Merger & Alliances_ STANDARD CHARTERED

1- Tehseen Ullah MB-10-722- Faraz Qadir Marral MB-10-713- Muhammad Altaf MB-10-314- Rashid Minhas MB-10-425- Saqib Ihsan MB-10-356- Zeeshan Awan MB-10-687- Hina Syed MB-10-048- Hafiz Muzamil Hussain MB-10-419- Malik Umair MB-10-38

Faraz Qadir Marral

MB-10-71

TABLE OF CONTENTS Introduction Merger Types of Merger Acquisition Purpose of Merger and Acquisition Profile of Union Bank Profile of Standard Chartered 3 Stage Model Alliance and Conclusion

Many companies today, in order to survive and grow, need and want to be efficient, profitable, flexible, adaptable, and have a dominant market position.

This dominant market position could be attain through deals like mergers and acquisition.

A merger refers to a process in which two companies become one by coming together.

No one company rules over the other e.g. GlaxoSmithKline (the second largest

pharmaceutical company in the world).

Usually the management of both companies shares the control of the resultant company and names of both companies are retained for the resulting companies.

Horizontal – between

business competitors

Vertical – Moving up or down the value chain

Purchase – one company take over others

(AS SC TAKE OVER UB)

Hina Syed

MB-10-04

Acquisitions on the other hand refer to processes in which one company buys the other company.

In such a situation the buying company absorbs the bought company into the existing company.

As SCB did.

AcquisitionsMergers

One firm buys another firm.

Two firms are combined on a relatively co-equal basis.

Parent stocks are usually retired and new stock issued.

Name may be the original or a combination.

One of the partners take over the dominant management

Can be by means of controlling share, a majority, or all of the target firm’s stock.

Can be friendly or hostile. Usually done through a

tender offer.

Mergers and Acquisitions (M&A) serve three main purposes:

It can serve as a market entry strategy As a corporate portfolio expansion tool As a competitive defense mechanism

Target Name Acquirer Name $ Value of Deal (M)

Yahoo! Inc (YAHOO) Microsoft Corp (MSFT) 43,711.60

Inmobiliaria Colonial SA Investment Corp of Dubai {ICD}

15,213.20

Rio Tinto PLC Shining Prospect Pte Ltd. 14,284.20

Alcon Inc (ACL) Novartis AG 10,547.50

Bolsa de Valores de Sao Paulo {Bovespa}

Bolsa Brasileira de Mercadorias {BM&F}

10,309.10

Millennium Pharmaceuticals Inc (MLNM)

Mahogany Acquisition Corp

8,734.10

Citigroup Inc (C) Government of Singapore Investment Corp Pte Ltd {GIC}

6,880.00

Weyerhaeuser Co-Containerboard Packaging & Recycling Business

International Paper Co (IP)

6,000.00

MMX Mineracao e Metalicos SA-Certain Assets

Anglo American PLC 5,500.00

Scania AB Volkswagen AG 4,377.50

Sr.No

Name of Company New name of the company/merged

with

Date of Merger

Paid-up Capital

Ratio

1 WORLDCALL Multimedia Ltd

WORLDCALL Telecom Ltd

09/06/2006

530.000 [ 1 : 1.27 ]

2 WORLDCALL Broadband Ltd

WORLDCALL Telecom Ltd

09/06/2006

1,500.000

[ 1 : 1.09 ]

3 WORLDCALL Communication Ltd

WORLDCALL Telecom Ltd

09/06/2006

1,831.702

[ 1 : 1.42 ]

4 Modaraba A1-Tijarah Modaraba A1-Mali 11/07/2006

75.778 Certificate [ 91 : 2 ]

5 Atlas Investment Bank Limited

Atlas Bank Limited 26/07/2006

506.024 [ 1 : 3.14 ]

6 Pakistan Papersack Corporation Ltd

Thal Limited 04/08/2006

68.993 [ 3.07 : 1 ]

7 First Allied Bank Modaraba

Allied Bank Limited 25/08/2006

350.000 [ 1 : 024 ]

8 Colony Textile Mills Limited

Colony Mills Limited 28/08/2006

250.000 [ 1 : 9.50 ]

9 Union Bank Limited Standard Chartered Bank Ltd

29/12/2006

3,387.505

[ 1 : 2.50 ]

10 Jahangir Siddiqui Inv.Bank Ltd

JS Bank Limited 30/12/2006

853.125 [ 1 : 3.24 ]

Rashid Minhas

MB-10-42

Union Bank was established in 1991

Had its headquarters in Karachi, Pakistan.

Prior to the acquisition/merger with Standard Chartered Bank.

It was Pakistan's eighth largest bank Had 65 branches in some 22 cities About US$2 billion in assets About 400,000 customers Was a local private bank Shaukat Tareen was the owner of Union Bank at that

time

In 2000,it acquired Bank of America's operations in Pakistan.

