Dealers Buying Longaberger Baskets Near Reading Pa
A. TERMS, THEORIES AND DEFINITIONS
Mergers and acquisitions (abbreviated Grand&A) are both aspects of strategic management , corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that tin help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.
Distinction betwixt Mergers and Acquisitions
Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly dissimilar things.
When one company takes over some other and clearly established itself as the new owner, the purchase is called an acquisition. From a legal betoken of view, the target company ceases to be, the heir-apparent "swallows" the business and the buyer's stock continues to be traded.
In the pure sense of the term, a merger happens when two firms, often of well-nigh the same size, agree to get forward every bit a unmarried new company rather than remain separately owned and operated. This kind of activity is more precisely referred to as a "merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place. For case, both Daimler-Benz and Chrysler ceased to exist when the ii firms merged, and a new company, DaimlerChrysler, was created.
In practice, notwithstanding, actual mergers of equals don't happen very often. Usually, one company will purchase some other and, as part of the deal's terms, simply let the acquired firm to proclaim that the action is a merger of equals, even if information technology's technically an acquisition. Being bought out often carries negative connotations, therefore, past describing the deal every bit a merger, deal makers and top managers try to make the takeover more palatable.
Whether a buy is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile and how information technology is announced. In other words, the existent difference lies in how the buy is communicated to and received by the target visitor'due south board of directors, employees and shareholders.
B. VOCABULARY EXERCISES
Lucifer the words on the left with the words on the right
| 1. make / decline / accept / improve / retract 2. buy up some 3. subscribe to / follow / ignore four. an unregulated 5. exercise / close half-dozen. gain 7. consolidate viii. sell off an | a. a code of practise b. controlling interest c. a deal d. activeness / industry e. unwanted subsidiary f. an offering / a bid 1000. our position in the market place h. shares / smaller companies |
C. READING
Reading 1:
Leap in their steps. Some notes for company bosses out on the prowl.
(Adapted from The Economist, February, 2004.)
ane. After a long hibernation, company bosses are beginning to rediscover their animal spirits. The $145 billion – worth of global mergers and acquisitions announced last month was the highest for any calendar month in over three years.There are now lots of main executives thinking nigh what target they might attack in order to add growth and value to their companies and celebrity to themselves. Although they slowed down for a while because of the dot – com boom, they are once over again on the prowl.
2. What most CEOs do to amend their chances of success in the coming blitz to buy? Kickoff of all, they should not worry to much about widely – quoted statistics suggesting that every bit many equally three out of every four deals take failed to create shareholder value for the acquiring company. The figures are heavily influenced past the time menstruum chosen and in whatever case, i out of iv is slap-up when compared with the chances of getting a new business started. And so they should keep looking for good targets.
three. There was a fourth dimension when meridian executives considered any type of business to be a good target. But in the 1990s the idea of the conglomerate, the belongings visitor with a diverse portfolio of businesses, went out of manner every bit some of its nearly prominent protagonists – CBS and Hanson Trust, for example – faltered. Companies had establish by then that they could add more value by concentrating on their 'core competence', although one of the most successful companies of the decade, General Electric, was trivial more than than an old – style conglomerate with a particularly fast – changing portfolio.
4. Brian Roberts, the man who built Comcast into a behemothic cable company, was e'er known for concentrating on his core product – until his recent bid for Disney, that is. It is not nonetheless clear wether his bid is an opportunistic attempt to acquire and pause up an undervalued house, or wether he is chasing the media industry'due south dream of combining entertainment content with distribution, a strategy which has made fortunes for a few but which regularly proves the ruin of many large media takeovers.
5. If vertical integaration is Comcast'southward aim, then information technology volition be imperative for Mr. Roberts to have a clear plan of how to achieve that. For in the end, CEOs will be judged less for spotting a good target than for digesting information technology well, a much more difficult task. The assumption will be that, if they are paying a lot of money for a business, they know exactly what they want to exercise with it.
6. If CEOs wish to avert some of the failure of the 1990s, they should non forget that they are subject to the eternal trend of business planners to be over – confident. Information technology is a near certainty that, if asked, almost 99 per cent of them would depict themselves as 'higher up average' at making mergers and acquisitions work. Deplorable as it may be, that can never be true.
vii. They should also be aware that they volition be powerfully influenced by the herd instinct, the feeling that it is amend to be incorrect in large numbers than to be right alone. In the coming months they volition have to watch carefully to be sure that the competitive infinite into which the predator in front of them is so joyfully leaping does not lie at the border of a cliff.
