Difference between

Mergers & Acquisitions:

Presenters:
Ifrah
Difference between Mergers &
Acquisitions:
Although they are often uttered in the same breath and used
as though they were synonymous, the terms merger and
acquisition mean slightly different things


Mergers:
A merger is a combination of two companies to
form a new company.

In the pure sense of the term, a merger happens
when two firms, agree to go forward as a single
new company rather than remain separately owned
and operated.

Both companies' stocks are surrendered and new
company stock is issued in its place.
AMALGAMATION
MERGERS
TYPES OF Mergers :
Horizontal
Vertical
Conglomerate
Horizontal Merger:
Companies producing similar kinds
commodities or similar type of businesses
merge with each other


Mergers Examples:
Exxon and Mobil

Big oil got even bigger in
1999, when Exxon and
Mobil signed an $81 billion
agreement to merge and
form ExxonMobil.

Mergers Examples:
Mergers Examples:
Daimler Benz and
Chrysler

In 1998, Mercedes-Benz
manufacturer Daimler Benz
merged with US auto maker
Chrysler to create Daimler
Chrysler for $37 billion.

Merger between two companies producing different
goods or services

2 companies that may not compete with each other,
but exist in the same supply chain. An automobile
company joining with a parts supplier would be an
example of a vertical merger
Mergers Examples:
Disney and Pixar


The merger of legendary
Walt Disney and
everything-we-create-
kids-adore Pixar was a
match made in cartoon
heaven.

CONGLOMORATE Mergers :
A merger between firms that are involved in totally
unrelated business activities

There are two types of conglomerate mergers: pure
and mixed.

Pure conglomerate mergers involve firms with
nothing in common, while mixed conglomerate
mergers involve firms that are looking for product
extensions or market extensions.
Mergers Examples:
Walt Disney and ABC company
Acquisitions
An acquisition is the purchase of one
company by another in which no new
company is formed

From a legal point of view, target company ceases to exist,
the buyer "swallows" the business and the buyer's stock
continues to be traded.

It is considered negative in nature.
Acquisitions
Types of Acquisitions:
Friendly acquisition
Reverse acquisition
Hostile acquisition



Friendly Acquisitions :

Both the companies approve of the
acquisition under friendly terms. There
is no forceful acquisition and the entire
process is cordial.

Example:
Johnsons n Johnsons acquired
Dutch Crucell
Example:
Google and YouTube


Here, as the name suggests, the entire process is done by
force.

The smaller company is either driven to such a
condition that it has no option but to say yes to
the acquisition to save its skin or the bigger
company just buys off all its share, their by
establishing majority and hence initiating the
acquisition.
Example:
Google acquired Motorola

A type of acquisition where a
private company acquires a public
company
Example:
American West Airlines acquired
US Airways

Differences between
joint ventures and
ALLIANCES
joint ventures and ALLIANCES
They are common in technology,
manufacturing and commercial real estate
development, and whenever a company
wants to expand its sales or operations into
a foreign country.

joint ventures
When two companies invest funds into creating a
third, jointly owned company, that new subsidiary
is called a joint venture

Because the joint venture can access assets,
knowledge and funds from both of its partners it
can combine the best features of those companies
without altering the parent companies



joint ventures
The new company is an
ongoing entity that will be in
business for itself, but
profits are owned by the
parents.

In a joint venture, the
companies start and invest
in a new company that's
jointly owned by both of the
parent companies.


EXAMPLES:
Caterpillar tractors & Mitsubishi
industries

EXAMPLES:
SONY ERICSSON
Jaguar Land rover - cherry

Strategic alliances
Is a voluntary, formal arrangement between two or
more parties to pool resources to achieve a common
set of objectives that meet critical needs while
remaining independent entities

Strategic alliances involve exchange, sharing, or co
development of products, services, procedures, and
processes
EXAMPLES:
Starbucks partnered with Barnes and Nobles
bookstores in 1993 to provide in-house coffee
shops, benefiting both retailers.

Starbucks partnered with Pepsico to bottle,
distribute and sell the popular coffee-based
drink, Frappacino

A Starbucks-United Airlines alliance has resulted
in their coffee being offered on flights with the
Starbucks logo on the cups.