TIẾNG ANH KINH TẾ U7 merger and acquisitions

From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded... A takeover/ An AcquisitionA merger happ

Unit 7: M&As

1 + 1 = 3 ?

Mergers and Acquisitions

Reasons for M&As

Discussion

1 Why do people get married?

2 Why do companies merge with/ acquire each other?

A takeover/ An Acquisition

and clearly establishes itself as the

new owner, the purchase is called an

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

Source: http://en.wikipedia.org/wiki/Mergers_and_acquisitions#Distinction_between_mergers_and_acquisitions

A takeover/ An Acquisition

A merger happens when two firms agree

to go forward as a single new company rather than remain separately owned and operated This kind of action is more

precisely referred to as a "merger of

equals" The firms are often of about the same size Both companies' stocks are surrendered and new company stock is issued in its place

Source: http://en.wikipedia.org/wiki/Mergers_and_acquisitions#Distinction_between_mergers_and_acquisitions

In practice

Actual mergers of equals don't

happen very often

Usually, one company will buy

another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action

is a merger of equals, even if it is technically an acquisition.

Ways to acquire a company

A Raid

or

A Takeover Bid

Ways to acquire a company

A Raid

Buying as many of a

company’s stocks as possible

on the stock market

Ways to acquire a company

A takeover Bid

A public offer to a company’s

stockholders to buy their

stocks at a certain price during

a limited period of time

Two types of takeover bid

board of directors agrees to a takeover.

does not want to be taken

over.

A company either acquires or merges

with another company in an related stage of production and

immediately-distribution

Diversification

A company acquires another company in

an entirely different sphere.

Integration

Horizontal integration

by acquiring competitors in the same field of activity.

For example: Electrical retailer Dixon bids for high street

competitor Currys

Vertical integration

-Acquiring companies involved in other parts of the supply chain, usually to make cost savings E.g BP now controls the entire supply chain, from the oil refinery to the petrol pump.

-Backward integration: Acquiring suppliers of

raw materials or components.

E.g A hotel chain to buy a furniture

manufacturer to supply its new hotels

-Forward integration: Buying distributor or retail outlets.

E.g Shell purchases 30 gas stations

businesses in completely different fields.

E.g Coca-Cola acquires

Columbia Pictures for $700 million

Example

Types of Mergers

Reasons for Horizontal Mergers

- To reduce competition

- To increase market share

- To acquire additional plants and

equipment

scales

Types of Mergers

Reasons for Vertical Mergers

- To guarantee the supply and cost of raw material and

components

- To be closer to the customers, by cutting out the wholesaler for example and dealing directly with the retail trade.

Reasons for Diversification Mergers

- To move into a sector which promises greater growth or

profits

Types of Mergers

Further classification/ M&A

waves

1889 - 1904 First Wave Horizontal mergers

1916 - 1929 Second Wave Vertical mergers

1965 - 1989 Third Wave Diversified conglomerate mergers

1992 - 1998 Fourth Wave

Congeneric mergers; Hostile takeovers;

Corporate Raiding

2000 - Fifth Wave Cross-border mergers

Problems with Mergers

Damage of a company’s image, goodwill and share value

Unmanageable and inefficient structures (such as large conglomerates)

Drainage of Human Capital

…

…

…

Problems with Mergers

 LBOs = Leveraged buyouts

 MBO = Management buyouts

Writing practice

Language Practice Cause and Effect Expressions

Page 50

Speaking practice

Work in groups of 3 or 4 and make a 15-minute presentation on