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bus fin > Q2 L1: merger, acquisition, and takeover (INCLUDED) > Flashcards

Q2 L1: merger, acquisition, and takeover (INCLUDED) Flashcards

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1
Q

May or may not be a mutual agreement

A

Acquisition

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2
Q

The target (aka the small) company will be a part of the large company OR will dissolve OR will operate under a new name

A

Acquisition

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3
Q

Occurs when a buyer acquires all or part of assets or business of a selling entity, and where both parties are actively assisting in the purchase transaction.

A

Acquisition

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4
Q

When one company takes over another and clearly established itself as the new owner, the purchase is called an?

A

Acquisition

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5
Q

give examples of Acquisitions

A

2000
- America Online Inc. (AOL) — Time Warner
- Glaxo Wellcome Plc. — SmithKline Beecham Plc.
- Spin-off: Nortel Networks Corporation

2001
- Comcast Corporation — AT&T Broadband & Internet Svcs

2002
- Pfizer Inc. — Pharmacia Corporation

2004
- Royal Dutch Petroleum Co. — Shell Transport & Trading Co.
- Sanofi-Synthelabo SA — Aventis SA
- JP Morgan Chase & Co — Bank One Corp

2006
- AT&T Inc. — BellSouth Corporation

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6
Q

Both have mutual agreement

A

Merger

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7
Q

Equal companies “join forces” to create a new entity/product/services or to expand their market share
(Same scale business)

A

Merger

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8
Q

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.

A

Merger

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9
Q

in corporate law, it is the joining together of two corporations in which one corporation transfer all its assets to the other, which continues to exist. In effect, one corporation “swallows” the other, but the shareholders of the swallowed company receive shares of the surviving corporation.

A

Merger

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10
Q

is a transaction that result in the transfer of ownership and control of a corporation.

A

Merger

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11
Q

When one company purchases another company of an approximately similar size. The two companies come together to become one.

A

Merger

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12
Q

Two companies usually agree to do this when they feel that they can do something together that they can not do on their own.

A

Merge

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13
Q

Merger combines two or more companies, generally by?

A

offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

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14
Q

what is merger in corporate law?

A

it is the joining together of two corporations in which one corporation transfer all its assets to the other, which continues to exist. In effect, one corporation “swallows” the other, but the shareholders of the swallowed company receive shares of the surviving corporation.

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15
Q

merger is a transaction that result in the transfer of?

A

ownership and control of a corporation.

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16
Q

Mostly walang mutual agreement

A

Takeovers

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17
Q

A corporate action where an acquiring company makes a bid for an acquiree.

A

Takeovers

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18
Q

two types of takeovers?

A
  1. Hostile Takeover
  2. Friendly Takeover
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19
Q

A takeover attempt that is strongly resisted by the target firm. Walang mutual agreement ung takeover (sapilitan/threatening/blackmail/against the will of the acquiree)

A

Hostile Takeover

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20
Q

(Takeovers) If the target company is publicly traded, what happens?

A

the acquiring company will make an offer for the outstanding shares.

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21
Q

Target company’s management and board of directors agree to a merger or acquisition by another company. Both parties agree (mutual agreement)

A

Friendly Takeover

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22
Q

enumerate the types of merger

A

(7) (HVCCSSC)
1. Horizontal Merger
2. Vertical Merger
3. Conglomerate Merger
4. Concentric Merger
5. Statutory
6. Subsidiary
7. Consolidation

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23
Q

Two companies belong to the same industry

A
  1. Horizontal Merger
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24
Q

what is the relationship of companies in horizontal mergers?

