Merger, acquisition alliance

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  1. 1. Mergers, Acquisition & Strategic Alliance Prepared By: Bhavin Agrawal(02) Nikita Balar(04) Malvi Bhatt(08) Ishani Dave (14) Nitin Madhvi (28) Kushal Mehta (31)
  2. 2. What is Merger Merger means the combination of two or more companies in creation of a new entity.
  3. 3. Tech Mahindra and Satyam merger
  4. 4. Tech Mahindra and Satyam merger Satyam Computer Services Limited was an Indian IT services company based in Hyderabad, India. It offered a range of services, including software development, system maintenance, packaged software integration and engineering design services. It subsequently merged within Tech Mahindra on 24 June 2013.
  5. 5. Tech Mahindra and Satyam merger Tech Mahindra Diversification Broadens its customer base Stronger merged entity Satyam Financial Support Relief to shareholder Management
  6. 6. Tech Mahindra and Satyam merger Terms of transaction: Tech Mahindra had to pay Rs. 1757 crore for 31% at Rs.58 per share whereas for 51% stake the company had to pay Rs.2890 crore. Rs.700 crore - internal Rs.2190 crore - debt
  7. 7. Acquisition A corporate action in which a company buys most of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.
  8. 8. Tata and Jaguar Jaguar Land Rover (JLR): Jaguar Cars bought by Ford in 1989 Land Rover bought by Ford from BMW for $1.4bn in 1989 A difficult relationship between the UK firm and its US owners Jaguar fell into heavy losses whilst owned by Ford (reaching up to $600million per year) However, Ford invested heavily in new model development http://googleweblight.com/?lite_url=http://beta.tutor2u.net/business/blog/6-essential-ma-cases-tata- group-buys-jaguar-land-rover&ei=ibl78oko&lc=en- IN&s=1&m=561&ts=1443516017&sig=APONPFkMtX26gKW4T8gMbLhXLVV-DFLAdA
  9. 9. Tata Group: One of Indias largest private conglomerates - used to investing in the UK Bought Tetley Tea in 2000 Bought Corus Steel - a big supplier to JLR - in 2007 Tata Motors - was already Indias third largest car- maker, but struggling with a poor image and hampered by rising raw material costs
  10. 10. The Deal Ford sells JLR to Tata for in March 2008 just over 1bn - just a few months before a collapse in global demand in the international car market Tata financed the takeover with $3bn of new long-term loans The price paid by Tata was approximately half of what Ford paid to buy Jaguar and Land Rover.; + Ford had continued to incur heavy losses in Jaguar as it failed to turn the business around. The deal took over a year to agree - which may have helped with the post-merger integration. Tata recognised that it would continue to need support from Ford who are a main supplier of car components to the two brands. No significant change proposed to the businesses by Tata. They claimed that staff, trade unions and the UK government had been kept informed about the proposed takeover and supported the move. The deal has been endorsed by trade unions, which secured a commitment from Tata to continue with JLRs production plans until the end of 2011. This includes development of new models.
  11. 11. Benefits Acquiring JLR would provide significant potential for revenue synergies, including giving Tata greater international distribution, broader product range and better customer service skills Tata gains access to world-class engineering capability Strengthens relationship between Tatas steel and motoring businesses
  12. 12. Strategic Alliance A strategic alliance is an agreement between two or more parties to share resources, capabilities and internal assets while remaining independent organizations. It occurs when two or more organizations join together to pursue mutual benefits.
  13. 13. Coca-Cola and McDonalds McDonalds and Coca-Cola alliance is a big success, making the two companies what they are today. McDonalds is now the worlds leading global food service retailer with more than 35000 local restaurants serving nearly 70 million people more than 100 countries http://strategic-partnering.net/case-3-coca-cola-mcdonalds/
  14. 14. While Coca-Cola is the worlds largest beverage company owning and licensing around 1.9 billion beverage servings worldwide every day In more than 200 countries Customers are accustomed to enjoying a meal with a coke inside all along, which result in that the soft drink becoming a key revenue stream, covering about five percent of McDonalds revenue. Moreover, the top management teams from both sides have been very careful about partnering relationship since the handshake between the two top executives in 1955.
  15. 15. McDonalds partnered with Coca-Cola in 1955 and it is in continuation. Despite the lack of paper contract, there is considerable contact between the two companies at board level. McDonalds shared the very exact destination, expansion first across the US, then around the world with Coca- Cola. As the result, they managed to create and deliver excellent transformational value for both sides, mainly focusing on Integrated supply chain Enabling rapid entry Large-scale expansion into new geographies.
  16. 16. Benefits 1) McDonalds and Coca-Cola shared a common mission and vision to expand globally 2) The know-how and expertise from Coca-Cola benefits the product development of McDonalds. 3) The unique supply chain co-operated by both Coca-Cola and McDonalds creates added values. 4) Advertising McDonalds and Coca-Cola have stood by each other and worked countless campaigns globally over years.