Merger and Acquisitions:
Introduction
Presented by
Josua Tarigan, SE, MBA, CMA, CFP, CSRS
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Your Text Book
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Merger and Acquisitions Trends
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Scorecard of Worldwide M&A
(Thomson Reuters)
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Worldwide M&A by Target Industry
(Thomson Reuters)
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Asian M&A by Target Industry
(Thomson Reuters)
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Top Fifteen Worldwide M&A 2012
(Thomson Reuters)
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Top Ten Asian M&A 2012
(Thomson Reuters)
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Case Study: Vodafone
Largest Takeover History
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Case Study: Vodafone
Vodafone Air Touch (UK) acquisition
Mannesmann AG (German) with value
transaction $202.785.130.000 in June 2000.
Both telecom company, actually alliance
partners. Mannesmann AG was a large
company with 100.000 employees and had
been existence for over 100 years
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Case Study: Vodafone
Mannesmann tried to resist the Vodafone
takeover, but the board ultimately agreed to
the generous price paid. The price book ratio
is 125,5
At first time, Vodafone agree to maintain
Mannesmann name, however it was changed
slowly-something that made good sense in
thi age globalization. In order to reduce
marketing cost
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Case Study: Vodafone
Up unitl mid-1990s, takeover company from
foreigner difficult to complete, as German
having corporate governance institution.
However since 1990s-2000s the condition
was changed
But, the takeoverof Manesmann was a shock
to the German corporate world. Parties that
were passive began to become more active in
response to a popular outcry against any
further takeover
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Merger and Acquisitions: Concepts
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Definitions
Merger is combination of two corporations in which
only one corporation survives. Another term used is
statutory merger. Example Bank Danamon
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Definitions
Acquisition is another types of Merger, which is called
subsidiary merger. Example Semen Gresik Tbk
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Definitions
Consolidation is business combination wherby two or
more companies join to form an entirely new
company. Example Bank Mandiri
Bank
Pembangunan
Indonesia
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Types of Mergers
Related
Vertical: Suppliers or
customers (Merck & Medco)
Unrelated
Conglomerate: verything else
(Philip Morris & General
Foods)
Horizontal: competitors
(Exxon & Mobil)
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Reason for M&A
Expansion
Financial
Factors
Tax Motives
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Merger Consideration (Payment)
Cash
Securities
Mixed Cash
& Securities
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detik.com
Acquisition 530 billion (Rp) by PARA Group Juni 2011
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Original owned by Saratoga Group
Acquisition 1 million (Aus$) & stock ownership by IPGA Mei 2011
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M&A Professionals (Financial Advisors)
Worldwide 2012
(Thomson Reuters)
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M&A Professionals (Legal Advisors) by
Target Industry in USA 2012 (Thomson Reuters)
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M&A Professionals (Legal Advisors) by
Target Industry in Asian 2012 (Thomson Reuters)
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Merger Arbitrage
Arbitrage refers to the buying of an asset in
one market and selling it in another.
Arbitrage is another group of professionals
who can play an important role in M&A
The M&A arbitrage business is fraught with
risks. Some investment banks have arbitrage
departments
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LBO (Leverage Buyouts)
LBO is method which the buyer uses DEBT to
finance the acquisition of company. Usually
there are 2 versions of LBO
LBO usually used by private company to acquire
public company, hence “public” becomes private
since the buyer is private company and purchase
all the equity. This process call going private
Another version of LBI is management
buyout, which means the management of
company is the buyer
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Reverse Mergers
A merger in which a private company may go
public by merging with an already public
company
A reverse merger may take between two to
three months to complete whereas an IPO is
a more involved process that may longer
Beside quickly, the cost will be lower compare
with traditional IPO
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Special Purchase Acquisition Vehicles
(SPACS)
SPACs are the companies raise the capital in
an IPO where the funds are earmarked for
acquisitions
Sometimes also referred to as blank check
companies or cash-shells
SPACs were very popular between 2006 and
2008
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Holding Companies (Advantage)
Rather M&A, the acquiring company may choose to purchase only a
portion (majority) of target’s stock and act as a holding company
Lower Cost. Acquirer may be able to
attain control of a target with a lower
cost rather than M&A
Long and complex procedured not
required. As we already discussed, M&A
process will take various law &
government procedures
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Holding Companies (Disadvantage)
Multiple taxation. The holding company
structure add another layer to the corporate
structure. Normally stockholder income is
subject to double taxation
The influence still not 100%, it leaves the
holding company withother outside
shareholders who will have some controlling
influence
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Merger & Strategic Management
External
Analysis
Mission
Strategic
Choice
Objectives
Strategy
Implementation
Competitive
Advantage
Which Businesses
to Enter?
Internal
Analysis
Corporate Level
Strategy
• Vertical Integration
• Diversification
Mode of Entry?
• Strategic Alliances
• Mergers &
Acquisitions
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TERIMAKASIH
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