CONTEMPORARY ISSUES IN BUSINESS

ASSIGNMENT NO: 1
SUBMITTED BY: MAHERBAH HAIDER
ENROLLMENT NO: 01-220182-010
SUBMITTED TO: QAZI AHMED

Qs: What have been the impacts of acquisitions and mergers for the Pakistani businesses at
large? Develop your viewpoint with contemporary and recent examples.
Mergers and acquisitions bring a number of changes within the organizations of pakistan. The
size of the organizations change, its stocks, shares and assets also change, even the ownership
may also change due to the mergers and acquisitions. The mergers and acquisitions play a major
role on the activities of the organizations. However, the impact of mergers and acquisitions
varies from entity to entity; it depends upon the group of people who are being discussed here.
The impact of mergers and acquisitions also depend on the structure of the deal.
Impact of acquisitions and mergers:
Have a look at the impact of Mergers and Acquisitions on different segments of business.

IMPACT ON EMPLOYES:
Mergers and acquisitions may have great economic impact on the employees of the organization
in Pakistan. In fact, mergers and acquisitions could be pretty difficult for the employees as there
could always be the possibility of layoffs after any merger or acquisition. If the merged company
is pretty sufficient in terms of business capabilities, it doesn't need the same amount of
employees that it previously had to do the same amount of business. As a result, layoffs are quite
inevitable. Besides, those who are working, would also see some changes in the corporate
culture. Due to the changes in the operating environment and business procedures, employees
may also suffer from emotional and physical problems.

Impact on Management:
The percentage of job loss may be higher in the management level than the general employees in
Pakistan. The reason behind this is the corporate culture clash. Due to change in corporate
culture of the organization, many managerial level professionals, on behalf of their superiors,
need to implement the corporate policies that they might not agree with. It involves high level of
stress.
Impact on Shareholders:
Impact of mergers and acquisitions also include some economic impact on the shareholders in
Pakistan. If it is a purchase, the shareholders of the acquired company get highly benefited from
the acquisition as the acquiring company pays a hefty amount for the acquisition. On the other
hand, the shareholders of the acquiring company suffer some losses after the acquisition due to
the acquisition premium and augmented debt load.

Impact on Competition:
Mergers and acquisitions have different impact as far as market competitions are concerned.
Different industry has different level of competitions after the mergers and acquisitions. For
example, the competition in the financial services industry is relatively constant. On the other
hand, change of powers can also be observed among the market players.

EXAMPLE:

The best example what I would like to quote is the merging and acquisition of JAZZ with
Warid..

Warid was a GSM, HSPA+ and LTE based mobile operator in Pakistan. It was the seventh

mobile carrier to enter the Pakistani market. It commenced commercial operations on May 23,
2005 by the Abu Dhabi Group, a business conglomerate in the Middle East and a major investor
in Pakistan. It was the first venture of the group in the field of Telecommunication.
Warid was Pakistan's fourth largest GSM mobile service provider and fifth largest mobile service
in terms of subscriber base of over 12.9 million. It has a market share of 9% among cellular
operators.
On November 26, 2015 VimpelCom and Dhabi Group agreed to merge Mobilink and Warid into
a single company. On January 6, 2017 the combined CEO of Mobilink and Warid announced the
launch of new brand Jazz Mobilink ceased to exist on January 10, 2017 whereas Warid as a
brand continued for a year.

MOBILINK JAZZ AND WARID MERGER:

Phase 1:

 Mobilink has acquired 100% shares of Warid.

 Dhabi Group got 15% shares of Mobilink.
 There had no cash transaction involved, just the shares were
swapped.

Governance:

 The Board of the merged company  composed of 7 directors of

which 6 nominated by VimpelCom; while Dhabi Group
appointed 1 director.
 Resolutions of the Board, in general, shall be decided by
majority vote, except for certain limited reserved matters.
 Jeffrey Hedberg will be the CEO of merged company.
 Andrew Kemp is the CFO of merged company.

Impact on Employees:

In the result of this merger the WARID and JAZZ both companies
were decided to remove many number of employees from their
working unit..

Impact on Customers:

 Current Warid and Current Mobilink customers  start using one

single network, one helpline and same services.
  Customers of merged company have offered compound
services of both Warid and Mobilink, including 2G, 3G, 4G, and
MobiCash.
 Customers are allowed to retain their current numbers.

MY OPINION:

I would like to give my opinion on M&A of companies by telling you

the advantages and disadvantages.

ADVANTAGES:
 The most common reason for firms to enter into merger and
acquisition is to merge their power and control over the markets.

 And you can see today MOBILINK JAZZ is the number one
network in Pakistan…

 Another advantage is Synergy that is the magic power that allow

for increased value efficiencies of the new entity and it takes the
shape of returns enrichment and cost savings.

 You can experience that MOBILINK JAZZ is offering very

cheap packages to their customers
 Decrease of risk using innovative techniques of managing financial
risk.
 Jazz has now decreased his risk of getting fail from the
market by becoming the no1 telecommunication company in
Pakistan after merging..

 To become competitive, firms have to be compelled to be peak of

technological developments and their dealing applications. By
M&A of a small business with unique technologies, a large
company will retain or grow a competitive edge.
  As you can see JAZZ is offering the most highest coverage to
its customers after merging with WARID and JAZZ gain a
new customers and grown up and JAZZ is Pakistan most
largest telecom company in Pakistan..
DISADVANTAGES:

 Loss of experienced workers aside from workers in leadership

positions. This kind of loss inevitably involves loss of business
understand and on the other hand that will be worrying to
exchange or will exclusively get replaced at nice value.

 Yes we know that there were many expert of businesses were

in both of the company but after merging JAZZ had decided
to reduced the worker and in the result JAZZ Lost some
experienced workers..

 As a result of M&A, employees of the small merging firm may

require exhaustive re-skilling.

 Yes you can see when Jazz merged with Warid they both had
different culture and different way of working style, so when
they merged lots of investment get done to re-skill their
workers..

 In many events, the return of the share of the company that caused
buyouts of other company was less than the return of the sector as
a whole.

 Yes some times we also found some this kind of issues in Jazz
like somewhere they were performing greatly in alone but
after merging they were lacked…