takeovers, mergers and buyouts. + listen to the explanations of the words: restructuring, takeover,...
TRANSCRIPT
TAKEOVERS, MERGERS TAKEOVERS, MERGERS AND BUYOUTSAND BUYOUTS
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• http://www.youtube.com/watch?v=vdjigFRQh7g• Listen to the explanations of the words: restructuring, takeover, merger, buyout
• Restructuring means:• a)___________________________• b) __________________________• c) __________________________• Takeover is _____________________________. It is also called a
_______________________• A merger is ________________________________
Learn Business English Conversation 93 (restructuring, merger, buyout, takeover) [www.keepvid.com].mp4
GROWTH OFGROWTH OF COMPANIESCOMPANIES
1. invest in R&D new products
2. diversify enter new markets
3. take over other companies
4. merge with another company
take over = buy = acquiretake over = buy = acquire ((part-ownershippart-ownership))
MERGERSMERGERS
company too big to buy
to merge = combine the two companies to form a single new one
TAKEOVERTAKEOVER
a) RAID buying as many of a company’s stocks on the stock market demand increases the stock price rises
b) TAKEOVER BID public offer to buy the stocks at a certain price during a limited period of time a) friendly bid / friendly takeover (the board agrees) b) hostile bid / hostile takeover (the board does not agree)
INVESTMENT BANKSINVESTMENT BANKS
- large mergers / acquisitions departments
- analyze the value of listed companies
- earn high fees
TAKEOVERSTAKEOVERS
1. horizontal integration acquiring a competitor in the same field of activity: a) a larger market share b) reduces competition
2. Vertical integration taking over a business involved in the supply chain to achieve cost savings: a) backward integration – acquiring suppliers of raw materials b) forward integration – taking over distributors or retail outlets
BUYOUTSBUYOUTS
takeovers large conglomerates (different firms)
inefficient
undervalued on the stock market
market capitalization lower than assets
financiers – corporate raiders
private equity funds
RAIDERS – RAIDERS – LEVERAGED BUYOUTSLEVERAGED BUYOUTSleveraged = financed by borrowed capital
issue bonds borrow money
buy the companies
asset-stripping (sell off the subsidiaries / assets)
pay back the bonds
earn profit
LEVERAGED BUYOUTSLEVERAGED BUYOUTS(LBOs)(LBOs)
• Takeovers using borrowed money against the security of the shares to be bought
• Leverage means having a large proportion of debt compared to equity capital
• Buying companies in order to strip assets
HISTORY OF LBOsHISTORY OF LBOs
v 1960s – conglomeratesv 1980s - recession - companies with good earnings but low stock prices - assets were worth more than their market price (less dividend) - central management not efficient
Targets for buyoutsTargets for buyouts
§ Companies with huge cash reserves
§ Companies with successful subsidiaries
§ Companies in fields not sensitive to a recession (food/tobacco)
http://www.youtube.com/user/businesssalereport?blend=23&ob=5#p/a/u/0/0lvnfteI9yE
Find out why growing through acquisition is a perfect way to grow. The aims are:to conquer __________________________to acquire __________________________ quicklyto secure ___________________________peopleto cut ____________________of failure and finally to focus on ________________ and
_______________________.
http://www.youtube.com/watch?v=yWHpsCH7ad0&feature=related
Why should companies beware of themerger? http://www.youtube.com/watch?v=QEfxnoXX21s&feature=related
Answer the following questions: • What is a merger?• Why do companies merge?• What is the example for a horizontal merger? What does their
combining bring?• What is the example for a vertical merger? Why is this
combination good?
FIND THE WORDS THAT MEAN THE FOLLOWING:FIND THE WORDS THAT MEAN THE FOLLOWING:
1. To expand into new fields. _________________2. Buying another company’s shares on the stock exchange, hoping to persuade enough
other shareholders to sell to take control of the company. _________________3. A public offer to a company’s shareholders to buy their shares at a particular price during
a particular period. _______________4. To merge or take over other firms producing the same type of goods or services.
_____________________5. A merger with or the acquisition of one’s suppliers. ___________________6. Joining with firms in other stages of the production or sale of a product. _______________7. A merger with or the acquisition of one’s marketing outlets. ___________8. A large organisation formed by joining together a group of companies with different
business activities. __________________9. Takeovers using borrowed money. ______________10. Selling off the assets of poorly performing or under-valued companies. ______________11. Bonds that are considered to be risky but which pay a high rate of interest.
FILL IN THE BLANKS:FILL IN THE BLANKS:
A company that wants to grow or __________can launch a _________, simply buy a large quantity of another company’s shares on the _____________. This will immediately increase the __________price, and may persuade other shareholders to sell for the raider to take _________ of the company.
It is also possible to make a __________ bid: a public _______ to a company’s shareholders to buy their shares. A _________takeover has the consent of the board of the company whose shares are being acquired. A __________ takeover bid is against the wishes of the board of directors. A company can attempt to find a _______________– another buyer whom they prefer.
A company that wants to grow or diversify can launch a raid, simply buy a large quantity of another company’s shares on the stock exchange. This will immediately increase the share price, and may persuade other shareholders to sell for the raider to take control of the company.
It is also possible to make a takeover bid: a public offer to a company’s shareholders to buy their shares. A friendly takeover has the consent of the board of the company whose shares are being acquired. A hostile takeover bid is against the wishes of the board of directors. A company can attempt to find a white knight – another buyer whom they prefer.