Submitted To :- Dr. Jasleen Kaur

Submitted By :- Pankaj Modi Class :- MBA 1ST Roll No. :- 5521

AgendaIntroduction (Definition & Overview)TypesMethods of paymentCase Study on Merger and Acquisitions 1. Facebook purchase Whatsapp 2. Microsoft Acquire Nokia 3. Adidas and Reebok Merger Case 4. Disney-Pixar Merger case 5. Flipkart Myntra Merge Deal 6. Android Acquired by Google Summary and Conclusions

Brief IntroductionMergers and acquisitions are

both aspects of strategic management , corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture .

Merger (Definition)Combining of two business

entities under common ownership or

Two firms combine and share resources in order to realise a common goal.

Acquisition (Takeover)An acquisition or takeover is the

purchase of one business or company by another company or other business entity. Such purchase may be of 100%, or nearly 100%, of the assets or ownership equity of the acquired entity. "Acquisition" usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger and/or longer-established company and retain the name of the latter for the post-acquisition combined entity. This is known as a reverse takeover.

Types of Merger and AcquisitionHorizontal Merger:-This kind of merger

exists between two companies who compete in the same industry segment. The two companies combine their operations and gains strength in terms of improved performance, increased capital, and enhanced profits.

Vertical Merger:-Vertical merger is a kind in which two or more companies in the same industry but in different fields combine together in business.

Conglomerate Merger:-Conglomerate merger is a kind of venture in which two or more companies belonging to different industrial sectors combine their operations. All the merged companies are no way related to their kind of business and product line rather their operations overlap that of each other.

Strategic mergers:-A Strategic merger usually refers to long term strategic holding of target (Acquired) firm. This type of M&A process aims at creating synergies in the long run by increased market share, broad customer base, and corporate strength of business. A strategic acquirer may also be willing to pay a premium offer to target firm in the outlook of the synergy value created after M&A process.

Acqui-hire:-The term "acqui-hire" is used to refer to acquisitions where the acquiring company seeks to obtain the target company's talent, rather than their products (which are often discontinued as part of the acquisition so the team can focus on projects for their new employer). In recent years, these types of acquisitions have become common in the technology industry, where major web companies such as Facebook, Twitter, and Yahoo! have frequently used talent acquisitions to add expertise in particular areas to their workforces.

Financing (Methods of payment)Mergers are

generally differentiated from acquisitions partly by the way in which they are financed and partly by the relative size of the companies. Two main methods of financing an M&A deal exist:

Cash Payment by cash. Such transactions

are usually termed acquisitions rather than mergers because the shareholders of the target company are removed from the picture and the target comes under the (indirect) control of the bidder's shareholders.

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. They receive stock in the company that is purchasing the smaller subsidiary.

Case Study on Merger and Acquisitions:-1. Facebook has bought popular

messaging app WhatsApp for $19billion:-Facebook has bought popular messaging app WhatsApp for $19billion, what is the key reason behind this biggest acquisition, why did Facebook buy messaging app WhatsApp?

Facebook’s official added news about this acquisition, that’s the shared mission of Facebook and WhatsApp’s bring more connectivity and utility to the world wide users by delivering efficient and affordable internet services, which will escalates growth of both companies. For this Facebook paid $16billion for WhatsApp, which consists of $4billion in cash and $12billion in shares. There’s also a further $3billion will be granted to WhatsApp’s founders and employees. So far What’sApp gained 450 million users across the world with 70 percent of them active on any one day and the service has more than one million users being added every day, both having a common goal that’s to connect people.

Biggest Social Networking Company Purchase WhatsApp

Facebook Inc.’s purchase of mobile messaging service Whatsapp Inc. for $19 billion in stock and cash is by far the company’s largest acquisition and bigger than any which Microsoft, Google or Apple had ever done.“According to CEO, Mark Zucherberg, WhatsApp seems to be on the path to reach a billion users”

2.Microsoft’s acquisition of NokiaNokia hasn't always been a phone manufacturer. The company dabbled in paper products, footwear and tires before it became involved in the wireless industry. Starting today, it begins a new chapter as its Devices and Services division gets swallowed up by Microsoft in a $7 billion deal.Neither party was legally allowed to discuss details about the acquisition in public.This is just the beginning of a lengthy move-in process in which the two companies can finally start working together as one.