Do i. Read the article. Are these statements true or false?
i. In the first paragraph, the author says that CEOs can no longer detect targets for mergers and acquistions.
2. Studying facts and figures from the contempo past won't necessarily help CEOs to form a successful alliance.
3. The tendency in the 1990s was for companies to build portfolios with diverse investments.
4. The author suggests that media mergers are always likely to improve share value.
five. CEOs demand above all to find the right company to learn.
vi. If business planners wish to avoid some of the errors of the 1990s, they should be prudent when taking risks.
Exercise two. Observe the words in italics in the text and match them with their meaning below.
1.___________ A collection of companies
2.___________ An offer to buy
3.___________ Most important activity
4.___________ Controlling all stages of one particular blazon of business organization
5.___________ Organization comprising several companies
6.___________ What stocks in a public company are worth.
Reading 2:
A.___________
Successful companies more often than not want to diversify; to introduce new products or services, and enter new markets. Nonetheless entering new markets with new brands is ussually a deadening, expensive and risky process, so buying another company with existing products and customers is often cheaper and safer. If a state is too big to acquire, another possibility is to merge with it, forming a new company out of the tow erstwhile ones. Apart from diversifying, reasons for acquiring companies including getting stronger position in a marketplace and a larger market place share, reducing competition, benefiting from economics of scale, and making use of plant and equipment.
B.___________
In that location are ii ways to larn a company: a raid or a takeover bid. A raid only involves buying as many of a visitor's stocks equally possible on the stock marketplace. Of course if at that place is more than demand for stock than at that place are sellers, this increases the stock price. A takeover bid is a public offer to a company's stockholders to buy their stocks at a sure price (college than the current marketplace cost) during a express menstruum of time. This tin be much more expensive than a raid, considering if all the stockholders accept the bid, the buyer has to buy 100% of the visitor'south stocks, even though they but demand l% plus i to gain control of a company. (In fact they often need much less, a many stockholders practise not vote at stockholders' meeting.) If stockholders have a bid, but receive stocks in the other visitor instead of cash, it is not always articulate if the operation is a takeover or a merger – journalists sometimes use both terms.
C.___________
Companies are somtimesencouraged to take over other ones by investment banks, if researchers in their Mergers and Acquisitions departments consider that the target companies are undervalued. Banks tin can earn high fees for advising on takeovers.
D.___________
Yet at that place are also a number of good arguments against takeovers. Diversification tin can harm a company'due south image, goodwill and shared values (e.g. quality, good service, innovation). After a hostile takeovers (where the managers of a visitor do non want it to be taken over), the top exccutives of the newly acquired company are often replaced or choose to go out. This is a problem if what fabricated the company special was its staff (or 'human capital letter') rather than its products and client base. Futhermore, a company's optimum size or market share can be quite small, and large conglomerates tin become unmanageable an inefficient. Takeovers do not always event in synergy. In fact, statistics show that about mergers and acquisitions reduce rather than increment the company's value.
E.___________
Consequently, corporate raider and private equity companies look for big conglomerates (formed by a serious of takeovers) which have become inefficient, and so are undervalued. In other words, their market capitalization (the price of all their stocks) is less than the value of their total assets, including state, buildings and – unfortunately – pension funds. Raiders can infringe money, ussually by issuing bond, and buy the companies. They tin split them up or sell off the assets, then pay back the bonds while making a large profit. Until the law was inverse, they were also able to to appropriate the pension funds. This is known as asset – stripping, and such takeovers are called leveraged buyouts or LBOs. If a visitor's own managers buy its stocks, this is a management buyout of MBO.
