1. MERGERS & ACQUISITIONS

2. Integration of companies
Oil-wells
Electricity generators
Car dealers
Gas (petrol) stations
Subcontractors (component suppliers)
Car makers
Refineries
Electricity distributors

3. Examples of different types of integration:
oil wells
refineries
petrol stations
component suppliers
car makers
car dealers
car maker A + car maker B
refineries + electricity generators

4. Different types of integration
Vertical integration (supplier- company– customer)
Horizontal integration (competitors)
Conglomerate (comp. with no common business areas)
Integration of core businesses or
non-core business
diversification (to diversify)
Make or buy decision

6. How can companies get together?
Sony Ericsson, a 50:50 joint venture of Sony Corporation and Ericsson AB, was established in October 2001.

7. How can companies get together?
Daimler-Benz merged with Chrysler.
(The Daimler-Chrysler merger)

8. How can companies get together?
Ford took over Volvo Automotive Operations in 1999.

9. How can companies get together?
Joint ventures
Mergers
Takeovers/acquisitions
(friendly takeovers or hostile takeovers)
* takeover, (n.), take over (v.)
acquisition (n.), acquire (v.)
merger (n.), merge (v.)

10. Fill in the missing words: merger, black knight, white knight, gray knight, takeover (acquisition), poison pill
Basically, when two companies become one. This decision is usually mutual between both firms.
A strategy used by corporations to discourage a hostile takeover by another company. The target company attempts to make its stock less attractive to the acquirer, e.g. by allowing existing shareholders (except the acquirer) to buy more shares at a discount or to buy to buy the acquirer's shares at a discount.
A company that makes a friendly takeover offer to a target company that is being faced with a hostile takeover
A second bidder in a corporate takeover which enters the scene in order to take advantage of any problems between the first bidder and the target company.
The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
When one company purchases a majority interest in another company.
A company that makes a hostile takeover offer.

11. Key:merger, black knight, white knight, gray (grey) knight, takeover (acquisition), poison pill
Basically, when two companies become one. This decision is usually mutual between both firms. MERGER
A strategy used by corporations to discourage a hostile takeover by another company. The target company attempts to make its stock less attractive to the acquirer, e.g. by allowing existing shareholders (except the acquirer) to buy more shares at a discount or to buy to buy the acquirer's shares at a discount. POISON PILL
A company that makes a friendly takeover offer to a target company that is being faced with a hostile takeover WHITE KNIGHT
A second bidder in a corporate takeover which enters the scene in order to take advantage of any problems between the first bidder and the target company. GRAY KNIGHT
The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. MERGER
When one company purchases a majority interest in another company. ACQUISITION
A company that makes a hostile takeover offer. BLACK KNIGHT

12. Recent examples of M&A?

13. Merger or acquisition? The difference is not always so clear…
‘Fiat completed the full acquisition of, and merger with, Chrysler in 2014…’
‘Facebook will now award million shares of its Class A common stock and $4.59 billion in cash to WhatsApp’s shareholders,…, plus 45.9 million shares to WhatsApp’s employees to complete the deal.’

14. Speak about these companies ....

16. Use the words in bold to retell the story of Pliva
Use the words in bold to retell the story of Pliva. Add the following: go for a friendly takeover /go for a hostile takeover make a friendly bid /make a hostile bid
Abbot Bank is doing badly and may become the victim of a predator. There were rumours of a possible takeover by Bullion, but it says it won’t play the white knight for Abbot by coming to its defence. This leaves Abbot exposed to acquisition, and it may be prey to a big international bank. Abbot does have a poison pill however, in the form of a special class of shares that will be very expensive for a predator to buy.

18. Companies can also split...
conglomerates → divestment/sell-off?
demerger (n.), demerge (v.)

19. Companies can also split...
Recent strategic thinking holds that conglomerates are not good. Many conglomerates have divested their non-core businesses, selling them off in order to concentrate on their core business.
Blighty Telecom is to split into two, and demerge its fixed-line and mobile business.

20. LEVERAGED BUYOUTS (home reading, MK: p.105-106)
LBO/ MBO –definition
conglomerates - explain
1960s v. 1980s
1980s: 2 different values
What did raiders really do?
What is asset-stripping?
Theory v. Practice

21. LEVERAGED BUYOUTS (home reading, MK: p.105-106)
What were the raiders' debts guaranteed by?
3 ideal targets
The role of Michael Milken and his bank
Raiders‘ arguments in favour of takeovers.