MERGERS AND TYPES OF MERGERS

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1. MERGERS AND TYPES OF MERGERS By Jagadish K S R14MB019 SCHOOL OF COMMERCE AND MANAGEMENT

2. “Merger is an absorption of one or more companies by a single existing company.” WHAT IS MERGER

3. MEANING OF MERGER 1. Acquiring company is a single existing company that purchases the majority of equity shares of one or more companies. 2. Acquired companies are those companies that surrender the majority of their equity shares to an acquiring company.

4. Recent examples of well-known mergers are British Salt operating in UK merged with TATA Chemicals based in India. Zain Telecommunications operating in Africa merged with Bharti Airtel Limited based in India. Bank of Rajasthan operating in India merged with ICICI Bank (India).

5. TYPES OF MERGERS 1.Horizontal Merger 2.Vertical Merger 3.Conglomerate Merger 4.Marketing Extension Merger 5.Product Extension Merger

6. TYPES OF MERGERS M ERGER Market-extension merger Two companies that sell the same products in different markets Product-extension merger Two companies selling different but related products in the same market Conglomerate merger Two companies that have no common business areas

7. 1.Horizontal merger . A horizontal merger occurs when two or more firms in the same market, producing substitute products, join together to form a single firm. An example of a horizontal merger is that of two soft drink companies. The firms are competitors producing similar products.

8. 2.Vertical Merger 'Vertical Merger' A merger between two companies producing different goods or services for one specific finished product. A vertical merger occurs when two or more firms, operating at different levels within an industry's supply chain, merge operations.

9. 3.Conglomerate Mergers Conglomerate merger in which merging firms are not competitors, but use common or related production processes and/or marketing and distribution channels.

10. 4.Market Extension Merger Market extension merger takes place between two companies that deal in the same products but in separate markets.

11. 5.Product Extension Merger Product extension merger takes place between two business organizations that deal in products that are related to each other and operate in the same market.

12. TOP 7 EXAMPLES OF MERGERS

13. 1. Tata Steel-Corus: $12.2 billion January 30, 2007 Largest Indian take-over After the deal TATA’S became the 5 th largest STEEL co. 100 % stake in CORUS paying Rs 428/- per share Image: B Mutharaman , Tata Steel MD; Ratan Tata, Tata chairman; J Leng , Corus chair; and P Varin , Corus CEO.

14. 2. Vodafone-Hutchison Essar : $11.1 billion TELECOM sector 11 th February 2007 2 nd largest takeover deal 67 % stake holding in hutch Image: The then CEO of Vodafone Arun Sarin visits Hutchison Telecommunications head office in Mumbai.

15. 3. Hindalco-Novelis: $6 billion June 2008 Aluminium and copper sector Hindalco Acquired Novelis Hindalco entered the Fortune-500 listing of world's largest companies by sales revenues Image: Kumar Mangalam Birla (center), chairman of Aditya Birla Group.

16. 4. HDFC Bank-Centurion Bank of Punjab: $2.4 billion February, 2008 Banking sector Acquisition deal CBoP shareholders got one share of HDFC Bank for every 29 shares held by them. 9,510 crore Image: Rana Talwar (rear) Centurion Bank of Punjab chairman, Deepak Parekh, HDFC Bank chairman

17. 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.

18. 6.S uzlon-RePower: $1.7 billion May 2007 Acquisition deal Energy sector Suzlon is now the largest wind turbine maker in Asia 5 th largest in the world. Image: Tulsi Tanti, chairman & M.D of Suzlon Energy Ltd.

19. 7.MERGER BETWEEN AIR INDIA AND INDIAN AIRLINES The government of India on 1 march 2007 approved the merger of Air India and Indian airlines. Consequent to the above a new company called National Aviation Company of India limited was incorporated under the companies act 1956 on 30 march 2007 with its registered office at New Delhi.