ACQUISITION MERGER IMPACT OF MERGER AND ACQUISITION SUCCESSFUL STORIES OF MERGER

1. Presented By:
Suvadeep Chatterjee
PGDM-4

2. Merger & Acquisition
WHAT IS MERGER?
A merger is a combination of two or more companies where one
corporation is completely absorbed by another corporation.
WHAT IS ACQUISITION?
Acquisition essentially means ‘to acquire’ or ‘to takeover’. Here a bigger
company will take over the shares and assets of the smaller company.

3. Merger
A merger is a transaction that result in
the transfer of ownership and control of a
corporation.
When one company purchases another
company of an approximately similar
size.The two companies come together
to become one.
Two companies usually agree to merge
when they feel that they can do
something together that they can not do
one their own.

4. Types of MERGER
Horizontal Mergers
Vertical Mergers
Market Extension
Mergers
Product Extension
Mergers
Conglomerate
Mergers
Occurs when two companies sell similar products to
the same markets.
It joins two companies that may not compete with
each other, but exist in the same supply chain.
To help two organizations that may provide similar
products and services grow into markets where they
are currently weak.
May merge when they sell products into different
niches of the same markets.
Occur when two organizations sell products in
completely different markets.

5. MERGER: WHY & WHY NOT
SIGNIFICANCE PROBLEMS
i. Increase Market Share.
ii. Economies of scale
iii. Profit for Research and
development.
iv. Benefits on account of tax shields
like carried forward losses or
unclaimed depreciation.
v. Reduction of competition.
i. Clash of corporate cultures
ii. Increased business complexity
iii. Employees may be resistant to
change

6. Types of ACQUISITION
 Friendly Acquisition Both of the companies approve of the
acquisition under friendly terms.
 Hostile Acquisition The smaller company either driven to such a
condition that it has no option but to say yes
to the acquisition to save its skin or the
bigger company just buys off all its share,
their by establishing majority and hence
initiating the acquisition.
 Reverse Acquisition A private company takes over a public
company.
 Back flip Acquisition A very rare case of acquisition in which, the
purchasing company becomes a subsidiary
of the purchased company.

7. ACQUISITION: WHY & WHY NOT
SIGNIFICANCE PROBLEMS
i. Increased market share.
ii. Increased speed to market
iii. Lower risk comparing to
develop new products.
iv. Increased diversification
v. Avoid excessive competition
i. Inadequate valuation of
target.
ii. Inability to achieve synergy.
iii. Finance by taking huge debt.

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

9. Benefits of
Merger &
Acquisition
Future
goals Mutual
benefits
Maximizing
profits
Expansion
of
business
Increase
market share
Cost
maximization
Diversification
of risk
Goodwill
Product
improvement

10. Impact of MERGER & ACQUISITION
 Employees:
Mergers and acquisitions impact the employees or the workers the most. It is a well known fact
that whenever there is a merger or an acquisition, there are bound to be lay offs.
 Impact of mergers and acquisitions on top level management:
Impact of mergers and acquisitions on top level management may actually involve a "clash of the
egos".There might be variations in the cultures of the two organizations.
 Shareholders of the acquired firm:
The shareholders of the acquired company benefit the most.The reason being, it is seen in
majority of the cases that the acquiring company usually pays a little excess than it what should.
Unless a man lives in a house he has recently bought, he will not be able to know its drawbacks.
 Shareholders of the acquiring firm:
They are most affected. If we measure the benefits enjoyed by the shareholders of the acquired
company in degrees, the degree to which they were benefited, by the same degree, these
shareholders are harmed

11. Successful
&
Unsuccessful
Stories

12. Vodafone-Idea merger: $23 billion
 March 2017
 Merger deal
 Amalgamation of India’s telco
No. 2Vodafone and third
ranked Idea.
 The all-share merger for both
partners excludesVodafone's
42 per cent stake in Indus
Towers and will be effected
through issuing new shares in
Idea toVodafone and result in
Vodafone deconsolidating
Vodafone India.

14. RIL-RPL merger: $1.68 billion
 March 2009
 Merger deal
 Amalgamation of its
subsidiary Reliance
Petroleum with the
parent company
Reliance industries
ltd.
 Rs 8,500 crore
 RIL-RPL merger swap
ratio was at 16:1
Image: Reliance Industries'
chairman Mukesh Ambani.

15. Conclusion
 Learn from mistakes of others
 Define your objectives clearly
 Complete strategy to achieve goal.
 SWOT analysis for the merged business - a must.
 Pick holes in strategy to get the best
 Will merged units be able to work at efficient / ideal level?