business

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business combination
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Why Business Combination? Forms Of Business
Combination
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• Mergers
• Amalgamation
• Acquisitions
• Takeovers

business combination
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• AI IA TO MERGE IN APRIL
• TATA LIKELY TO REVISE CORUS TAKEOVER OFFER
• AMTEK AUTO RENEW BID TO ACQUIRE UK COMPANY
• TATA GROUP IN RACE FOR DAEWOO ROMANIA
• GE SNAPS UP SMITHS AEROSPACE FOR 4.8 BILLION
• HINDUJAS ENTER RACE FOR HUTCHS HTL STAKE
• IDBI BUYS 10 STAKE IN BAG FILMS RADIO UNIT
• US AIRWAYS RAISES BID FOR DELTA

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• When two or more companies
• combines into one company
• may merge with existing co,
• form new company
• in India merger is called
• Amalgamation

Merger
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Merging Companies are called Amalgamating Compan
ies
Merger
New Company is called Amalgamated Company
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Merger Through Absorption
Merger
MERGER THROUGH CONSOLIDATION
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Merger Through Absorption
Merger

• An Absorption is Combination of
• two or more companies into an
• existing company
• All companies except one lose
• their identity

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Western Union Bank Merged With IDBI
New Bank Of India Merged With PNB
Bank Of New York Merged With Mellon Financial
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Merger Through Consolidation
Merger

• A consolidation is a combination of two or more
• Companies into a new Company
• All companies are dissolved to form a new Company

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Merger Through Consolidation
Merger
Hindustan Computers Ltd
Hindustan Instruments Ltd
Indian Software Co .Ltd
Indian Reprographic Ltd
HCL LTD
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Acquisition
An Acquisition may be an act of
acquiring effective control by one company over
assets or management of another company
without any combination of companies.. Companie
s may remain independent, separate But there may
be change in control of Companies..

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Acquisition

• Obtaining Control over management of a Company
• MRTP ACT-at least 25 voting right of a Company
• Investment of more than 10 share into a company
• Require approval of Shareholders C Govt.

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Dabur Pharma to acquire Thai company Aditya
Birla Group to acquire Trinethra Chinas largest
Bank to take over Indonesian Bank
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WE ARE LOOKING TO ACQUIRE
HOSPITALS
We are leading business house with a reputed
presence in In health care sector in the
country We are likely to acquire medium to large
sized hospitals in Metros, state capitals tier
1 cities. They could be on out right purchase or
long term lease. We are also open to Joint
Ventures
Pl. send proposals contact details to
indianhealth_at_gmail.com
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Acquisition Takeover
When Acquisition is unfriendly or hostile It may
be called Takeover
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Mittal -Arcelor Case
Mittal Steel bids for Arcelor-27.1.06 Mittal
after Arcelors Cash -2.2.06 Mittal and
Arcelor seek Support-6.2.06 Arcelor investors
favour mittal but want more-15.2 Arecelor offer
sweet,hostality wanning-mittal 16.2 Arecelor
declared higher dividend than mittal-16.2 Mittal
Steel Launched formal take over-19.5 Mittal
raised bid before share holders meet-19.5 A,lor
to merge with Russian Company Severstal
26.5 Mittal Arcelor start talks -9.6 Arecelor
rejects mittal bid-12.6
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Mittal -Arcelor Case

• Mital woos Arcelor with 70 growth-13.6
• Mittal may hike offer-21.6
• Mittal Arcelor close to friendly deal-23.6
• Mittal wins over more shareholders23.6
• Arcelor gives in to Mittal-26.6
• Did Mittal Yield too much-29.6
• Arcelor,s largest S,holder reject Severstal -
  30.6
• Mittal Steel claims 92 shares of Arcelor -27.7
• Mittal steel announces post merger plan-8.8
• Merged Arcelor-Mittal named Mike Repley
• As CEO OF US operations

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Tactics to Defend Takeover..Merger

• Divestiture
• Crown Jewels
• Poison Pill
• Greenmail
• White Knight
• Golden parachutes

