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MERGER AND ACQUISITION

DEFINITION:
MERGER: 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. Example: Company A+ Company B= Company C.

ACQUSITION: It also known as a takeover or a buyout, is the buying of one company by another. In acquisition two companies are combine together to form a new company altogether. Example: Company A+ Company B= Company A.

DIFFENCE BETWEEN MERGER AND ACQUISITION:


MERGER i. ii. iii. iv. v. Merging of two organization in to one. It is the mutual decision. Merger is expensive than acquisition(higher legal cost). Through merger shareholders can increase their net worth. It is time consuming and the company has to maintain so much legal issues. i. ii. ACQUISITION Buying one organization by another. It can be friendly takeover or hostile takeover. Acquisition is less expensive than merger. Buyers cannot raise their enough capital. It is faster and easier transaction.

iii.
iv. v.

TYPES OF MERGER:

MERGER

HORIZONTAL

CONGLOM ARATION

PRODUCT VERTICAL EXTENSION

MARKET EXTENSION

ACC & DAMODAR CEMENT(2006)

L&T & VOLTAS LTD

FORD &BENDIX.

PEPSICO & PIZZA HUT (November 1977)

RBC CENTURA & EAGLE BANCSHARES (july,2002) (US$153 million)


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TYPES OF ACQUISITION:

ACQUISITION

HOSTILE

FRIENDLY (WALT DISNEY CORP. &


PIXAR ANIMATION,2006 $7 .4 billion.)

(MICROSOFT FOR
YAHOO,2008,bid offer $44.6 billion)

Chrysler, Fiat merger

US carmaker Chrysler and Italian carmaker Fiat merged to create world's sixth largest global auto giant. The non-cash accord called for Fiat to take a 35% stake in the No 3 American carmaker Chrysler in exchange for Fiat's platforms for its fuel-efficient, small and medium-sized compact cars, which will fill a gap in Chrysler's range of models. Fiat in turn would gain access to American auto plants and service centres as well as the reintroduction of several of their models back into America. Fiat like Chrysler was also in a terrible state after a failed merger with General Motors, but is now on its road to recovery.

Volkswagen takes over Porsche

Europe's auto major Volkswagen is set to become the world's number one, pushing Japan's Toyota to the second place, by taking over sports car manufacturer Porsche. The acquisition ended years of takeover struggle between the two German automobile giants. Porsche, which made an unsuccessful bid to take over Volkswagen earlier this year, is now the 10th brand of the VW family. Volkswagen took 49.9% stake in Porsche for 3.9 billion and the merger will be completed by 2011. Porsche will continue to operate as an independent company within the VW family.