1. Pop quiz 3 results Filip Grljević ½ bpAna Grubišić 2 bp Mateja Grgić 1bpAnamari Hušnjak 2 bp Kristijan Keleminić 1 bpStella Kević 2 bp Ivana Hapač 1 bpGabrijela Grubišić-Čabo 2 bp Dora Jendriš 1bp Nikolina Klasnić 1 bpTina Horvat 3 bp Mislav Ivanković 1 bpLucija Horvat 3 bp Valentina Guštin 1 bpIrena Jovičić 3 bp Jurjević Nikolina 1 bpMatija Gregurić 3bp Juraj Juriša 1 bp Jasmina Kalingar 1 bp Eugen Klarić 1 bp Dora Jelavić 1 bp

2. Red alert: many teams still haven’t submitted the action minutes from their meetings Failing to submit the minutes at the latest on Monday (1 June) diminishes your score (your grade too)

3. 2nd progress test 2nd progress test: Tuesday, 2 June, 2015 –08.00 – 09.00 (half the group) –09.00 – 10.00 (half the group) Test (topics): up to 40 points Report (including graph description): up to 25 points Note: The report writing task will include a graph which should be described in the Findings section of your report. In the Findings section you should describe the graph according to the guidelines provided in the Graph description unit of RB. For an example of a report writing task, please go to next slide:

4. Report writing + graph description Your company is considering taking over Sunset PLC. On 20 May your Managing Director asked you to analyse the revenue and costs of Sunset PLC for the period between 2009 and 2015 and give your recommendation. Write a report and submit it by 26 May. You have obtained the financial information from Sunset’s annual reports. Invent any necessary details. of Sunset Ltd. 2009 2010 2011 2012 2013 2014 2015

5. Financing capital: discuss opportunities & threats government subsidies bank loans issuing bonds issuing shares  acquisitions: buyouts and takeovers

6. Why? → MK, p 105 to reinforce your position to reduce competition to rationalize production to diversify products/markets to gain access to new technology...

7. Unit 21: Takeovers Pg 1 How can companies use their profits? Provide synonyms of acquire: Explain the difference between takeovers and mergers Explain: supply chain vs. Explain the difference between horizontal and vertical integration Explain the difference between forward and backward integration 1 Horizontal integrationA enables cost savings 2 Vertical integrationB increases market share and reduces competition attain, buy, get, purchase, take, take possession of distribution chain

8. Unit 21: Takeovers Pg 1 How can companies use their profits? Provide synonyms of acquire: attain, buy, get, purchase, take, take possession of Explain the difference between takeovers and mergers Explain: supply chain vs. distribution chain Explain the difference between horizontal and vertical integration Explain the difference between forward and backward integration 1 Horizontal integrationA enables cost savings 2 Vertical integrationB increases market share and reduces competition

9. Mergers (integrations) with: competitors = distributors = suppliers = horizontal integration forward integration backward integration verticalvertical

10. Pg 2 Pg 2: Explain the difference between a raid and takeover bid (draft notes in the table and practice describing advantages and disadvantages of each) AdvantagesDisadvantages A raid A takeover bid ● Explain the difference between a friendly and a hostile bid

11. Vocabulary to bid (v irregular: bid, bid) –to offer to pay a particular price for sth. The company is bidding 910p a share for control of AB Ports...The bidder is interested in... a bid (n) –a price offered to buy sth. such as goods, property, shares, bonds (Longman BED) Takeover bids: -unwanted / unsolicited / hostile<>friendly bid

12. Pg. 3 Why do investment banks encourage companies to take over other companies? Pg. 4 Explain conglomerate What does LBO stand for? L _ _ _ _ _ _ _ db _ _ _ _ _ s Which globally famous Hollywood movie involves a male character who specializes in LBOs? Do you remember what it is he is doing in the movie?

13. Pg. 4 cont. Explain: undervalued on the stock market Explain: market capitalization Explain: leveraged Explain: asset-stripping Why is the risk involved in LBOs small? HW: Vocabulary, p 106 & complete →Takeovers handout → LBO handout

14. What is missing? ~ between ~talks ~ proposal ~ agreement conglomerate ~ defensive ~ horizontal ~ vertical ~

15. What is missing? MERGER a merger between similar banks but to merge with a similar bank merger talks merger proposaln. + n. merger agreement merger ≈ integration conglomerate merger defensive merger adj. + n. horizontal merger / integration vertical merger / integration

16. What is missing? friendly ~ hostile/unfriendly ~ leveraged ~ creeping ~ ~battle ~bid What is missing? leveraged ~(LBO) employee/staff ~ management ~ (MBO)

17. What is missing? TAKEOVER friendly takeover hostile/unfriendly takeover leveraged takeover creeping takeover takeover battle takeover bid What is missing? BUYOUT leveraged buyout (LBO) employee/staff buyout management buyout (MBO)

18. Review: M & A

19. Mergers & acquisitions → asset stripping Success →Retained earnings →Investments in R&D Acquisition of other companies (t________, b______) akeoversuyouts Conglomerates Merger (integration with): companies in un___ ed fields relat LBO a________ financed by debt cquisition stripped of assets & split up

20. TYPES 1.ACQUISITION / TAKEOVER 2.FRIENDLY TAKEOVER 3.HOSTILE TAKEOVER 4. MERGER 5.JOINT VENTURE 6.LEVERAGED BUYOUT 7.CORPORATE RAID

21. Cooperation of two or more individuals or businesses, each agreeing to share profit, loss and control, in a specific enterprise Combining two or more companies to form a new one Corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm JOINT VENTURE MERGER ACQUISITION / TAKEOVER

22. A takeover that a company being taken over agrees to. A takeover that a company taken over does not want and doesn’t agree to. Acquisition of another company using borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. FRIENDLY TAKEOVER HOSTILE TAKEOVER LEVERAGED BUYOUT

23. buying a large number of shares in a corporation with undervalued assets to obtain voting rights to increase share value and thus generate a massive return VOCABULARY (look up) to make a takeover bid to merge to use the poison pill to take over to find a white knight to acquire CORPORATE RAID

24. Vocabulary, p 106 1 diversify 2 retail outlets 3 a controlling interest 4 listed companies 5 fees 6 conglomerates 7 synergy 8 market capitalization 9 subsidiaries 10 pension fund

25. Handouts check Takeovers 1 reinforcing your company’s position 2 reducing competition 3 rationalizing production 4 optimizing the use of a plant or capital 5 diversifying products or markets 6 searching for synergy 7 grow8 launch9 buy 10 increase 11 persuade12 sell 13 friendly14 hostile15 board 16 poison pill17 white knight

26. Handouts check LBOs 1b2g3d4h5f6a7e8c 1 borrowed 2 financed 3 stock market value 4 asset-stripping 5 conglomerates