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Merger and Acquisition
Merger and Acquisition
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DEFINITION:
MERGER:
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TYPES OF MERGER:
MERGER
•When one company takes over another and clearly established itself
as the new owner, the purchase is called an acquisition.
ACQUISITION
FRIENDLY
HOSTILE (WALT DISNEY CORP. &
(ARCELOR-MITTAL) PIXAR ANIMATION)
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DIFFERENCE BETWEEN MERGER AND
ACQUISITION:
MERGER ACQUISITION
i. Merging of two organization in i. Buying one organization by
to one. another.
ii. It is the mutual decision. ii. It can be friendly takeover or
iii. Merger is expensive than hostile takeover.
acquisition(higher legal cost).. iii. Acquisition is less expensive
iv. It is time consuming and the than merger.
company has to maintain so iv. It is faster and easier
much legal issues. transaction.
v. Dilution of ownership occurs in v. The acquirer does not
merger. experience the dilution of
ownership.
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MERGER:WHY & WHY NOT
WHY IS IMPORTANT PROBLEM WITH MERGER
i. Increase Market Share. i. Clash of corporate cultures
ii. Economies of scale ii. Increased business complexity
iii. Profit for Research and iii. Employees may be resistant to
development. change
iv. Benefits on account of tax
shields like carried forward
losses or unclaimed
depreciation .
v. Reduction of competition .
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ACQUISITION:WHY & WHY NOT
PROBLEM WITH
WHY IS IMPORTANT ACQUISITION
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Amongst BRIC Nations, India second most targeted
country for Mergers & Acquisitions(2010):
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POTENTIAL BUYERS
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Offer
Kraft’s new offer of 850 pence a share
• Cadbury shareholders would also receive a special
dividend of 10 pence a share.
•The offer will consist of 500 pence in cash,
• with the rest made of Kraft shares
Deal
KRAFT acquired CADBURY for 11.5 billion
pounds ($19 billion).
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