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Mergers and Acquisitions
Merger
A transaction where two firms agree to integrate
their operations on a relatively coequal basis
because they have resources and capabilities that
together may create a stronger competitive
advantage
Acquisition
A transaction where one firm buys another firm
with the intent of more effectively using a core
competence by making the acquired firm a
subsidiary within its portfolio of businesses
Takeover
An acquisition where the target firm did not
solicit the bid of the acquiring firm
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Problems in Achieving Success
Reasons for Acquisitions
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Reasons for Acquisitions
Example British Petroleums acquisition of U.S.
Amoco
Example Belgian-Dutch Fortis acquisition of
American Bankers Insurance Group
Example Watson Pharmaceuticals acquisition of
TheraTech
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Reasons for Acquisitions
Example Kraft Foods acquisition of Boca Burger
Example CNETs acquisition of mySimon
Example General Electrics acquisition of NBC
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Problems with Acquisitions
Example Intels acquisition of DECs
semiconductor division
Example Marks and Spencers acquisition of
Brooks Brothers
Example AgriBioTechs acquisition of dozens of
small seed firms
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Problems with Acquisitions
Example Quaker Oats and Snapple
Example GE--prior to selling businesses and
refocusing
Example Ford and Jaguar
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Attributes of Effective Acquisitions
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Attributes of Effective Acquisitions
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Restructuring and Outcomes
Short-Term Outcomes
Long-Term Outcomes
Alternatives
Loss of Human Capital
Reduced Labor Costs
Downsizing
Reduced Debt Costs
Lower Performance
Downscoping