Professional Documents
Culture Documents
AND
ITS TYPES
MERGER
A merger is a transaction that
result in the transfer of
ownership and control of a
corporation.
When one company
purchases another company of
an approximately similar size.
The two companies come
together to become one.
Two companies usually agree
to merge when they feel that
they can do something
EXAMPLES:
Rajasthan bank and ICICI
bank
Arcelor Mittal
Renault and Nissan
TYPES OF
MERGER
CONGLOMERA
TE
VERTICAL
HORIZONTA
L
HORIZONTAL MERGER
A merger occurring between companies
producing similar products, goods and
offerings similar services.
This type of merger occurs frequently as
a result of larger companies attempting to
create more effective economies of scale.
ExampleThe merger of Centurion bank and
Bank of Punjab, Oriental Bank of
Commerce and GTB.
Tata Industrial Finance Ltd. with Tata
Finance Ltd.
5
Essar-Hutch
and
BPLs
mobile
VERTICAL MERGER
A
merger
between
two
companies producing different
goods and services for one
specific finished products.
The merger of the firm that
have actual or potential buyerseller relationship.
Car manufacture purchasing
a tire company.
Example- Nirma bid for
Gujrat
Heavy
Chemical
(backward integration) or
Hindalco Bidding for Pennar
CONGLOMERATE
MERGER
Market-extension merger
-Conglomerate mergers wherein
companies that sell the same
products in different markets/
geographic markets.
-E.g. Morrison supermarkets and
Safeway, Time Warner-TCI.
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M&A Process
1. Develop a strategic plan for the business
(Business Plan)
2. Building Acquisition Plan
3. Search companies for acquisition (Search)
4. Screen and prioritize potential companies
(Screen)
5. Initiate contact with the target (First contact)
6. Refine valuation, structure the deal, perform
due diligence, and develop financing plan
(Negotiation)
7. Develop plan for integrating the acquired
business (Integration plan)
8. Obtain all the necessary approvals, resolve
post-closing issues and implement closing
(Closing)
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9. Implement post-closing integration
Product
improvem
ent
Goodwil
l
Diversi
ficatio
n of
risk
Cost
maxi
mizat
ion
Futur
e
goals
Reaso
ns of
merge
r
Increas
e
market
share
Mutua
l
benefi
ts
Maximi
zing
profits
Expans
ion of
busine
ss
Econo
my of
scale
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