This document discusses conglomerate mergers, which involve merging companies that operate in different industries. It defines conglomerate mergers and describes two types: pure and mixed. Conglomerate mergers are further divided into financial and managerial categories. Reasons for conglomerate mergers include increasing market share, gaining technological advantages, and diversifying products. Examples provided are the mergers of AOL & Time Warner, L&T and Voltas Ltd, and Walt Disney Pictures and ABC Broadcasting company. The document analyzes the AOL-Time Warner merger in depth and its subsequent failure to realize synergies. Sony's acquisition of Columbia Pictures Entertainment to enter the media industry is also briefly discussed.

1. International Strategic management
Conglomerate Mergers
Presented By
K. Manoj Kumar (Roll No: 41)

2. What is
Conglomerate
Merger..?
Definition:
•
•
A conglomerate merger is a type of merger
whereby the two companies that merge
with each other are involved in different
sorts of businesses. The importance of the
conglomerate mergers lies in the fact that
they help the merging companies to be
better than before.
The term conglomerate mergers also
implies that the two companies that are
merging do not even have the same
customer base as they are in totally
different businesses.

3. Types
Pure conglomerate merger
The pure conglomerate merger is one
where the merging companies are doing
businesses that are totally unrelated to each
other
Mixed conglomerate merger
The mixed conglomerate mergers are ones where
the companies that are merging with each other are
doing so with the main purpose of gaining access to
a wider market and client base or for expanding the
range of products and services that are being
provided by them

4. Conglomerate
Mergers are
Sub-divided
Into 2 types
Financial Conglomerates
•
These conglomerates provide a flow of funds to
every segment of their operations, exercise control
and are the ultimate financial risk takers. They also:
– Reduce risk
– Improve the quality of general and functional
managerial performance
– Provide effective competitive process.

5. Conglomerate
Mergers are
Sub-divided
Into 2 types
Managerial Conglomerates
Managerial conglomerates provide managerial
counsel and interaction on decisions thereby,
increasing
potential
for
improving
performance. When two firms of unequal
managerial competence combine, the
performance of the combined firm will be
greater than the sum of equal parts that
provide large economic benefits

6. Reasons
For
Conglomerate
merger
 To Increase the market share
 To gain the Technological advantage
 To overcome the trade barriers
 To Increase their product line
 To diversify and distribute their products to
wide range of customers
 To improve their capabilities
To reduce their level of exposure to risks

8. Example of
Conglomerate
Mergers
Examples:
AOL & Time Warner
L&T and Voltas Ltd
Walt Disney Pictures and ABC Broadcasting
company
Etc..

9. Overview- AOL
 First established in 1983 and in 1985 named
Quantum Computer
 In 1991 the company renamed America Online
 In 1992 the company went public in NASDAQ
 Share price increased 50000% in two years
 Products: Online Portals, Web Browsers, Instant
Messengers, Online Gaming, Video
Functions Served: Marketing, Advertising,
Entertainment, Communications, e-Commerce.
Revenue Generation Mechanism: Advertising,
Subscriptions.

10. Time Warner
 Time Warner, is a result of merger in 1989
worth $14 Billion between
 Time,
 Established in 1922
 Main business is magazine publishing
 Followed by cable television in late 70s
by acquiring American televesion and
communication company.
 Warner Brothers
 Established in 1923
Main Business is film production
Followed by music production and cable
television operator business in the 60s

11. AOL
Time Warner
 In Jan 2001, it had been announced the
Merger between AOL and Time Warner
 The Merger aimed to - “Create the world’s
first fully integrated media and communication
company for the internet century ”
AOL would own 55% of Time Warner. Stock
combination value was $350bn.
AOL and Time Warner failed to implement
their visions and communicate them

12. SWOT Analysis

13. AOL
Time Warner
The merger was meant to create synergies
between the two companies, taking advantage of the
high growth rate of AOL, its large subscriber base, the
high-speed cable lines owned by Time Warner and
content provided by Time Warner.
However, the collapse of the dotcom bubble
in 2000 and the economic slowdown in 2001
essentially derailed this plan; in 2002 the company
reported a loss of $99 billion, which was, at the time,
the greatest annual loss ever recorded.

14. Sony
Make. Believe
Sony, which had previously been primarily in the
consumer electronics manufacturing business, moved
into the media industry through a series of
conglomerate mergers.
In 1989, Sony acquired the American film and
television production corporation Columbia Pictures
Entertainment Inc., made up of Columbia Pictures and
Tristar Pictures, from Coca-Cola for $3.4 billion.
In 1991, the newly acquired company was
renamed Sony Pictures Entertainment and became
Sony's key media division.