ALIA NALUGO ELIZABETH ANUWE DANISH AHMAD ANIKITA ZAIN RAHUL PRESENTED BY 1

CONTENT OF SLIDE. THE DEFINITION OF MERGING THE TWO FORMS OF MERGING: A) MERGING THROUGH ABSORPTION B) MERGING THROUGH CONSOLIDATION THE TYPES OF MERGING: A)VERTICAL B)HORIZONTAL C)MARKET-EXTENSION D)PRODUCT-EXTENSION E)CONGLOMERATION ADVANTAGES OF MERGING DISADVANTAGES OF MERGING ; 2

SLIDES FROM 1-6 ; presented by NALUGO ALIA 7-8 ; presented by ELIZABETH ANUWE 9- ; presented by ZAIN ; presented by AKINKITA 12- ; presented by RAHUL 13 ; presented by DANISH AHMED The conclusion statement done by NALUGO ALIA (From slide 14-16) The source our presentation was and YouTube videos while the conclusion was just an analyzed summary of what the presentation contained. 3

MERGING Itrefers to the process where two or more companies Come together to form one major company. 4

A MERGER This is where by two or more companies come together to form one company. In India a merger is known as an amalgamator (amalgamation). 5

FORMS OFF MERGING There a basically two forms of merging, which are : a)mergers through absorption. : b)mergers through consolidation. 6

MERGER THROUGH ABSORPTION This refers to the combination of two or more than two companies to form one existing company. For example, absorption of Tata Oil Mills Ltmd with the Hindustan Lever Ltmd (HLL). 7

MERGERS THROUGH CONSOLIDATION Combination of two or more companies into a new company. that is all companies dissolved to form one new company For example. The HCL- hinduston computer ltd + hinduston instruments ltd + Indian software + Indian repro graphic ltd = hinduston computers ltd 8

TYPES OF MERGERS HORIZONTAL MERGER HORIZONTAL MERGER:the merger where two companies who a are direct competitor of one another. That is, serve the same market and sell the same product. For example: merger of bankof mathura with icici bank. VERTICAL MERGER VERTICAL MERGER:involves a costomer and a company of suppliers and company merging. For example: general motors buying Bridgestone tyres and Michelin tyres. 9

MARKET EXTENSION-MERGER MARKET EXTENSION-MERGER:involves the combinationof two companies that sell the same products in different market. For example: dells alien ware gaming laptops. 10

PRODUCT EXTENSION-MERGER PRODUCT EXTENSION-MERGER: takes place between two business organisation that deal in products that are related to the other and operate in the same market. That is,companies selling different products which are related. For example: pencils and blades. CONGLOMERATION: CONGLOMERATION: occurs when two organization sell products in completely different markets. For example: Tata-sky 11

ADVANTAGES OF MERGERS Does not requires cash. Accomplished tax free for both parties. Lets the target(in effect, the seller)realize the appreciation potential of the merged entity, instead of being limited to sales proceeds. Allows shareholders of smaller entities to own a smaller piece of a larger pie, increasing their overall net worth. Merger of a privately held company into a publicly held company allows the target company shareholders to receive a public company stock. Allows the acquirer to avoid many of the costly and time consuming aspects of assets purchase, such as the assignments of lease and bulk sales notification. 12

DISADVANTAGES OF MERGER Diseconomies of scale if business becomes too large, which leads to higher unit cost. Clashes of culture between different types of businesses can occur, reducing the effectiveness of the integration. May need to make some workers redundant, especially at management level-this may have an effect on motivation. It may lead to conflict on objectives between different businesses. 13

IN CONCLUSION, Merging is basically a process where two or more companies come together to form one existing company. There are five types of merger,where by the first four types are related (horizontal merging, vertical merging, product extension merging and market extension merging)and the last type (conglomerate merging) is unrelated. - Vertical merging is where both the manufacturer and consumer come together to form one company, like joining of a car company and a tyre company. - Horizontal merging is where two companies competing for the same product come together. 14

- Market extension is basically where companies that produce goods for complementary markets come together to form a wide company, for example the Kraft foods company merged with the Cadbury company, this was because the Cadbury company used to do well in the market base of India and Brazil. - Product extension is basically where two companies producing complementary goods come together to form one major company. - Conglomerate merging is basically where two or more companies that are not related in any way come together. This is usually driven because of increasing there profit margin, like Tata sky. 15

The reason why companies merge is basically for value for value creation which is bought about by the enlargement of the economies of scale and the economies of scope. In this case the merged companies can share brand names,pakages,share customers and also face a reduction in competitors. Thank you! 16