Merger and Aquisition

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Gulzat Isbekova
Finance-342
07/12/2012
Takeovers and mergers
Nowadays due to globalization there is a strong competition in a market. That is why some companies resort to mergers in order to increase capital, expand the activities and capture a larger share of the market. And also there is another scenario, when a company weakens, the stronger company will take it over (acquisition).  Takeovers are much more common than mergers. But during the process of M&A the set of problems may arise. The takeover of Chrysler Corporation by Daimler-Benz in a $38 billion stock deal is a powerful demonstration of the globalization of the world economy. The largest industrial company in Germany, and in Europe as a whole, is acquiring one of the biggest American corporations, creating a transnational giant with a work force of 410,000 and an annual output of over $130 billion. The logic of merger: create a trans-Atlantic car-making powerhouse that would dominate the markets. But by 2007, Daimler Benz sold Chrysler to the Cerberus Capital Management firm, which specializes in restructuring troubled companies, for a mere $7 billion. Another reason of failure is corporate culture clash. Chrysler was nowhere near the league of high-end Daimler Benz, and many felt that Daimler strutted in and tried to tell the Chrysler side how things are done. Such clashes always work to undermine the new alliance; combine that with dragging sales and a recession, and you have a recipe for corporate divorce. Also an example of successful mergers illustrates the point. Disney, a company well known for traditional animated films and theme parks, purchased Pixar, a company (created by Steve Jobs during the years he was out of the Apple CEO chair) that made computer-generated children's films. The link-up gave Disney the creative boost its cinematic output needed and gave Pixar access to a huge distribution network. Disney then parlayed Pixar characters into strategic marketing vehicles, using...
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