1. Pop quiz 3 Results Kristian Krnić 1bpBožidar Klarin-Petrina 1bp MacKenzie Moore 1bp Ema Gorup 2pb Dan Stričević 1bp Zvonimir Medvidović 1bp Martin Obad 1bp Iva Pervan 2bp

2. Financing capital: discuss opportunities & threats government subsidies bank loans issuing bonds issuing shares  acquisitions: buyouts and takeovers

3. Why? → MK, p 105 to reinforce your position to reduce competition to rationalize production to diversify products/markets to gain access to new technology...

4. 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 vs. Explain the difference between horizontal and vertical integration Explain the difference between forward and backward integration 1 Horizontal integrationA enables cost savings 2 Vertical integrationB increases market share and reduces competition attain, buy, get, purchase, take, take possession of distribution chain

5. 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 vs. distribution chain Explain the difference between horizontal and vertical integration Explain the difference between forward and backward integration 1 Horizontal integrationA enables cost savings 2 Vertical integrationB increases market share and reduces competition

6. Mergers (integrations) with: competitors = distributors = suppliers = horizontal integration forward integration backward integration verticalvertical

7. Pg 2 Explain the difference between a raid and a takeover bid AdvantagesDisadvantages A raid A takeover bid ● Explain the difference between a friendly and a hostile bid

8. 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

9. Pg. 3 Why do investment banks encourage companies to take over other companies? Pg. 4 Explain conglomerate What does LBO stand for? L _ _ _ _ _ _ _ db _ _ _ _ _ s Which globally famous Hollywood movie involves a male character who specializes in LBOs? Do you remember what it is he is doing in the movie?

10. 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 →Takeovers handout → LBO handout

11. What is missing? ~ between ~talks ~ proposal ~ agreement conglomerate ~ defensive ~ horizontal ~ vertical ~

12. What is missing? MERGER a merger between similar banks but to merge with a similar bank merger talks merger proposaln. + n. merger agreement merger ≈ integration conglomerate merger defensive merger adj. + n. horizontal merger / integration vertical merger / integration

13. What is missing? friendly ~ hostile/unfriendly ~ leveraged ~ creeping ~ ~battle ~bid What is missing? leveraged ~(LBO) employee/staff ~ management ~ (MBO)

14. What is missing? TAKEOVER friendly takeover hostile/unfriendly takeover leveraged takeover creeping takeover takeover battle takeover bid What is missing? BUYOUT leveraged buyout (LBO) employee/staff buyout management buyout (MBO)

15. Review: M & A

16. Mergers & acquisitions → asset stripping Success →Retained earnings →Investments in R&D Acquisition of other companies (t________, b______) akeoversuyouts Conglomerates Merger (integration with): companies in un___ ed fields relat LBO a________ financed by debt cquisition stripped of assets & split up

17. TYPES 1.ACQUISITION / TAKEOVER 2.FRIENDLY TAKEOVER 3.HOSTILE TAKEOVER 4. MERGER 5.JOINT VENTURE 6.LEVERAGED BUYOUT 7.CORPORATE RAID

18. 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

19. 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

20. 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