Mergers and Acquisitions in Retail Managment

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1. Mergers and Acquisitions 2. Presented by: Danyal Mustafa & Sartaj Sangi 3. A brief Introduction Danyal Mustafa Shaikh 4. Outlines: ãWhat is Mergers? ãWhat is…
  • 1. Mergers and Acquisitions
  • 2. Presented by: Danyal Mustafa & Sartaj Sangi
  • 3. A brief Introduction Danyal Mustafa Shaikh
  • 4. 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.
  • 5. 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.
  • 6. What is ACQUISITION? • 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.
  • 7. DIFFERENCE BETWEEN MERGER AND ACQUISITION 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. i. 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.
  • 8. PROCESS OF MERGER & ACQUISITION The process of merger and acquisition has the following steps: i. ii. iii. iv. v. vi. vii. viii. Approval of Board of Directors Information to the stock exchange Application in the High Court Shareholders and Creditors meetings Sanction by the High Court Filing of the court order Transfer of assets or liabilities Payment by cash and securities Maximum Waiting period:210 days from the filing of notice(or the order of the commission - whichever earlier).
  • 9. Why Mergers and Acquisitions Fail? • Cultural Difference • Flawed Intention • No guiding principles • No ground rules • No detailed investigating • Poor stake holder outreach
  • 10. MERGER:WHY & WHY NOT WHY IS IMPORTANT i. Increase Market Share. ii. Economies of scale iii. Profit for Research and development. iv. Benefits on account of tax shields like carried forward losses or unclaimed depreciation. PROBLEM WITH MERGER i. Clash of corporate cultures ii. Increased business complexity iii. Employees may be resistant to change 10
  • 11. ACQUISITION:WHY & WHY NOT 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 PROBLEM WITH ACUIQISITION i. Inadequate valuation of target. ii. Inability to achieve synergy. iii. Finance by taking huge debt.
  • 12. For further.. Sartaj Sangi
  • 13. M&A DEALS…
  • 14. 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 Image: B Mutharaman, Tata Steel MD; Ratan Tata, Tata chairman; J Leng, Corus chair; and P Varin, Corus CEO. paying Rs 428/- per share
  • 15. 2. Vodafone-Hutchison Essar: $11.1 billion Image: The then CEO of Vodafone Arun Sarin visits Hutchison Telecommunications head office in Mumbai. • TELECOM sector • 11th February 2007 • 2nd largest takeover deal • 67 % stake holding in hutch
  • 16. 3. ONGC-Imperial Energy:$2.8billion Image: Imperial Oil CEO Bruce March. • 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 market
  • 17. 4. HDFC Bank-Centurion Bank of Punjab: $2.4 billion • • • • Image: Rana Talwar (rear) Centurion Bank of Punjab chairman, Deepak Parekh, HDFC Bank chairman. February, 2008 Banking sector Acquisition deal CBoP shareholders got one share of HDFC Bank for every 29 shares held by them. • 9,510 crore
  • 18. 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.
  • 19. EXPERIENCES IN M&A • • • • 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?
  • 20. Sector Value in USD Share in per No. of Deals million cent Telecom 3 22732.26 67.19 Pharmaceutical 4 3958.29 11.02 2651.54 7.84 Deals in India for first BFSI 6 financial quarter 2010 Metal and Mining 4 1483.15 4.38 Energy 4 1320 3.90 Other sectors 39 1919.00 5.67
  • 21. Impact of Mergers and Acquisitions Employees Shareholders Competition Impact Public Management
  • 22. How to Prevent the Failure • 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
  • 23. MERGER & ACQUISITION(2010-11) : 24
  • 24. THANK YOU 
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