PRESENTATION

ON
MERGERS & ACQUISITIONS

1
 Merger waves
The economic history has been divided into Merger Waves based on the
merger activities in the business world as:

Period Name Facet

1989 - 1904 First Wave Horizontal mergers

1916 - 1929 Second Wave Vertical mergers

Diversified
1965 - 1989 Third Wave
conglomerate mergers

Congeneric mergers;
1992 - 1998 Fourth Wave
Hostile takeovers;

2000 - Fifth Wave Cross-border mergers

2
 Varieties of Mergers
Horizontal merger - Two companies that are in direct
competition and share the same product lines and markets.
Vertical merger - A customer and company or a supplier and
company. (eg:Think of a cone supplier merging with an ice
cream maker).
Market-extension merger - Two companies that sell the
same products in different markets.
Product-extension merger - Two companies selling different
but related products in the same market.

Conglomeration - Two companies that have no common

business areas.

3
 "Seven key practises" to assist with a
successful merger or acquisition
:
 Close involvement of Human Resources managers in the acquisition
process.
"Building organisational capacity" by ensuring that close attention is paid
to the retention and recruitment of employees during the acquisition.
Ensuring that the integration is focused on achieving the desired effect
(for example, cost savings).
Carefully managing the integration of the organisations' cultures.
Completing the acquisition process quickly, since productivity is harmed
by the disorganisation and demoralisation that inevitably occur while the
change is underway.
Communicating effectively with everyone who will be affected by the
change.
Developing a clear, standardised integration plan. 4
Top 5 M&A deals worldwide by value (in mil. USD) from
1990 to 1999

Transaction
Rank Year Purchaser Purchased value (in mil.
USD)

Vodafone Airt
1 1999 ouch PLC Mannesmann 183,000
[8]
2 1999 Pfizer[9] Warner-Lamb 90,000
ert
3 1998 Exxon[10][11] Mobil 77,200
Travelers
4 1998 Citicorp 73,000
Group
SBC
Ameritech
5 1999 Communicatio 63,000
Corporation
ns
5
· A merger does not require cash.

· A merger may be accomplished tax-free for both parties.

· A merger lets the target (in effect, the seller) realize the appreciation potential
of the merged entity, instead of being limited to sales proceeds.

· A merger allows the shareholders of smaller entities to own a smaller piece of a

larger pie, increasing their overall net worth.

· A merger of a privately held company into a publicly held company allows the
target company shareholders to receive a public company's stock

· A merger allows the acquirer to avoid many of the costly and time-consuming
aspects of asset purchases
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 The Main Idea
One plus one makes three: this equation is the
special alchemy of a merger or an acquisition.
The key principle behind buying a company is
to create shareholder value over and above
that
of the sum of the two companies. Two
companies together are more valuable than
two separate companies - at least, that's the
reasoning behind M&A.
7
 Microsoft makes its biggest
acquisition ever
ON
MAY 18TH 2007
Microsoft is shelling out about $6 billion in cash to
buy digital marketing/advertising vendor aQuantive.

8
Major Mergers and Acquisitions in India

 Hindalco acquired Canada based The deal involved transaction of

Novelis  $5,982 million

 Tata Steel acquired Corus Group plc The acquisition deal amounted to $12,000
  million
 Dr. Reddy's Labs acquired Betapharm deal worth of $597 million

 Ranbaxy Labs acquired Terapia SA The deal amounted to$324 million

 Suzlon Energy acquired Hansen Group a deal of $565 million

 Daewoo Electronics Corp. by Videocon The acquisition of involved transaction of

$729 million

 HPCL acquired Kenya Petroleum Refinery The deal amounted to $500 million
Ltd

 VSNL acquired Teleglobe through a deal of $239 million

9
 ACQUISITION OF DECCAN BY
KINGFISHER

On May 31, 2007, United Breweries Holdings Limited

(UBH), the parent company of Kingfisher Airlines
(Kingfisher), a 'value carrier' based in Bangalore,
acquired a 26 percent stake in Deccan Aviation
Private Limited (DAP), which owned Air Deccan
(Deccan), the pioneer of low-cost airline in India,
also based in Bangalore. UBH paid Rs. 5.5 billion to
acquire the stake, which made it the largest
shareholder in DAP 10
 WHAT ARE THE benefits OF
KINFISHER - DECCAN
COMBINATION
The Kingfisher-Deccan combine became the largest domestic
airline in India in terms of fleet size,
With 71 aircraft
The kingfisher and deccan combine would cover low and
premium fare segments
The combined entity offered 537 flights to 69 cities daily
In addition to this, the combined market share of Kingfisher-
Deccan was estimated to be about 30 percent, positioning
them in the second place after Jet Airways, a full service
private airline, whose market share was estimated to be about
34 percent in mid 2007. 11
 Mr Ratan Tata,
Chairman of Tata Steel and Corus

12
 Tata Steel acquisition of Corus
Group plc
Tata Steel has completed its £6.2 billion (US$12
billion) acquisition of Corus Group plc (Corus) at a
price of 608 pence per ordinary share in cash. The
enlarged company will have a pro forma crude steel
production of 27 million tonnes in 2007 and will be
the world’s fifth largest steel producer with 84,000
employees across four continents.
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 CONCLUSION
A merger or acquisition is an extremely stressful
process
Job lose
Human factor
Diseconomies of scale
Most importantly, any decision to carry out a merger
or acquisition should consider not only the legal and
financial implications, but also the human
consequences - the effect of the deal upon the two
companies' managers and employees. It is upon
them, ultimately, that the fate of the newly-merged
company will depend. 14
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