ACQUISITIONKunwar Atul Singh

Institute of Management Studies (FMS), BHUMBA III SemRoll No. 20

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ACQUISITION Acquisition is the purchase of one business or

company by another company or business entity.

Acquisition is the acquiring the controlling stake of a target company.

When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition.

An acquisition takes place when one company takes over all of the operational management decisions of another.

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Both Companies Exist

Here both companies exist but Myntra is controlled by Flipkart, All the managerial decisions & strategies of Myntra is fully or partially decided by Flipkart.

Comp.A

Comp. B

A purchases major shares of B

Flipkart Myntra

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Single Company Exist

Zo Rooms is acquired by OYO Rooms. Currently in Indian market only OYO Rooms is existing and business of Zo Rooms is running in name the of OYO Rooms.

Comp.A

Comp. B

A purchases major shares of B

OYO Rooms

Zo Rooms

OYO Rooms

Comp.A

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TYPES OF ACQUISITION Horizontal Acquisition

Example – TFS acquired by OLA Cabs Vertical Acquisition

Example –Freecharge acquired by Snapdeal Reverse Acquisition

Private company acquires Public company Small company acquires big company

Example – TATA steel acquired Corus Back Flip Acquisition

A "backflip takeover" is any sort of takeover in which the acquiring company turns itself into a subsidiary of the purchased company. This type of takeover can occur when a larger but less well-known company purchases a struggling company with a very well-known brand. 

Example – NationsBank’s takeover of the Bank of America, but adopting Bank of America's name

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PROCESS OF ACQUISITIONPurchaseOf Shares

• Buyer directly pay to shareholders of acquired comp.

• Liabilities transferred as comp. ownership transfers

Purchase of Assets

• Shareholders of acquired comp. paid back in form of dividend or through liquidation

• Liabilities remains with acquired comp.

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MODE OF PAYMENT Cash

Example – Naspers (PayU) and Citrus Pay deal Stock

Payment in the form of the acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter.

Example – Sun Pharma buy Ranbaxy from Daiichi Sankyo in all share transaction

Acquiring Comp.

TargetComp.

Shareholders of acquired comp. get shares of acquiring comp. Mliag..

TAKEOVER Takeover is very similar to an acquisition where one

company will purchase another for an agreed sum in cash or number of shares.

Takeover will most probably be a hostile and unfriendly action in which one company acquires enough shares of another (more than 50%) so that the acquirer is able to take over the operations of the target company.

Board of Directors and Management of target company oppose/ resist the takeover but buyer (acquirer) purchase the shares of target company from stock exchange/ small shareholders at premium price or through bidding.

A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.

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A takeover is considered "hostile" if the target company's board rejects the offer, and if the bidder continues to pursue it

Example- Oracle takeover People Software

Please help me

No one can save you

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REASONS BEHIND ACQUISITION &

TAKEOVER Improve the company performance Accelerate growth Acquire skills and technology Economy of scale Economy of scope Increase market share Increase revenue Synergy Entering in foreign market

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Thank you...

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