Do 3. Read the text and match the titles (ane – 5) to the paragraphs (A – E)
1. Disavantages of takeovers
2. Raiders and assets – tripping
iii. Raids and bids
4. The 'make – or – purchase' decision
five. The role of banks
Do four. Find words or phrases in the text that mean the following:
i. ___________ Adding new and different products or services
2. ___________ A company's sales expressed as a percentage of the total sales in the market
iii. ___________ Reductions in costs resulting from increased production
4. ___________ Money paid to investment banks for work done
five. ___________ All the individuals or organizations that regularly or occasionally purchase goods or services from a company
vi. ___________ Best, perfect or ideal
7. ___________ Combined product or productivity that is greater than the sum of the divide parts
8. ___________ People or companies that attempt to purchase and sell other companies to brand a profit
9. ___________ Large corporation or groups of companies offering a number of different products or services
10. __________ Buying a company in club to sell its nigh valuable assets at a profit
D. FOLLOW – UP EXERCISES
Do i. Choose the all-time word from each pair in bold type
1. Anderson Accounting has been taken over / taken up by Berlin Brothers.
2. Collins Corporation has made a bid / play for Dacher Deutsche.
3. The board of Dacher Deutsche rejected / denied Collins Corporation's offer.
4. Eastern Electricity has joined / merged with Grampian Gas.
5. Inter – tek has been sold by its father / parent visitor, Harrison Holdings.
6. Inter – tek has been acquired / got by Johson & Johnson.
7. Harrison Holdings is expected to sell more than of its subsidiaries / children in the future.
Practice two. Put the words below into the correct spaces.
conditional bid decision-making interest hostile takeover
merger 'poisonous substance pill' shareholder
target company unconditional bid 'white knight'
Takeover bids
In a takeover bid, another person or business organization makes an offer to the (1)................. to buy their shares at a fixed price. The aim is to have control of the (two)......................
If it is a welcome takeover bid, the directors of the company advise the shareholders to accept the offer. If the shareholders have the offering, the upshot is commonly chosen a (3).........................
If the bid is unwelcome, the directors advise the shareholders against accepting it. The bidders may and so write to the shareholders explaining the advantages of the takeover, and perhaps improving the offering for the share. This is known equally a (4).............................. bid.
To avoid an unwelcome takeoverbid, the directors may devise a (v)...................... – a tactic that will mean the visitor is worth much less if the takeover bid is successful.
Alternatively, they may look for a (6)........................ – an alternative applicant for the company whose takeover would exist more welcome.
In an (vii)......................., the applicant offers a price for each share regardless of how many share it can purchase. In a (eight)......................., the offer price depends on the bidder being able to buy enough shares to gain a (9)....................... in the target company.
Exercise 3. Choose the best word to go into the space.
1. Berlin Brothers bought a ................ shareholding in Anderson Accouting.
a. more – than – half b. biggest c. majority
two. In the Uk, mergers and acquisitions are not ................buy the government.
a. controlled b. checked c. regulated
3. Nevertheless, they subject to a voluntary ................
a. lawmaking of behave a. code of exercise c. mode of doing things
4. Ownership a company for less than the value of its assets, then selling those assets to make a profti is called.........................
a. nugget stripping b. profiteering c. exploitation
5. Sometimes a controlling involvement in a visitor is bought buy its managers. This called a management .........................
a. buy – out b. purchase – out c. buy – in
half dozen. In the past, a lot of small-scale banks were .................buy larger industry.
a. bought upwardly b. eaten up c. chewed up
7. In other words, at that place was........................ in the bank manufacture.
a. amalgamation b. combining c. consolidation
8. A takeover of a foreign company is known as a ....................deal.
a. cantankerous – boundary b. cantankerous – border c. cross – state
E. GUIDE
READING
| Practice ane 1. F 2. T 3. F 4. F 5. F 6. T | Exercise two 1. conglomerate ii. bid 3. cadre competence 4. vertical intergration five. porfolio half dozen. shareholder value | Exercise 3 1. D 2. E iii. B 4. A 5. C |
Exercise 4
| 1. diversifying ii. marketplace share 3. economies of calibration iv. fees 5. client | 6. optimum 7.synergy viii. raider 9. conglomerate ten. asset stripping |
FOLLOW – UP EXERCISES
| Exercise 1 1. taken over 2. bid 3. rejected 4. merged v. parent 6. caused 7. subsidiaries | Exercise 2 1. shareholder 2. target visitor 3. merger iv. hostile takeover 5. poison pill 6. white knight vii. unconditional bid viii. provisional bid nine. controlling interest | Exercise 3 1. a two. c 3. b 4. a 5. a half dozen. a 7. c 8. b |
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