Valuation of Mergers and Acquisitions
Valuation of Mergers and Acquisitions
SUBMITTED BY:
DEBAYAN MUKHERJI
PGDM '"2008-2010
ROLL NO: 08PGDM083
INTERNATIONAL MANAGEMENT INSTITUTE, NEW DELHI
CONTACT NUMBER: 09717443910
EMAIL : debayan.p08@imi.edu
Valuation of Mergers and Acquisitions
Mergers and acquisitions (more generally, takeovers) are an important means through which companies achieve economies of scale, face the competition, or respond to economic shocks. For example ,how the $54 billion US chemical major Dow Chemicals is in process of acquiring its rival Rohm and Haas(R&H) for a total consideration of $18.8 billion, can be seen.Not surprisingly, these actions often make the news. Deals can be worth hundreds of millions, or even billions, of dollars. They can dictate the fortunes of the companies involved for years to come. For a CEO, leading an M&A can represent the highlight of a whole career. And it is no wonder we hear about so many of these transactions; they happen all the time.
■ A merger is a combination of two or more corporations in which only one corporation survives and the merged corporations go out of business.
■ Statutory merger is a merger where the acquiring company assumes the assets and the liabilities of the merged companies
■ A subsidiary merger is a merger of two companies where the target company becomes a subsidiary or part of a subsidiary of the parent company
Varieties of Mergers
From the perspective of business structures, there is a whole host of different mergers. Here are a few types, distinguished by the relationship between the two companies that are merging: ■ Horizontal merger - Two companies that are in direct competition and share the same product lines and markets. ■ Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker. ■ Market-extension merger - Two companies that sell the same products in different markets. ■
SUBMITTED BY:
DEBAYAN MUKHERJI
PGDM '"2008-2010
ROLL NO: 08PGDM083
INTERNATIONAL MANAGEMENT INSTITUTE, NEW DELHI
CONTACT NUMBER: 09717443910
EMAIL : debayan.p08@imi.edu
Valuation of Mergers and Acquisitions
Mergers and acquisitions (more generally, takeovers) are an important means through which companies achieve economies of scale, face the competition, or respond to economic shocks. For example ,how the $54 billion US chemical major Dow Chemicals is in process of acquiring its rival Rohm and Haas(R&H) for a total consideration of $18.8 billion, can be seen.Not surprisingly, these actions often make the news. Deals can be worth hundreds of millions, or even billions, of dollars. They can dictate the fortunes of the companies involved for years to come. For a CEO, leading an M&A can represent the highlight of a whole career. And it is no wonder we hear about so many of these transactions; they happen all the time.
■ A merger is a combination of two or more corporations in which only one corporation survives and the merged corporations go out of business.
■ Statutory merger is a merger where the acquiring company assumes the assets and the liabilities of the merged companies
■ A subsidiary merger is a merger of two companies where the target company becomes a subsidiary or part of a subsidiary of the parent company
Varieties of Mergers
From the perspective of business structures, there is a whole host of different mergers. Here are a few types, distinguished by the relationship between the two companies that are merging: ■ Horizontal merger - Two companies that are in direct competition and share the same product lines and markets. ■ Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker. ■ Market-extension merger - Two companies that sell the same products in different markets. ■