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1+1=3?
Mergers and Acquisitions
Reasons for M&As
Discussion
Source: http://en.wikipedia.org/wiki/Mergers_and_acquisitions#Distinction_between_mergers_and_acquisitions
Mergers
A merger happens when two firms agree to
go forward as a single new company rather
than remain separately owned and operated.
This kind of action is more precisely referred
to as a "merger of equals". The firms are
often of about the same size. Both
companies' stocks are surrendered and new
company stock is issued in its place.
Source: http://en.wikipedia.org/wiki/Mergers_and_acquisitions#Distinction_between_mergers_and_acquisitions
In practice
Actual mergers of equals don't
happen very often.
Usually, one company will buy
another and, as part of the deal's
terms, simply allow the acquired
firm to proclaim that the action is a
merger of equals, even if it is
technically an acquisition.
Ways to acquire a company
A Raid
or
A Takeover Bid
Ways to acquire a company
A Raid
Buying as many of a
company’s stocks as possible
on the stock market.
Ways to acquire a company
A takeover Bid
A public offer to a company’s
stockholders to buy their
stocks at certain price during a
limited period of time.
Types of Mergers
Horizontal
Two companies making the same
products combined
Vertical
A company either acquires or merges with
another company in an immediately-
related stage of production and
distribution.
Diversification
A company acquires another company in
an entirely different sphere.
Example
Example
Types of Mergers
Reasons for Horizontal Mergers
- To reduce competition
- To increase market share
- To acquire additional plants and
equipment
- To achieve synergy and economies of
scales
Types of Mergers
Reasons for Vertical Mergers
- To guarantee the supply and cost of raw material and
components.
- To be closer to the customers, by cutting out the wholesaler
for example and dealing directly with the retail trade.
Diversified conglomerate
1965 - 1989 Third Wave
mergers
Congeneric mergers;
1992 - 1998 Fourth Wave Hostile takeovers;
Corporate Raiding
Language Practice
Cause and Effect Expressions
Page 50
Speaking practice
Work in groups of 3 or 4 and make a 15-minute
presentation on