MERGERS AND

ACQUISITIONS
Unit 12
CHOOSE THE CORRECT
SUCCESSFUL MERGERS
◦ WALT DISNEY
◦ A. ANDROID
◦ B. PIXAR
◦ C. VODAPHONE
FAILED MERGING
◦ QUAKER OATS

◦ GATORADE

◦ NEW YORK CENTRAL

◦ SNAPPLE
COLLOCATIONS
DEFINITIONS(Khanh)
◦ MERGE-COMBINE, ADD TO MAKE IT ONE, BIGGER, DOMINANT PARTNER
◦ ACQUISITION- BUY, ADD SOMETHING YOU ALREADY HAVE
◦ TAKE OVER-YOU GAIN CONTROL OF A COMPANY BY BUYING A PART OF THAT
COMPANY, PROFIT SHARING
◦ PREDATOR AND PREY
SUCCESSFUL MERGERS-(Dung)
Disney and Pixar/Marvel
◦ Google and Android
◦ Exxon and Mobile
◦ Vodafone and Mannesmann
◦ Pfizer and Warner-Lambert
◦ Verizon/Vodafone
◦ Altria/Philip Morris
◦ AT&T/Bell South
◦ America Online and Time Warner
◦ Travelers Group/Citicorp
◦ Dow Chemical and DuPont
◦ Anheuser-Busch InBev and SABMiller
◦ H. J. Heinz and Kraft Food
WHY DO COMPANIES MERGE OR
ACQUIRE?(Charlotte)
Synergy: is the concept that, the value of the combined companies will be
greater than the joint value of the two individual companies
Two plus two equals five
DIVERSIFICATION-(Nghia)
◦ to diversify their investment or reduce the impact of that particular industry on their
profitability. Also, two companies may merge to complement a product or service and to
gain a competitive edge over other companies in the market.
SURVIVAL-(Jenny)
◦ THE COMPANIES MAY BE IN FINANCIAL DIFFICULTY OR IN THE BRINK OF
BANKRUPTCY.
◦ in order to survive especially during the period of global financial crisis
Economy of scale-(Linda)
◦ : to reduce cost of production, and thereby maximize profit
◦ to decrease reliance and save on the margins that the suppliers are adding to its costs, or buy out a
distributor so that it may ship its product at a lower price.
Eliminate competition-(Flora)
◦ the purpose of eliminating competition, and gaining a larger
market share
FOCUS ON CORE ASSETS-(Philip)
◦ TO FOCUS ON WHERE THEY ARE GOOD AT LIKE PEARSON ON PUBLISHING
BOOKS AND OTHER PROFITABLE ASSETS
PROS AND CONS
ADVANTAGES DISADVANTAGES

NEW CAREER PATHS MAY ELIMINATE DUPLICATION OF POSTS

NEW ARRAY OF BETTER PRODUCTS LOSS OF CULTURES, VALUES

EXAMPLE: TATA CARS MERGED TO VULVA

MORE WORK FROM THE BIGGER BUSINESS ELIMINATE SUPPLIERS

MAY NOT OTHERWSE

ENHANCED SHAREHOLDERS’ VALUE

INCREASED RESOURCES OR WIDER MARKETING RE BRANDED OR DISAPPEAR ALTOGETHER

CULTURE DIVERSIFICATION FOR CROSS BORDER  CROSS CULTURAL MISUNDERSTANDING AND TENSIONS
MERGERS 
CASE STUDY-CHERRY, ANH & TIN
COMPANY RINNOVAR INTERNATIONAL INC (RI)
REVENUES/SALES $14 BN
PRODUCTS COSMETICS, FRAGRANCE, SKIN CARE
MARKETS US AND OVERSEAS
MISSIONS TO COMPETE WITH THE LIKE OF REVLON, L’OREAL, PROCTER AND
GAMBLE

SURVEY RESULTS PRODUCTS NEED TO BE MORE INNOVATIVE AND VARIED

MARKETS EXPAND IN S. ASIA AND S. AMERICA
PRODUCTION IN US THEREFORE HIGH COST
DISTRIBUTION: ONLY EXCLUSIVE AGENTS OVERSEAS
 
DILEMMA CHOOSE THE BEST COMPANY TO MERGE AND ACQUIRE