A PROJECT ON MERGERS AND ACQUISITIONS

Topics: Daimler AG, Chrysler, Mercedes-Benz Pages: 50 (11179 words) Published: March 15, 2015
CONTENTS:PAGE NO
1. INTRODUCTION---------------------------------------------------------------------- 4 2. LITERATURE REVIEW-------------------------------------------------------------- 5 3. ABOUT M&A--------------------------------------------------------------------------- 6 3.1 TYPES OF MERGER---------------------------------------------------------- 6 3.2 IMPORTANCE OF MERGER----------------------------------------------- 7 3.3 COST AND BENEFIT OF MERGER--------------------------------------- 8 3.4 DOING/CLOSING THE DEAL----------------------------------------------10 4. ANALYSIS--------------------------------------------------------------------------------13 4.1 ABOUT DAIMLER-------------------------------------------------------------13 4.2 ABOUT CHRYSLER------------------------------------------------------------16 4.3 THE MERGE----------------------------------------------------------------------18 4.3.1 ANALYSIS OF THE MERGER ------------------------------- 18 4.3.2 MOTIVES OF THE MERGER--------------------------------- 23 4.3.3 SYNERGIES----------------------------------------------------24 4.3.4 RESULT OF THE MERGER------------------------------------27 4.3.5 SALES OF CHRYSLER----------------------------------------- 38 4.3.6 POST MERGER ANALYSIS------------------------------------39 4.3.7 REASON OF FAILURE-----------------------------------------41 4.3.8 PITFALLS OF THE MERGER-----------------------------------44 5. CONCLUSION---------------------------------------------------------------------------------45 REFERENCE----------------------------------------------------------------------------------------46 APPENDIX------------------------------------------------------------------------------------------48

EXECUTIVE SUMMARY:
Mergers and acquisition is the most popular means of corporate restructuring or business combinations. It has played an important role in the external growth of a number of leading corporations around the world.

A merger is said to occur when two or more companies combine to form one company. One or more companies may merge with an existing company, or they may merge to form a new company. In a merger, there is complete merger of the assets and liabilities as well as shareholder’s interest and businesses of the merging companies.

This project is meant to examine and access the merger of two giant companies i.e. Daimler Benz a German multinational automotive corporation and Chrysler Corporation an American based company. In the mid-1990s, Chrysler Corporation an American based company was the most profitable automotive producer in the world. It had taken a risk in producing vehicles that captured the bold and pioneering American spirit when imports dominated the market – the Dodge Ram, the Jeep Grand Cherokee and the LH Sedan Series. Daimler is a German multinational automotive corporation. Daimler is headquartered in Stuttgart, Germany. By unit sales it is the 13th largest car manufacturer and second largest truck manufacturer in the world. Daimler produces cars and trucks under the brand of Mercedes- Benz, Maybach, Smart, Freightliner and many others. On May 7th, 1998, Eaton announced that Chrysler would merge with Daimler-Benz. Thanks to a $36 billion stock-swap deal, it is the largest trans-Atlantic merger ever. Daimler and Chrysler Corporation merged in 1998 in an exchanged of shares and formed DaimlerChrysler. The reason behind the merger was to cut spending, squeeze cost and bring about a rise in profits. The merger was said to be a merger of equals and both the companies had high expectations from the merger. But the merger proved to be a costly mistake for both the company. The main reason for the failure of this merger was lack of honesty and cultural differences. Daimler and Chrysler split in the year 2007 and Daimler continued his journey without Chrysler. Daimler sold Chrysler to Cerberus Capital Management in May 2007 for US$6 billion....


References: Holtzman, E. (1994), ‘There is No Such Thing as a Perfect Merger or Acquisition’, The CPA Journal, Vol. 64 (12).
Khan, M Y (2012), Financial Services, sixth edition. Ch 15: “Corporate Restructuring”, Pg 15.1, Tata McGraw Hill Education Private Limited.
Rhodes, K. (2002), ‘Making Mergers a Growth Strategy’.
http://articles.economictimes.indiatimes.com/2011-06-23/news/29694549_1_mergers-and-acquisitions-competition-commission-norms
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