1. Corporate Growth Growth from within
Introducing new products
Entering new markets
Growth through mergers and acquisitions
Merger: the purchase of one corporation by another; essentially the same as an acquisition
Hostile takeover: a situation in which the management and board of directors of the firm targeted for acquisition disapprove of the merger
Tender offer: an offer to purchase the stock of a firm targeted for acquisition at a price just high enough to tempt stockholders to sell their shares
Proxy fight: a technique used to gather enough stockholder votes to control the targeted company
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2. Three Types of Growth by Merger
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3. Corporate Growth (cont’d)
Current merger trends
Takeover advocates say
Companies that are taken over are made more profitable and productive
Proceeds from the sale of non-core subsidiaries help pay off debt or enhance the company
Takeover opponents say
Takeover threats force managers to spend time on defense rather than vital business activities
The only people who benefit from takeovers are investment bankers, brokerage firms, and takeover artists
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4. Corporate Growth (cont’d)
Current merger trends
Mergers during the first part of the 21st century will be the result of cash-rich companies looking to enhance their position in the marketplace
There will be more mergers involving companies or investors from other countries
Future mergers and acquisitions will be driven by solid business logic and the desire to compete internationally
There will be more leveraged buyouts
A purchase arrangement that allows a firm’s managers and employees or a group of investors to purchase the company
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