In July 2001,signed an Independent Operator agreement for American Express Cards in Pakistan.

In 2002, acquired the operations in Pakistan of Emirates Bank International .

This purchase helped Union Bank become one of the larger private banks in the market of Pakistan.

In 2006, Standard chartered purchased Union bank for $32billion that was 500% more than value of Union Bank. The merged bank is named Standard Chartered Bank (Pakistan) and now is Pakistan's sixth

Mainly Under law’s of Pakistan in 2005 it was a necessary condition that a bank must have more than 100 branches network and the paid-up-capital must be at least $5 billion.

In 2005, at its high boom period standard chartered bank offered it a deal of $32 billion which was almost 500% more than its actual price value of $4 billion.

Saqib Ihsan

MB-10-35

Standard Chartered is one of the largest international Bank in Pakistan.

After the acquisition of Union Bank in September 2006, the new entity Standard Chartered Bank (Pakistan) Limited was incorporated in Pakistan on 30 December 2006.

50 branches over 10,000 employees in its

Pakistan operations 4000 permanent employees network of over 165 branches in

Pakistan Total branches in Multan are 3

At international level its Head office is in London. In Pakistan the Head office of standard chartered is in

Karachi Standard chartered have almost 20 regions in Pakistan Regions are sub-divided into 3 sub-continent

Hafiz Muzmmil Hussain

MB-10-41

This stage includes:- Identifying reasons for the M & A- Forming M & A team/leader- Searching for potential partners- Selecting a partner- Cultural assessment- Planning for managing the process of the M/A

The acquisition of Union Bank will make SC one of largest bank in Pakistan by market share of assets…so its on sixth position in Pakistan.

It provide significant opportunity for growth in both Consumer and Wholesale Banking.

UB will help SC to increase its network up to 100 branches..as Standard Chartered have.

Activities involved in this stage are:- Selecting the integration manager- Designing/implementing teams- Creating the new structure/strategies/leadership- Retaining key employees- Motivating the employees- Managing the change process- Deciding on who stays and goes- Establishing a new culture, structure, HR policies

Follow international standards High rate of resignation Immediate replacements due to good opportunities in

the bank The upper management remain same and lower level

was contractual Promotions were based on the level of experiences Productivity level of employees improved No risk level of jobs coz there were no lay-offs by the

bank itself

Umair Malik

MB-10-38

Activities involved are:- Solidifying leadership and staffing- Assessing the new strategies and structures- Assessing the new culture- Creating and evaluating a new structure- The concerns of all stakeholders need to be addressed

and satisfied- The new entity must learn

Training was given to employees Paid better pay structures and bonuses to the employees

for good progresses. Mutual decision makings, that who would remain and

who will be sent to other branches. Acquired bank management remained in the same

branches. No discrimination among UB and SCB employees

which helped to avoid any cultural clashes.

Muhammad Altaf

MB-10-31

Combining operations may result in

◦ Resistance from rank-and-file employees

◦ Hard-to-resolve conflicts in management styles and corporate cultures

◦ Tough problems of integration

◦ Greater-than-anticipated difficulties in

Achieving expected cost-savings

Sharing of expertise

Achieving enhanced competitive capabilities

They face problems in maintaining accounts because both banks have different criteria's of maintain accounts.

They start car leasing and giving more loans to industries and they started giving loans later they face problem in collection

Zeeshan Awan

MB-10-68

Alliance is an approach in

which two or more companies

agree to pool their resources

together to form a combined

force in the marketplace .

Alliances and partnerships can help companies cope with two demanding competitive challenges

◦ Racing against rivals to build a market presence in many different national markets

◦ Racing against rivals to seize opportunities on the frontiers of advancing technology

It can help a company lower its costs and/or gain access to needed expertise and capabilities

Strategic alliance – A formal agreement between two or more separate companies where there is◦ Strategically relevant collaboration of some sort◦ Joint contribution of resources◦ Shared risk◦ Shared control◦ Mutual dependence

Alliances often involve◦ Joint marketing◦ Joint sales or distribution◦ Joint production◦ Design collaboration◦ Projects to jointly develop new technologies or products

Tehseen Ullah

MB-10-72

UBL & U-fone signed an agreement to formalize an upcoming marketing initiative for UBL credit card customers in a ceremony held in Karachi.

As part of this strategic alliance, UBL customers will have the facility to avail U-fone special packages with International Roaming, GPRS, MMS including security deposit waivers.   

•Successful merger•SCB is private sector bank•Effective in setting goals according to the competition in the banking sector•The employees are satisfied with these goals and performing well to achieve the goals which were provided to them•The management style in SCB is kind of participative management

• Because of identical positioning of both the banks in the market, the

combined entity of Standard Chartered and Union Bank

delivering• Economies of scale,• A more complete product set,• A stronger operating platform and a wider distribution network.

THANK YOU ALLTHANK YOU ALL