Microsoft will take over Nokia's Devices and Services business, which includes both Smart Devices and Mobile Devices. In other words: The Lumia, Asha and X series are now all under Microsoft's umbrella. Design teams, supply chain, accessories, employees, developer relations and most of Nokia's manufacturing plants and testing facilities are also on Microsoft's side, as are most of the company's services like Mix Radio, Store and more. Here, Nokia's mapping entity, is considered a separate business and isn't included as part of the deal, but Microsoft has agreed to a 10-year licensing agreement.

3. Adidas and Reebok Merger CaseThe second largest and the third largest sports

good companies finally decided to come together as one to try and become the leader in the market, i.e. Nike.

However the two companies put together still fall behind Nike. The three companies have long been involved in a battle which is won mostly by Nike as their expansive business plans have helped them take over world markets consistently as the number one manufacturer of sports goods. The merger benefited both the companies and brought two of the most well known names in sports goods together.

4. Disney-Pixar Merger caseMickey and Nemo. Pinocchio

and “Toy Story.” Cinderella and “Cars.” The merger of legendary Walt Disney and everything-we-create-kids-adore Pixar was a match made in cartoon heaven. Disney had released all of Pixar’s movies before, but with their contract about to run out after the release of “Cars,” the merger made perfect sense. With the merger, the two companies could collaborate freely and easily.

Did the merger work?The Disney-Pixar merger was one of the

most anticipated mergers in recent times. The merger of the two sets of the most loved animated characters in the world happened in 2006 when Disney put up a bid to buy out Pixar. The two companies have worked together often and this was not so much of an unanticipated move. The two companies have merged well to bring out more success to their already populated list of successful animated films.

Well, take a look at the successful movies that Disney and Pixar have put out since: “WALL-E,” “Up,” and “Bolt.”

5.Flipkart, Myntra merge deal in Rs 2,000 croreTwo of India's biggest e-commerce companies, Flipkart and Myntra, have merged to create an entity with annualized sales of $1.5 billion, bringing them closer and in some cases rivaling the much older offline retailers of those like Future Group, Aditya Birla, and Reliance.Their combined might also places them in a better position to take on the likes of Amazon, which has become increasingly aggressive in India's booming e-tailing market. The deal was influenced by two large common shareholders, Tiger Global and Accel Partners.

News About Merger

Brief DetailsFlipkart and Myntra did not disclose the details

of the deal, but analysts estimate that Myntra has been valued at about Rs 2,000 crore ($350 million). The impending deal was first reported by TOI in January 2014. This is the biggest M&A deal in India's e- commerce story to date, surpassing the $100 million that the Ibibo Group spent to buy RedBus, again a story which first broke on this newspaper in June last year.

"We want to be a leader in every category that we are present in. Fashion is definitely the category of the future and we want to be the biggest players in this space," said Sachin Bansal, who co- founded Flipkart with Binny Bansal.

6. Android Acquired by Google Google acquired

Android Inc. in August, 2005, making Android Inc. a wholly owned part of Google Inc.

Nick Sears was the only original founder that did not stay with Android Inc. after the acquisition.

At this point in time, many assumed that Google was planning to enter the mobile phone market with this move.

Once at Google, Rubin led a team to develop a mobile device platform powered by the Linux kernel.

Google marketed the platform to handset makers and carriers with the intent of providing a flexible, upgradable system.

This caused speculation about Google 's intention to enter the mobile communications market to build.

Officially Announced

On October 21st, 2008, Android 1.0 became available to the public.

"Today's announcement is more ambitious than any single ' Google Phone' that the press has been speculating about over the past few weeks. Our vision is that the powerful platform we're unveiling will power thousands of different phone models.“

-Eric Schmidt, former Google Chairman/CEO

COURTESY OF T-MOBILE USA INC.

Summary and Conclusions The three legal forms of acquisition are

◦ Merger and consolidation◦ Acquisition of stock◦ Acquisition of assets

M&A requires an understanding of complicated tax and accounting rules.

The synergy from a merger is the value of the combined firm less the value of the two firms as separate entities.

The possible synergies of an acquisition come from the following:◦ Revenue enhancement◦ Cost reduction◦ Lower taxes◦ Lower cost of capital

The reduction in risk may actually help existing shareholders.