Takeovers and Mergers

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CHAPTER
1
INTRODUCTION TO TAKEOVERSAND MERGERS |

We have been learning about the companies that come together to form another company and companies taking over other existing companies to extend and expand their business.
With the recession taking over toll of the international markets and many Indian businesses and the feeling of insecurity surging over our businessmen, it is not surprising when we get to hear about immense numbers of corporate restructurings taking place all over, especially in the resent past. Several companies have been taken over and several have been undergone internal or external restructuring, whereas certain companies in the same field of business have found it beneficial to merge together into a single firm.

Our daily newspapers are filled with cases of takeovers, mergers, tender offers & other form of corporate restructuring. Thus important issues for both business decisions and public policy formation have been raised. The positive side 1

of Takeovers and Mergers is that it is critical for the healthy expansion and growth of the firm. Successful entry into new product and geographical markets may require Takeovers and Mergers at some stage for the growth of the firm. The survival in the international market may depend on capabilities obtained in a timely and efficiently through Takeovers and Mergers. The Takeovers and Mergers increases value and efficiency and move resources to their highest and best uses, thereby increasing the value of the company and the value of its shareholders. History:-

Mergers and Acquisitions History helps us to understand the evolution of the concepts of Mergers and Acquisitions in the world. If we involve in the detailed analysis of the History of Merger of Acquisitions, we will find that Mergers and Acquisitions started to take place in the world from very early years. 

US Mergers and Acquisitions History
In USA, mergers and acquisitions started in twentieth century. After that Mergers and Acquisitions continued to occur in cycle. These cycles of Mergers and Acquisitions, took place in USA in 1929, in the last half of 1960s, in the first half of 1980s and again in the last half of 1990s. Here, it should be mentioned that, by cycle we are referring to the period, in which the maximum number of mergers took place. 2 Among the mergers and acquisitions cycles cited above, the most significant mergers of USA took place in the last half of 1990s. The reason of this was that, the stock market was quite strong in US in that period and this strong stock market supported the high incidence of mergers and acquisitions. The mergers and acquisitions of this period involved big brands and huge amount of dollars. Significant Mergers and Acquisitions of the History:

* In 1987, an Australian Company named Stephen Jaques Stone James, which was a partnership company with 79 partners, merged with the company named Mallesons. After the Merger, the new joint company was known as Mallesons Stephen Jaques. This Merger contributed significantly to the telecommunication sector development in Australia.  * In 1988, Tower Federal Savings Bank of Indiana acquired two financial institutions of Michigan. Then in 1991, the Standard Federal Bank strengthened their position in Ohio by acquiring a financial institution of Toledo. These two acquisitions had great impact on the banking Sector of USA.  * In 2001, a merger between Association of European Universities and the Confederation of European Union Rectors' Conference took place in Spain. This merger provided more power to the University community of Europe.

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CHAPTER
2
MERGERS

Before we understand, What is Merger? First, let's find out the simple meaning of an acquiring company and acquired companies. 1. Acquiring company is a single existing company that purchases the...
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