M.Com- 2 SPU

1. MERGERS AND TYPES OF MERGERS
Dr. Ashok D. Gaur
Assistance Professor
B.J.Vanijya Mahavidyalaya
Vallabh Vidyanagar

2. Programme: M.COM. (CBCS)
Semester: II
Syllabus with effective from: JUNE-2017
COURSE CODE: PB02CCOM21
COURSE TITLE : STRATEGIC BUSINESS MANAGEMENT-II
Unit- 2: MERGERS AND ACQUISITIONS
•Nature of mergers and acquisitions
•Evolution of mergers in India
•Types of mergers
•Reasons for corporate mergers
•Benefits of mergers
•Impact of mergers on consumers and workers
•Reasons for failure of mergers and acquisitions
•Strategies for successful acquisitions

3. MERGERS AND ACQUISITIONS

4. WHAT IS A M&A?
An aspect of corporate strategy, corporate finance and
strategic management.
•
• Deals with buying, selling,
that can
combining of different companies
–
–
–
Aid
Finance
Help
a growing company in a given industry grow rapidly
without having to create a new business entity.

5. WHAT IS MERGER
“Merger is an absorption of one or more
by a single existing company.”
companies

6. MEANING OF MERGER
1. Acquiring company is a single existing
company that purchases the majority of
equity shares of one or more companies.
2. Acquired companies are those companies
that surrender the majority of their equity
shares to an acquiring company.

8. Recent examples of well-known mergers are
1. British Salt operating in UK merged with TATA
Chemicals based in India.
Zain Telecommunications operating in Africa
merged with Bharti Airtel Limited based in
India.
Bank of Rajasthan operating in India merged
with ICICI Bank (India).
2.
3.

9. TYPES OF
1.Horizontal Merger
2.Vertical Merger
3.Conglomerate Merger
MERGERS
4.Marketing Extension Merger
5.Product Extension Merger

10. TYPES OF MERGERS
MERGER
Conglomerate
merger
Market-extension
merger
Product-extension
merger
Two companies selling
different but related
products in the same
market
Two companies that
have no common
business areas
Two companies that
sell the same products
in different markets

11. 1.Horizontal merger
A horizontal merger occurs when two or more
.firms in the same market, producing substitute
products, join together to form a single firm. An
example of a horizontal merger is that of two
soft drink companies. The firms are competitors
producing similar products.

13. 2.Vertical Merger
'Vertical Merger' A merger between two
companies producing different goods or
services for one specific finished product. A
vertical merger occurs when two or more
firms, operating at different levels within an
industry's supply chain, merge operations.

15. 3.Conglomerate Mergers
Conglomerate merger in which merging firms
are not competitors, but use common or
related production processes and/or
marketing and distribution channels.

17. 4.Market Extension Merger
Market extension merger takes place between
two companies that deal in the same products
but in separate markets.

18. 5.Product Extension Merger
Product extension merger takes place between
two business organizations that deal in
products that are related to each other and
operate in the same market.

19. TOP 7 EXAMPLES OF MERGERS

20. 1. Tata Steel-Corus: $12.2 billion
•January 30, 2007
•Largest Indian take-over
•After the deal TATA’S became
5th
the largest STEEL co.
•100 % stake in CORUS
Rs 428/- per share
paying
Image: B Mutharaman, Tata Steel MD; Ratan Tata,
Tata chairman; J Leng, Corus chair;
and P Varin, Corus CEO.

21. 2. Vodafone-Hutchison Essar: $11.1
billion
•TELECOM sector
•11th
•2nd
deal
February 2007
largest takeover
•67 %
hutch
stake holding in
Image: The then CEO of Vodafone Arun
Sarin visits Hutchison Telecommunications
head office in Mumbai.

22. 3. Hindalco-Novelis: $6 billion
•June 2008
•Aluminium and copper
sector
•Hindalco Acquired
Novelis
•Hindalco entered the
Fortune-500 listing of
world's largest companies
by sales revenues
Image: Kumar Mangalam Birla
(center), chairman of Aditya Birla
Group.

23. 4. HDFC Bank-Centurion Bank of
Punjab: $2.4 billion
•February, 2008
•Banking sector
•Acquisition deal
•CBoP shareholders got
one share of HDFC Bank
for every 29 shares held
by them.
Bank•9,510 crore
Image: Rana Talwar (rear) Centurion
of Punjab chairman, Deepak Parekh,
HDFC Bank chairman

24. 5. Tata Motors-Jaguar Land Rover: $2.3
billion
•March 2008 (just a year
after acquiring Corus)
•Automobile sector
•Acquisition deal
•Gave tuff competition to
M&M after signing the
deal with ford
Image: A Union flag flies behind a Jaguar
car emblem outside a dealership in
Manchester, England.

25. 6.Suzlon-RePower: $1.7 billion
•May 2007
•Acquisition deal
•Energy sector
•Suzlon is now the largest
wind turbine maker in
Asia
•5th largest in the world.
Image: Tulsi Tanti, chairman &
M.D of Suzlon Energy Ltd.

26. 7.MERGER BETWEEN AIR INDIA AND
INDIAN AIRLINES
•The government of India on
1 march 2007 approved the
merger of Air India and Indian
airlines.
• Consequent to the above a
new company called National
Aviation Company of India
limited was incorporated
under the companies act
1956 on 30 march 2007 with
its registered office at New
Delhi.

30. ACQUISITION
Purchase of one company by another
company.
•
Newly Formed Company
Company 1 Company 2

31. TYPES OF ACQUISITIONS
Depending upon
– Acquiree or merging is or isn’t listed in public
markets.
– How the communication is done and received
the target.
•
by

32. THE FIRST CLASSIFICATION
PUBLIC (IF ACQUIREE
LISTED IN PUBLIC
MARKETS)
PRIVATE (IF ACQUIREE
NOT LISTED IN PUBLIC
MARKETS
ACQUISITION

33. THE SECOND CLASSIFICATION
HOSTILE
FRIENDLY
ACQUISITION