Industrial Engineering 2

8/6/2019 Industrial Engineering 2

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o The figure shows an example of an entity service. Several of its capabilities

are reminiscent of traditional CRUD (create, read, update, delete) methods.

Merger

The combining of two or more companies, generally by offering the

stockholders of one company securities in the acquiring company

in exchange for the surrender of their stock.

In business or economics a merger is a combination of

two companies into one larger company. Such actions are commonly

voluntary and involve stock swap or cash payment to the target.

Stock swap is often used as it allows the shareholders of the two

companies to share the risk involved in the deal. A merger can

resemble a takeover but result in a new company name (often

combining the names of the original companies) and in

new branding ; in some cases, terming the combination a "merger"

rather than an acquisition is done purely for political or

marketing reasons.

Classification of Mergers

o Horizontal mergers take place where the two merging

companies produce similar product in the same industry .o Vertical mergers occur when two firms, each working at

different stages in the production of the same good,

combine.

o Conglomerate mergers take place when the two firms operate

in different industries.
http://www.wordiq.com/definition/Corporationhttp://www.wordiq.com/definition/Stock_swaphttp://www.wordiq.com/definition/Takeoverhttp://www.wordiq.com/definition/Brandhttp://www.wordiq.com/definition/Industryhttp://www.wordiq.com/definition/Conglomeratehttp://www.wordiq.com/definition/Conglomeratehttp://www.wordiq.com/definition/Stock_swaphttp://www.wordiq.com/definition/Takeoverhttp://www.wordiq.com/definition/Brandhttp://www.wordiq.com/definition/Industryhttp://www.wordiq.com/definition/Conglomeratehttp://www.wordiq.com/definition/Corporation


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o A unique type of merger called a reverse merger is used as

a way of going public without the expense and time required

by an IPO .

Examples

o Hewlett-Packard; with Compaq (Announced Sept. 2001 - Final

May 2002) ($25 billion)

o AOL Time Warner; America Online and Time Warner ($166

billion)

o Citigroup; Citicorp and Travelers Group ($73 billion)

o J.P. Morgan Chase, Bank One (announced January 14, 2004)

($59 billion)

o Procter & Gamble buy Gilette ($54 billion)

o Bank of America; with FleetBoston Financial ($47 billion)

Acquisition

A 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. Acquisitions are often made as part of a

company's growth strategy whereby it is more beneficial to take

over an existing firm's operations and niche compared to

expanding on its own. Acquisitions are often paid in cash, the

acquiring company's stock or a combination of both.

Acquisitions can be either friendly or hostile. Friendly

acquisitions occur when the target firm expresses its agreement

to be acquired, whereas hostile acquisitions don't have the same

agreement from the target firm and the acquiring firm needs to

actively purchase large stakes of the target company in order to

have a majority stake.

In either case, the acquiring company often offers a premium on

the market price of the target company's shares in order to

entice shareholders to sell.
http://www.wordiq.com/definition/Reverse_mergerhttp://www.wordiq.com/definition/IPOhttp://www.wordiq.com/definition/Reverse_mergerhttp://www.wordiq.com/definition/IPO


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Examples

o Corp.'s bid to acquire Dow Jones was equal to a 65% premium

over the stock's market price.

o San Miguel Corporation

SMC acquired 51% interest in Universal LRT Corp. Ltd.,

the company in charge of developing the Metro Rail

Transit Line 7 (MRT7). In December 2010, SMC through

its subsidiary Vega Telecom, acquired AGN Philippines

which owns 40% stake of Eastern Communications

(Eastern Telecom) from ISM Communications Corp., a

company controlled by businessman Roberto Bobby

Ongpin.

Parent Company

A company that controls other companies by owning an influential

amount of voting stock.

Companies can become parent companies by many different means.

The two most common ways are through (1) acquisitions of smaller

companies and (2) the spinoff or creation of subsidiaries.

Examples .

o General Electric is the parent company of CNBC

o Lopez Holdings Corp. is the parent company of multimedia

conglomerate ABS-CBN Broadcasting Corp. and First

Philippine Holdings Corp

o PLDT is the parent of Smart Communications, Telesat

Philipines

Subsidiary

A company whose voting stock is more than 50% controlled by

another company, usually referred to as the parent company.

As long as the parent company has more than 50% of the voting

stock in the subsidiary, it has control. In the case of a foreign

subsidiary, the company under which the subsidiary

is incorporated must adhere to the laws of the country in which


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slowly and systematically over a long period of time, or in large

lots over a short time period.

For a business, divestiture is the removal of assets from the

books. Businesses divest by the selling of ownership stakes,

the closure of subsidiaries, the bankruptcy of divisions, and so

on.

In personal finance, investors selling shares of a business

can be said to be divesting their interests in the company being

sold.

Examples

o For example, a railroad line might purchase a coal mining

company to provide a direct source of fuel for its fleet of

locomotives. But with development of more efficient diesel

engines, the value of that mine becomes seriously eroded.

As the railroad replaces its steam engines with diesels, it

has no use for its coal, except to sell it to someone else.

Thus, it faces a crucial decision of whether to sell the

mine or hold on to it and enter the coal supply business.

Read more: Corporate Divestiture -

benefits http://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSg
http://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSghttp://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSghttp://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSghttp://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSghttp://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSghttp://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSghttp://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSghttp://www.referenceforbusiness.com/encyclopedia/Con-Cos/Corporate-Divestiture.html#ixzz1QkNTIcSg


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Source:

http://www.investopedia.com/terms/

http://www.justsharethis.com/top-10-biggest-companies-in-the-world-

2009/

http://www.thefreedictionary.com/

http://www.wordiq.com/definition/Merger

http://beginnersinvest.about.com/od/investingglossary/g/parent-company.htm

http://www.pinoyexchange.com/forums/showthread.php?t=466999
http://www.investopedia.com/terms/http://www.justsharethis.com/top-10-biggest-companies-in-the-world-2009/http://www.justsharethis.com/top-10-biggest-companies-in-the-world-2009/http://www.thefreedictionary.com/http://www.wordiq.com/definition/Mergerhttp://beginnersinvest.about.com/od/investingglossary/g/parent-company.htmhttp://beginnersinvest.about.com/od/investingglossary/g/parent-company.htmhttp://www.pinoyexchange.com/forums/showthread.php?t=466999http://www.investopedia.com/terms/http://www.justsharethis.com/top-10-biggest-companies-in-the-world-2009/http://www.justsharethis.com/top-10-biggest-companies-in-the-world-2009/http://www.thefreedictionary.com/http://www.wordiq.com/definition/Mergerhttp://beginnersinvest.about.com/od/investingglossary/g/parent-company.htmhttp://beginnersinvest.about.com/od/investingglossary/g/parent-company.htmhttp://www.pinoyexchange.com/forums/showthread.php?t=466999

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Industrial Engineering 2