A

They are technically competitors

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25
The companies have businesses in the same space and are generally competitors to each other.
1. Horizontal Merger
26
is a feature of an industry which consists of a large number of small **firms or fragmented industry.**
1. Horizontal Merger
27
A merger occurring between companies producing similar products, goods and offerings similar services.
1. Horizontal Merger
28
This type of merger occurs frequently as a result of *larger companies attempting to create more effective economies of scale.*
1. Horizontal Merger
29
give examples of horizontal mergers
Example: - *Boeing* and *McDonnell Douglas* - *Landbank*(large/surviving company) and *Ucpb*(target company), - *URC* and *Century Pacific foods*, - *Facebook* and *Instagram*(Meta bought Instagram) - *Lipton India* and *Brooke Bond*., - *Bank of Mathura* with *ICICI Bank*. - *BSES Ltd* with *Orissa Power Supply Company*. - Associated Cement Companies Ltd Damodar Cement.
30
what is the relationship of companies in vertical mergers?
buyer and seller relationship (potentially or actually)
31
is a merger between companies that produce different goods or offer different services for **one common finished product.**
2. Vertical Merger
32
The companies operate at different levels in the supply chain of the same industry.
2. Vertical Merger
33
what are the motivations behind vertical mergers?
(COIM) The motivation behind such mergers is: - cost efficiency, - operational efficiency, - Increased margins, and - more control over the production or the distribution process.
34
The merger of the firm that have actual or potential buyer-seller relationship.
2. Vertical Merger
35
give examples of vertical mergers
Example: - [ung car manufacturer company purchases a tire company,] - *Time Warner Incorporated* (a major cable operation) and the *Turner Corporation* (which produces CNN, TBS, and other programming) - *Pixar Animation Studio* and *Walt Disney*
36
what is the relationship of companies in conglomerate mergers?
no relationship
37
A merger between companies that operate in completely different and unrelated industries. A merge between firms that are involved in totally interrelated business activity.
3. Conglomerate Merger
38
A pure conglomerate merger is between companies with totally nothing in common.
3. Conglomerate Merger
39
They do this with different industries because they want to monopolize all the possible goods/services/industries to increase power and market shares (like sm kasi ang dami nyang eme eme)
3. Conglomerate Merger
40
give examples of conglomerate mergers
Example: - **SM investment corporation** (merchandising, retail, financial services, food(sm bonus), clothing line, real estate, etc) and **2go logistics** - **Walt Disney Company** and the **American Broadcasting Company** - **PepsiCo** and **Pizza Hut** - **Proctor** & **Gamble-Clorox**
41
what are the two types of conglomerate merger?
1. Pure conglomerate merger 2. Mixed conglomerate merger
42
It involves firms with nothing common. Merger is between companies with **totally** nothing in common.
1. Pure conglomerate merger
43
It involves firms that are looking for product extensions or market extensions. Is between companies looking for market or product extensions.
2. Mixed conglomerate merger Examples: - [Procter & Gamble Corporation (Pantene, Pringles, Whisper, Always, Pampers, lams, Head & Shoulders and Bounty) extended its line of products in 2004 by merging with Clorox Company, a producer of household-cleaning products and bleach.
44
Conglomerate mergers are typically undertaken to?
reduce business risks.
45
what is the relationship of companies in concentric mergers?
Same line of business pero no mutual relationship
46
A merger of firms which are into similar type of business.
4. Concentric Merger
47
A concentric merger, often called a?
congeneric merger,
48
Is the merging of firms that operate in the same industry but do not have a mutual relationship (such as a buyer-seller relationship).
4. Concentric Merger
49
give examples of concentric mergers
Example: - *Citigroup's* acquisition of *Travelers Insurance*. (While both were in the financial services industry, they had different product lines.) - when an airline acquires a tourism industry-related business or if a newspaper merges with a TV channel. - IF nag merge ung samsung with netflix,
50
Only one company continues to exist and the other dissolves
5. Statutory Merger
51
is one in which all the assets and liabilities of the smaller company is acquired by the bigger (acquiring) company. As a result, the smaller target company loses its existence as a separate entity.
5. Statutory Merger
52
give examples of statutory mergers
Example: - Bank of Florida(surviving company) and Bank of Lubao(na dissolve)
53
The smaller company will become part of or a subsidiary of the bigger company
6. Subsidiary Merger
54
is one in which the target company becomes a subsidiary of the bigger acquiring company. This happens because the target company may have a known brand or a strong image which would make sense for the acquiring company to retain. Company A + Company B = (Company A + Company B)
6. Subsidiary Merger
55
give examples of subsidiary mergers
Example: - Planters Development Bank is a subsidiary of China Bank Savings (they are both considered a HORIZONTAL-SUBSIDIARY bank, horizontal kasi same industry, and subsidiary kasi nagging part ung smaller ng bigger)
56
Happens with the same scale/size (bali madidisolve ung same size and magiging part sila both ng **parent company)**
7. Consolidation Merger
57
is one in which both the companies lose their identity as separate entities and become a part of a bigger new company. This is generally the case with both the companies being of the same size.
7. Consolidation Merger
58
enumerate the ways of merger (a merger can take place in what ways?)
1. By purchasing of assets 2. By purchase of common shares 3. By exchanging of shares for assets 4. By exchanging of shares for shares
59
differentiate each ways of merger
1. By purchasing of assets - The assets of company Y may be sold to company X. Once this is done company Y is then legally terminated and company X survives. 2. By purchase of common shares - The common share of company Y may be purchased by company X. When company X holds all the shares of company Y, it is dissolve. 3. By exchanging of shares for assets - The company X may give their shares to stakeholders of company for its net assets. The company Y terminated by its shareholder who now holds share of company X. 4. By exchanging of shares for shares - Company X gives its shares to the shareholder of company Y and then company X is terminated.
60
The assets of company Y may be sold to company X. Once this is done company Y is then legally terminated and company X survives.
1. By purchasing of assets
61
The common share of company Y may be purchased by company X. When company X holds all the shares of company Y, it is dissolve.
2. By purchase of common shares
62
The company X may give their shares to stakeholders of company for its net assets. The company Y terminated by its shareholder who now holds share of company X.
3. By exchanging of shares for assets
63
Company X gives its shares to the shareholder of company Y and then company X is terminated.
4. By exchanging of shares for shares
64
enumerate the reasons of merger
- Future goals - Mutual benefits - Maximizing profits - Expansion of business - Economy of scale - Increase market share - Cost maximization - Diversification of risk - Goodwill - Product improvement
65
enumerate the benefits of merger:
1. Diversification of product and service offerings 2. Increase in plant capacity 3. Larger market share 4. Utilization of operational expertise and research and development (R&D) 5. Reduction of financial risk
66
why should firms takeover? (enumerate)
1. To gain opportunities of market growth more quickly than through internal means 2. To seek to gain benefits from economies of scale 3. To seek to gain a more dominant position in a national or global market 4. To acquire the skills or strengths of another firm to complement the existing business Ls 5. To acquire a speedy access to revenue streams that it would be difficult to build through normal internal growth 6. To diversify its product or service range to protect itself against downturns in its core markets
67
why do mergers fail?
1. Lack of human integration 2. Mismanagement of cultural issues 3. Lack of communication

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