c






 
 

 What Does Merger Mean?

The combining of two or more companies,

generally by offering the stockholders of one
company securities in the acquiring company
in exchange for the surrender of their stock.
 r 



= Diversification of product and service offerings

= Increase in plant capacity

= Larger market share

= Utilization of operational expertise and research and

development (R&D)

= Reduction of financial risk

 2




=   
 


= c
    

 
= 


 




=When one company takes over another and clearly

established itself as the new owner, the purchase is
called an acquisition.

=Acquisition is generally considered negative in nature

 u
RGIu RLATD TO ACQUIuITIO

= conomies of scale

= utaff reductions

= Acquiring new technology

= Improved market reach and industry visibility

= Taxation
 


 


 
 
Ô
   
 



America Online
[


Time Warner [,77
Inc. (AOL)
Glaxo Wellcome umithKline



75,9[
Plc. Beecham Plc.
Royal Dutch uhell Transport &


 7,559
Petroleum Co. Trading Co
Belluouth


 AT&T Inc. 7 ,7[
Corporation
Comcast AT&T Broadband
5

[ 7 ,
[
Corporation & Internet uvcs
uanofi-uynthelabo


 Aventis uA 
, 
uA
u

ortel
7



etworks 59,97
Corporation
Pharmacia


Pfizer Inc. 59,5[5
Corporation
P Morgan Chase
9

 Bank One Corp 5,7[
& Co
  

= 

 
 
 




 

 

 

 

 


  





  

 
  
 

 Takeover might be o
6
 
   

A takeover attempt that is Target company's
strongly resisted by the management and board of
target firm directors agree to a merger or
acquisition by another
company.
 2 !c"##!
= 




 
 



  
  

  
=  
 

  
 
=  


 

 
 
 


 
= 

 


  



    $

 

= 

 
 
 
 

  

 

   




 
= 





 


 
  
 
 

 




 
 K
IGHTu A
D uQUIRu

= In the case of a hostile takeover, the firm making the bid can be
referred to as a ë   ë.
= §  ë is a firm that may enter the fray as a 'friendly'
bidder.
= A ë ë is a third firm that is not welcomed by the
'victim', seeking to exploit the situation to their own advantage.
= §
  ë is a firm who originally seeks to launch a hostile
takeover bid but then moderates its stance and negotiates on the
basis of a merger.
= Ú
 Ú



 
  
     
  
 


 
  

 
%

%


  %
 %

 

 
 
 
 
 c


& 

' c


( 

c


) * 
 c


+ *  

c


 

' c


= 

' 


  



 
 















 
 
 
 
   

 #$ 

' c


= Lipton India and Brooke Bond.

= Bank of Mathura with ICICI Bank.

= Buu Ltd with Orissa Power uupply Company.

= Associated Cement Companies Ltd Damodar Cement.

 

c


= 

  

 






 
 #$ 

c


= Time Warner Incorporated, a major cable operation, and the
Turner Corporation, which produces C

, TBu, and other
programming.

= Pixar-Disney Merger
 * 
 c


A merger between firms that are involved in totally
unrelated business activities.

Two types of conglomerate mergers

[. Pure conglomerate mergers involve firms with nothing in

common.

. Mixed conglomerate mergers involve firms that are looking

for product extensions or market extensions.
 #$ * 
 c


= 2

*
  

 
r

*

 *  

c







 





 
 

 #$ *  

c


= , $

 

  $   








 
-.

 


 
 
 / 

= *  

 
 /
 
 
 
0  
 
 0 
 /,

 
  
 
,,,"##/ /!#*,
,,c,1*cc#/ !2*cc#!*2,3

,,#* ",!*#c*,
,,#*/ 1!c# !c
,"#2!,#4**#c ,#4*,1#2,3
/!*#c /#,!#
!*, "#,! ,
!!,,#c#, ##
!/2,!# "/,!#
!,1#,#!,!# 1#,#!,!*#
!,##!#4/! c! 
# ,,r!2,r#!
,/!#, ,,1 ,23
,*r#,!# !/1*r#
,*r#*!/, ,*r#,!#
,* ## *,#* ##
,2/c#!/ "/,!#
"c !,c
*###*!*, 1#,#!##*!** ,
*## , #,#
*#/2#!* #!1!/2#!//*
,*2#3 !#*"*#c, ,
!##"#* 1#!1#2c,2c3
",2r1!3 ,1c#2!* ###,

/!* 1!!c*
!rr#! !*"!
*
c
 2

 !# c!*
 r2"##,!#
r2,2* 1!###!,//,1*
"!*! /!#c#,!#
/*#4 ,/,
r!#*,1 2/c#!
*, ,!*c/,#,
 ,/ ,!#
2#, ,!#
2!# ,!#
#5#2#1#!2,3 1,#!!r,*
,/121* "!,!*/,
,*#2#,1 ,0#!",
#" "!!, ,##!*#/
#/# ,,*# !#,r##!1#
1/*#c* ,!c#*/!c
c#r4c*,c* !,c

"!/c" "!c,!
*0*#c //#!1,1#1!,!#

#cr*!r! #cr**#c*2!"*
,*# ,c,1#c#, ,*#*!#,#c#,
*/# !#,r!
cr/! 2!# 14//,*#
c**!r,4# #1*#c*,!#

c!/!#,  c!r,/

c!#4/!/ c! /!*
,1!c ,,!# r!"#r,2,3
,1!c ,,*# **
 /0c   
= ucare off by purchasing large amounts of the acquiring
company's stock.
= Resisting company may even sell off non-vital assets to
procure enough assets to buy out the acquirer.
xample
Attempted acquisition of Martin Marietta by Bendix
Corporation in [9 
= Martin Marietta's management responded to takeover
attempt by selling non-core businesses in order to attempt a
takeover of its own - of Bendix Corporation. In the end

= Bendix Corporation was bought by Allied Corporation

 

 
  
 

  
p  
        

 *
1
  " &(666  

6  , 
 *  -78(  
 
  "
 .(7 # 


# 

*

  ! r  
 1

-7. / 
 


"#    1
  r 
 -9- #


"
/ 
 
6 "
 -66 
 1
! 



!$ ! 

 !
 )(+ / 
 


 ,  

(7)  

    
  (76 # 




%    *  ()7   

Indian outbound deals since



2


   
1
c
 


 



 $ 
  1
  
 




  

 
 
 
 
    
  
  
  


 

 
   
   
 

 
 
   

  
   
 


 
  
   
 


 


   
 
  $ 
 


 
 
 
   



 


 
  
 


  
* 
   
 * 
 
   
  


 * 
   


  

    
   

 
   
 
 
 
 1c     



 

  



    
    1c

 
  



:
 
 

 0
0 1c 


;        
 

  


 
 


  1c