Mergers & Acquisitions. Financing capital: discuss opportunities & threats government...

Mergers & Acquisitions

Financing capital: discuss opportunities & threats

• government subsidies

• bank loans

• issuing bonds

• issuing shares acquisitions: buyouts and takeovers

Why?

→ MK, p 105

to reinforce your position to reduce competitionto rationalize productionto diversify products/marketsto gain access to new technology...

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

=• Explain the difference between horizontal and vertical

integration• Explain the difference between forward and backward

integration• 1 Horizontal integration A enables cost savings

2 Vertical integration B increases market share and reduces competition

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

= distribution chain• Explain the difference between horizontal and vertical

integration• Explain the difference between forward and backward

integration• 1 Horizontal integration A enables cost savings

2 Vertical integration B increases market share and reduces competition

Pg 2

• Explain the difference between a raid and a takeover bid

Advantages Disadvantages

A raid

A takeover bid

● Explain the difference between a friendly and a hostile bid

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

Pg. 3

• Why do investment banks encourage companies to take over other companies?

Pg. 4

• Explain conglomerate

• What does LBO stand for?

• L _ _ _ _ _ _ _ d b _ _ _ _ _ s

• Which globally famous Hollywood movie involves a male character who specializes in LBOs?

• Do you remember what it is he does?

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

TYPES

1. ACQUISITION / TAKEOVER

2. FRIENDLY TAKEOVER

3. HOSTILE TAKEOVER

4. MERGER

5. JOINT VENTURE

6. LEVERAGED BUYOUT

7. CORPORATE RAID

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

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

• 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

to make a takeover bid to merge

to use the poison pill to take over

to find a white knight to acquire

CORPORATE RAID