Ajmer Institute of Technology

8/9/2019 Ajmer Institute of Technology

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AJMER INSTITUTE OF TECHNOLOGY

A

ASSIGENMENT

ON

MARGER &EQUISITION

SUBMITED TO- SUBMITTED BY- Akansha Sharma Shubhendra Kumawat

Faculty member M.B.A 3rd

Sem.(A.I.T)

M.B.A (A.I.T)


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CONTENTs

Merger

1. Meaning of Merger2. Concept of Merger

3. Reasons for Merger

4. Objectives of Merger

5. Categories of Merger

Acquisition

1. Meaning

2. Objectives of acquisition

3. Kinds of acquisition

4. Acquisition bids


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Merger:-

Sometimes a company decide to developing own co. Into new business areas.

Once a co. Has decided to enter into a new business area, it has to explore various

alternatives to achieve its goals.

Basically there can be three options available to it:

1. The formulation of a new company.

2. The acquisition of an existing company.

3. Merger with an existing co.

Concept ofMerger

Merger is like as an arrangement of one thing or right into another. In merger one of

the two co. or more co. merges its identify into another new co. and merge their

identities into a new co. by transferring their business and undertakings including all

assets and liabilities to the new company. the shareholders of the co. and have

been merged will be issued shares in exchange for the capital of merged co. the

scheme will require approval of the Board of Directors of the respective co.

approval of the shareholders of both the co. exercised by means of a resolution with

the prescribed majority and in addition the sanction of the respective high court.

Reasons for Merger:Merger is the part of the business and corporate strategies aimed at creating

perfect competitive advantage for the firm. It is leading to the maximization of a co.

growth. various reasons advantage of merger are :

y Reduction in the average cost of production and unit cost.

y Reduction in production, administrative, selling, legal and professional

expenses.

y Benefits of integration(reducing competition, saving cost, capture larger

market share).y Optimum use of capacities and factors of production.

y Carry fowd. And set loss and profit.

y Medicine of a sick and poor co.

Objective of Merger :


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1. limiting competition

2. market leadership

3. improving economies of scale.

4. Financial benefits

5. Make new product or brand name

6. Taxation or investment benefits.

Categories of Merger :

A Horizontal merger

B Vertical merger

C Conglomerate merger

D Cash mergerE Defacto merger

F Downstream merger

G Upstream merger

H Short-form merger

Acquisitions(takeover)

takeover implies acquisition of a co., which is already registered through the purchase

or exchange of shares. takeover of mgmt and control of a business enterprise could

take take place in diff. modes. The mgmt. of a co. may be acquired by acquiring the

majority stake in the share capital of a co. it is could take place through diff. methods.

A person may acquire the voting shares of a listed co. a takeover may be effected by

agreement with the holders of those shares.

Takeovers are taking place all over world. those co. whose shares are underquoted on

the stock market are under a constant threat or takeover.


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Objectives oftakeover(acquisitions)

I. To effect savings in overheads and other working expenses.

II. To achieve product development through acquiring firms with compatible

products .

III. To improve productivity and profitability by joint effort.

IV. To create shareholders value and wealth by optimum utilization of the resources

of both co.

V. To reduce competition.

VI. To increase market shsre.

Kinds ofacquisitions :

1) Friendly takeover

2) Hostile takeoverbail out takeover

Takeoverbids

it is an offer to the shareholders of a company, whose shares are not closely held, to

buy their shares in the co. at the offer prize within the period of time.

A takeover bid is a technique, which is adopt by a co. for taking over control of the

mgmt. and another co. by acquiring its controlling shares.


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