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ARUN PRASAD (12PGDM06) ARUN V KANNAN (12PGDM07) ASHOK RAUT (12PGDM40) HARSHAL PALKRITWAR (12PGDM32) RAJKUMAR SHARMA (12PGDM37) JESTIN THOMAS (12PGDM49)
Acquisition
Act of one enterprise of acquiring directly or indirectly of share, voting rights assets or control over the management of another enterprise
Acquisition When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition.
Eg: The acquisition of Cadbury by Kraft foods
MERGER
THE MERGER OF COMPANY 1 AND COMPANY 2
Company 1
Company 2
ACQUISITION
THE ACQISITION OF COMPANY 1 BY COMPANY 2
Company 2
Related
Vertical Horizontal
Vertical Merger When a company merges with either a supplier or a customer to create an extension of the supply chain Horizontal Merger
EXAMPLES OF :
Vertical Acquisition Tata Motors acquired Trilix Srl, an Italian design and engineering firm to help Tata Motors enhance its design capabilities Horizontal Merger The combination of car companies Chrysler and Daimler Benz to form Daimler Chrysler
Product extension
A snow ski manufacturer merging with a ski apparel company
Conglomerate ???
MERGER OF EQUALS
A merger of two firms of about the same size, that agree to go forward as a single new company rather than remain separately owned and operated
In practice, actual mergers of equals doesn't happen very often Usually one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals (even if it's technically an acquisition) Being bought out often carries negative connotations, therefore, by describing the deal as a merger, deal makers and top managers try to make the takeover more palatable
An acquisition may be friendly or hostile It depends on how it is communicated to and received by the target company's board of directors, employees and shareholders
Quite normal for M&A deal communications to take place in a so called 'confidentiality bubble' : whereby information flows are restricted due to confidentiality agreements
In the case of a friendly transaction, the companies cooperate in negotiations and in the case of a hostile deal, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer
REVERSE TAKEOVER
Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover.
REVERSE MERGER
A deal that enables a private company to get publicly listed in a short time period of time A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly listed shell company (one with no business and limited assets) Reverse mergers allow a private company to become public without raising capital which considerably simplifies the process While conventional IPOs can take months (even over a calendar year) to materialize, reverse mergers can take only a few weeks to complete This saves management a lot of time and energy, ensuring that there is sufficient time devoted to running the company
CLASSROOM EXERCISE