Merger & Acquisition
Merger & Acquisition
Merger & Acquisition
GSN
MERGER
• Employee retention
• Culture
• Communication
MERITS & DEMERITS OF M&A
Merits Demerits
Cost Savings (Synergy) Overpaying
Revenue Enhancement Large expenses associated with the investment
Increase Market Share
Enhance Financial Resources
POST OFFER DEFENSE MECHANISM
• Say No
• Litigation
• White knight
COMPARABLE COMPANY VALUATION
VAT = VA+VT+S-C
Where,
VAT = Post merger value of the combined company (Acquirer+Target)
VA = Pre merger value of acquirer
VT = Pre merger value of Target
S = Synergies created by merger
C = Cash paid to target shareholders
FORMS OF PAYMENT
• Cash offer
• Stock offer
• Mixed offer
GAIN FOR THE ACQUIRER AND TARGET
S.M & Co. makes a cash offer to acquire G.R & Co. at Rs.15 per share of G.R’s stock. The
synergies from this merger is estimated to be Rs. 200 million.
Particulars S.M & Co. G.R & Co.