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FORMS OF MERGER
Horizontal Merger
Vertical Merger
Conglomerate Merger
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Merger Objectives

• Faster Growth
• Improving Profitability
• Managerial Effectiveness
• Gaining Market Power
• Leadership
• Cost Reduction

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Are there any alternatives to Mergers or
acquisitions?
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• Joint Venture
• Strategic Alliance
• Eliminating Inefficient
• Operations
• Productivity Improvement
• Hiring Capable
• Managers

Merger Alternatives
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• Limit Competition
• Market Power
• Diversification
• Growth
• Economy of Scale
• Access to Foreign Market
• Resources
• Displace existing Management
• Circumvent Govt Regulations
• Aggressiveness
• Diversifying Risk
• Profitability

MOTIVES BENEFITS OF
MERGERS
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• Accelerated Growth
• Expanding Existing Markets
• Entering New Markets
• Expand Internally
• Expand Externally
• Developing Operating Facilities
• Price Paid for Merger

MOTIVES BENEFITS OF
MERGERS
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• Enhanced Profitability
• Economies of Scale
• Operating Economies
• Synergy

MOTIVES BENEFITS OF
MERGERS
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• Reduction in Tax Liability
• Carry forward Losses
• Tax on Share

MOTIVES BENEFITS OF
MERGERS
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• Financial Benefits
• Eliminating Financial Constraints
• Deploying Surplus Cash
• Enhancing Debt Capacity
• Lowering Financial Costs

MOTIVES BENEFITS OF
MERGERS
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• Increased Market Power
• Market Share
• Bargaining Power
• Technological Advancement
• Pricing
• Limiting Competition

MOTIVES BENEFITS OF
MERGERS
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Planning

Search Screening
Steps in Analysis Of Mergers Acquisitions
Financial Evaluation
Mode of Merger
Negotiation
Post Merger
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• Objective of Acquisitions
• Strengths Weaknesses
• Business Units-dropped
• or Added

Planning
Steps in Analysis Of Mergers Acquisitions
Industry Data Market Growth Competition Ease
Of Entry Capital Labour Degree of Regulation
Target Firm Quality Of Mgt Market Share
Size Capital Structure Profitability Production
Marketing Capabilities etc
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Search Screening
Steps in Analysis Of Mergers Acquisitions

• Where to look for candidates
• Is it too large or small
• Engaged in related or unrelated Activity
• Export oriented or Local
• Amenable or not amenable to merger

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Financial Evaluation

Steps in Analysis Of Mergers Acquisitions
Current Market Value

• Determining
• Earnings
• Cash flows
• Areas Of Risk
• Maximum Price Payable
• How to Finance Merger

Premium Value
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Mode of Merger

Steps in Analysis Of Mergers Acquisitions
Regulations Time frame Resources Degree of
control Assume hidden liabilities
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Negotiation

Steps in Analysis Of Mergers Acquisitions
Your intentions should be to pay one dollar more
than the value to the next highest bidder and an
Amount that is less than the value to you
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Post Merger

Steps in Analysis Of Mergers Acquisitions
Check Hostility Anticipate Problems Solve
Problems Treat people With Dignity
Art of taking over Company Without overtaking It
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Value Created by Merger

• Economic Advantage (EA) if
• VPQ gt (VP VQ)
• Where VPQ Combined PV of merged firms
• VP Worth of Firm P
• VQWorth of firm Q

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Value Created by Merger

• Economic Advantage
• EA VPQ - (VP VQ)

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Few Mergers, Acquisitions, Take over

• New Bank Of India merged with Punjab National
  Bank
• Global Trust Bank Taken over by OBC
• Western United Bank taken over by IDBI
• International Data Management By HCL Ltd
• Chhabrias took over Shaw Wallace, Dunlop
• Ashok Leyland By Hindujas
• Spensers By Goenkas
• VSNL by Tata
• Tata Tea Ltd Acquired Consolidated Coffee
  Company
• Tomco with HLL
• Tata Fertilizers Merged With Tata Chemicals
• Sundaram Clayton Merged With TVS-suzuki Ltd
• MITTAL STEEL'S ACQUISITION OF ARCELOR