MERGERS & ACQUISTION

GROUP NO – 10
MEMBERS :–
SEJAL
SAURABH
SAIMA
SAPNA
 WHAT IS MERGER???
• A merger is an agreement that unites two existing companies into one new company.
It is commonly done to expand a company’s reach, expand into new segments, or
gain market share.

• Mergers happen for a variety of reasons. They could allow each company to enter a
new market, sell a new product, or offer a new service.

• They can also reduce operational costs, improve management, change their pricing
models, or lower tax liabilities.
 TYPES OF MERGER
The most common types include:-
1. Horizontal - A merger is considered horizontal if the two companies already offer
the same products or services. It help companies reduce competition and
dominate the market.
2. Vertical - When two companies that produce parts or services for a product
merger, the union is referred to as a vertical merger. Think of a home construction
company purchasing a window pane manufacturer or a winery buying a glass
bottle manufacture 
3. Market Extension- This type of merger occurs between companies that sell the
same products but compete in different markets. Companies that engage in a
market extension merger seek to gain access to a bigger market and, thus, a
bigger client base.
4- Conglomerate- This is a merger between two or more companies engaged in
unrelated business activities. The firms may operate in different industries or in
different geographical regions. Think of a clothing company combining with a snack
food manufacturer.

5- Co generic- A co- generic merger is also known as a Product Extension merger.

In this type, it is a combining of two or more companies that operate in the same
market or sector with overlapping factors, such as technology, marketing,
production processes, and Research & Development.
 EXAMPLE OF MERGER
•  The Vodafone Idea merger to be valued at $23 Billion. Although the deal resulted
in a telecom giant it is safe to say that the 2 companies were pushed to do so due
to the entry of Reliance Jio and the price war that followed. Both companies
struggled amidst the growing competition in the telecom industry.
• The deal worked both for Idea and Vodafone as Vodaphone went on to hold a
45%stake in the combined entity with the Aditya Birla group holding a 26% stake
and the remaining by Idea. On the 7th of September,  Vodafone Idea unveiled its
brand new identity ‘Vi’ which marked the completion of the integration of the 2
companies. 
 WHAT IS ACQUISITION

• An acquisition occurs when one company buys out another company’s stock or other
asset shares.

• The acquiring company buys the shares or the assets of the target company, which
gives the acquiring company the power to make decisions concerning the acquired
assets without needing the approval of shareholders from the target company.
 REASONS OF MERGERS & ACQUISTION
• Improving Both Companies- A company will often decide to merge with
another company because the weaknesses and strengths of both
organizations complement each other.

• Diversifying Business Interests- Intensifying the focus of a business or

diversifying business interests are two other motivations for mergers and
acquisitions.

• Growing the Company - Growth is the goal of every major company, and one
of the easiest ways to grow an organization is through mergers or acquisitions.
• Eliminating Competition - Mergers and acquisitions are also an effective tool
for eliminating competition.
• Tax Benefits - Acquisitions and mergers can also provide enticing tax benefits
to the companies involved in the deal.
 BENEFITS OF MERGERS & ACQUISITION
 Economies of Scale- Often, the end goal of a merger and acquisition is to
realize economic gains and economies of scale.

 Economies of Scope- Mergers and acquisitions benefits include economy of

scope, which refers to the reduction in production cost of one product due to
the production of another related product.
 Access to the Best Talent - Talent acquisition is one of the biggest concerns
for companies that wish to excel in the market . Consequently, the bigger the
company, the better access it enjoys to the best available talent.
 Access to New Markets - Breaking into a new market can be challenging,
even for established businesses. A merger or acquisition can save companies a
significant amount of time, effort, and money compared to starting from scratch.
 Opportunist Value Generation - Larger organizations are often on the lookout
for acquisition opportunities where the purchase price is valued at less than the
fair market value of the target’s net assets.