1. Mergers, Aqcuisitions and Corporate Control

2. Recent Mergers

3. Definition
Merger: Combination of two firms into one, with the acquirer assuming assets and liabilities of the target firm.
Kombinasi dari dua perusahaan menjadi satu, dengan asumsi aset pengakuisisi dan kewajiban pada perusahaan target.

4. Tools Used To Acquire Companies
The Merger Market
Tools Used To Acquire Companies
Proxy Contest
Acquisition
Tender Offer
Leveraged Buy-Out
Management Buy-Out
Merger 9

5. Proxy Contest
Takeover attempt in which outsiders compete with management for shareholders’ votes.
Also called Proxy Fight
Most proxy contests fail because outsiders use their own limited money while management can use the corporation’s funds and lines of communication with shareholders to defend itself

6. Acquicisiton
Takeover of a firm by purchase of that firm’s common stock or assets
The acquiring company runs the firm after merger
Must have the approval of at least 50% of the shareholders of each firm

7. Leveraged Buy-Out
Acquisition of the firm by a private group using substansial borrowed funds.

8. Management Buy-Out
Acquisition of the firm by its own management in a leveraged buyout

9. Tender Offer
Takeover attempt in which outsiders directly offer to buy the stock of the firm’s shareholders.
The acquiring firm can bypass the target firm’s management altogether.
If the tender offer is succesful, the buyer will get control and can replace the existing management

10. Sensible Reasons for Mergers
Economies of Scale
A larger firm may be able to reduce its per unit cost by using excess capacity or spreading fixed costs across more units. $
Reduces costs $ $ 11

11. Sensible Reasons for Mergers
Economies of Vertical Integration
Control over suppliers “may” reduce costs.
Over integration can cause the opposite effect.
Pre-integration (less efficient)
Company S
Post-integration (more efficient)
Company S 14

12. Sensible Reasons for Mergers
Combining Complementary Resources
Merging may results in each firm filling in the “missing pieces” of their firm with pieces from the other firm.
Firm A
Firm B 16

13. Sensible Reasons for Mergers
Mergers as a Use for Surplus Funds
If your firm is in a mature industry with few, if any, positive NPV projects available, acquisition may be the best use of your funds. 17

14. Evaluating Mergers ???? Questions
Is there an overall economic gain to the merger?
Do the terms of the merger make the company and its shareholders better off?
???? 23

15. Evaluating Mergers
Economic Gain 24