Download - Mergers and Acquisitions in Retail Managment
Mergers and Acquisitions
Danyal Mustafa &Sartaj Sangi
Presented by:
A brief Introduction
Danyal Mustafa Shaikh
Outlines:• What is Mergers?• What is Acquisitions?• Difference between Mergers and Acquisitions.• Why merger is important and problems with Merger.• Why Acquisition is important and problems with
Acquisition.• Experience in Mergers and Acquisitions.• Some Examples.• Process of mergers and acquisition.• Impact of Mergers and Acquisition.• Why Mergers and Acquisition Fail.
What is MERGER?
• A transaction where two firms agree to integrate their operations on a relatively co-equal basis because they have resources and capabilities that together may create a stronger competitive advantage.
• Example: Company A+ Company B= Company C.
• It also known as a takeover or a buyout• It is the buying of one company by another. • In acquisition two companies are combine together to form a
new company altogether.
• Example: Company A+ Company B= Company A.
What is ACQUISITION?
ACQUISITIONi. Buying one organization by
another.ii. It can be friendly takeover or
hostile takeover.iii. Acquisition is less expensive
than merger.iv. Buyers cannot raise their
enough capital.v. It is faster and easier
transaction.
DIFFERENCE BETWEEN MERGER AND ACQUISITION
MERGER
i. Merging of two organization in to one.
ii. It is the mutual decision.iii. Merger is expensive than
acquisition(higher legal cost).iv. Through merger shareholders can
increase their net worth.v. It is time consuming and the
company has to maintain so much legal issues.
The process of merger and acquisition has the following steps:i. Approval of Board of Directorsii. Information to the stock exchangeiii. Application in the High Courtiv. Shareholders and Creditors meetingsv. Sanction by the High Courtvi. Filing of the court ordervii. Transfer of assets or liabilitiesviii. Payment by cash and securities
Maximum Waiting period:210 days from the filing of notice(or the order of the commission - whichever earlier).
PROCESS OF MERGER & ACQUISITION
• Cultural Difference
• Flawed Intention
• No guiding principles
• No ground rules
• No detailed investigating
• Poor stake holder outreach
Why Mergers and Acquisitions Fail?
PROBLEM WITH MERGER
i. Clash of corporate cultures
ii. Increased business complexity
iii. Employees may be resistant to change
MERGER:WHY & WHY NOT
WHY IS IMPORTANT
i. Increase Market Share.ii. Economies of scaleiii. Profit for Research and
development.iv. Benefits on account of
tax shields like carried forward losses or unclaimed depreciation.
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PROBLEM WITH ACUIQISITION
i. Inadequate valuation of target.
ii. Inability to achieve synergy.
iii. Finance by taking huge debt.
WHY IS IMPORTANT
i. Increased market share.
ii. Increased speed to market
iii. Lower risk comparing to develop new products.
iv. Increased diversification
v. Avoid excessive competition
ACQUISITION:WHY & WHY NOT
Sartaj Sangi
For further..
M&A DEALS…
1. Tata Steel-Corus: $12.2 billion
• January 30, 2007
• Largest Indian take-over
• After the deal TATA’S
became the 5th largest
STEEL co.
• 100 % stake in CORUS
paying Rs 428/- per
shareImage: B Mutharaman, Tata Steel MD; Ratan Tata, Tata chairman; J Leng, Corus chair; and P Varin, Corus CEO.
2. Vodafone-Hutchison Essar: $11.1 billion
• TELECOM sector• 11th February 2007• 2nd largest
takeover deal• 67 % stake holding
in hutchImage: The then CEO of Vodafone Arun Sarin visits Hutchison Telecommunications head office in Mumbai.
3. ONGC-Imperial Energy:$2.8billion
• January 2009• Acquisition deal• Imperial energy is a
biggest chinese co.• ONGC paid 880 per
share to the shareholders of imperial energy
• ONGC wanted to tap the siberian marketImage: Imperial Oil
CEO Bruce March.
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.
• 9,510 croreImage: Rana Talwar (rear) Centurion Bank of Punjab chairman, Deepak Parekh, HDFC Bank chairman.
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.
• Learn from mistakes of others• Define your objectives clearly• Complete strategy to achieve goal.• SWOT analysis for the merged business - a
must• Pick holes in strategy to get the best• Will merged units be able to work at efficient /
ideal level?
EXPERIENCES IN M&A
Deals in India for first financial quarter 2010
Sector No. of Deals Value in USD million
Share in per cent
Telecom 3 22732.26 67.19
Pharmaceutical 4 3958.29 11.02
BFSI 6 2651.54 7.84
Metal and Mining 4 1483.15 4.38
Energy 4 1320 3.90
Other sectors 39 1919.00 5.67
Impact of Mergers and Acquisitions
Impact
Employees
Competition
Management
Public
Shareholders
• Continuous communication – employees, stakeholders,
customers, suppliers and government leaders.
• Transparency in managers operations
• Capacity to meet new culture higher management
professionals must be ready to greet a new or modified
culture.
• Talent management by the management
How to Prevent the Failure
MERGER & ACQUISITION(2010-11) :
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THANK YOU