Basic Undestanding of Cross Border M&A
Basic understanding of Cross-Border M&A Mai Doan 20 May 2014 Why use M&A strategy? From the buyer side: To enter a new market To have network foundation To secure control over the business Why use M&A strategy? From the seller side: <49%:>49%: because they can!!! 100%: to retire, get the cash and move to another business How do they do that? Horizontal acquisition: same industry M&A between companies in the same industry Vertical acquisition: in the supply chain M&A between companies in different stages of the supply chain or distribution channels. Related acquisition: related industry M&A between companies in highly related industries. Wait, so what is M&A? M&A= Merge and Acquisition Just another corporate strategy? (There are different levels in an M&A transaction based on how it is done.) Merge: Company A and Company B are willing to comes together co-equal basis. Acquisition: Company A buys Company B’s stock in order to have management control. Take over: Company B could not resist being hostile take over by Company A. How about cross-border M&A? Still exactly the same thing but more complicated because: It’s a cross-border transaction. Legal barriers are more complex. The gap between business cultures is larger. And so many other things needed to be considered. For those who are still being confused out there, cross-border M&A is a concept in which… It’s an international “marriage” between two companies to form a “family”. The two parties will be responsible for the “family” finance and management strategies. The two parties will share the profit/loss accordingly. Cross-border M&A between Japan and Vietnam in 2013-2014 Here is just a review Cross-border M&A really helps to overcoming entry barriers into new market. It also saves cost but adds more skills and capability for new product development. And it definitely create added-value and reshapes your competitive scope. Thank you!!! The concept of M&A and all the “tricks” along with it have been written in piles and piles of books. Please note this presentation serve the purpose to simplify the idea of cross-border M&A for a clueless person like myself. Hope it helps to introduce you to this fun and exciting remarks of the finance industry. I’m looking forward to having more to add on this topic. Anyhow, good luck!!!
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Basic Undestanding of Cross Border M&A
- 1. Mai Doan 20 May 2014 Basic understanding of Cross-Border M&A
- 2. Why use M&A strategy? From the buyer side: 1. To enter a new market 2. To have network foundation 3. To secure control over the business Source: Widen.com 05, 2014
- 3. Why use M&A strategy? From the seller side: 1. <49%: to expand with a strategic partner but still have control over the business. 2. >49%: because they can!!! 3. 100%: to retire, get the cash and move to another business Source: Genequity Co 05, 2014
- 4. How do they do that? 1. Horizontal acquisition: same industry M&A between companies in the same industry 2. Vertical acquisition: in the supply chain M&A between companies in different stages of the supply chain or distribution channels. 3. Related acquisition: related industry M&A between companies in highly related industries.
- 5. Wait, so what is M&A? M&A= Merge and Acquisition Just another corporate strategy? (There are different levels in an M&A transaction based on how it is done.) 1. Merge: Company A and Company B are willing to comes together co-equal basis. 2. Acquisition: Company A buys Company B’s stock in order to have management control. 3. Take over: Company B could not resist being hostile take Source: Strategic EHS 05, 2014
- 6. How about cross-border M&A? Still exactly the same thing but more complicated because: 1. It’s a cross-border transaction. 2. Legal barriers are more complex. 3. The gap between business cultures is larger. And so many other things needed to be considered. Source: Business Technology 05, 2014
- 7. For those who are still being confused out there, cross-border M&A is a concept in which… 1. It’s an international “marriage” between two companies to form a “family”. 2. The two parties will be responsible for the “family” finance and management strategies. 3. The two parties will share the profit/loss accordingly.
- 8. Cross-border M&A between Japan and Vietnam in 2013-2014 Year Acquirer Acquired Type $Value Industry 2014 Mitsui&Co Minh Phu Hau Giang Seafood Processing 30.77% 19 m Seafood 2014 En-Japan Inc Navigos Group 89.8% 22m Human Resource 2014 Showa Denko K.K. Rexam-Hanacans JST 91.75% - Chemical 2014 Undisclosed Vina Properties Pte - 16m Hotel 2013 Asahi Glass Co Phu My Plastics & Chemicals Co 93.11% - Chemical 2013 Undisclosed Premier Oil Vietnam South BV - 45M Oil Source: Merger Market 05, 2014
- 9. Here is just a review Cross-border M&A really helps to overcoming entry barriers into new market. It also saves cost but adds more skills and capability for new product development. And it definitely create added-value and reshapes your competitive scope.
- 10. Thank you!!! The concept of M&A and all the “tricks” along with it have been written in piles and piles of books. Please note this presentation serve the purpose to simplify the idea of cross- border M&A for a clueless person like myself. Hope it helps to introduce you to this fun and exciting remarks of the finance industry. I’m looking forward to having more to add on this topic. Anyhow, good luck!!!