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Mergers &

Acquisitions
Overview

 Mergers & Acquisition


 Differences
 Types of Mergers
 Types of Acquisitions
 The Reasons Behind Mergers & Acquisitions
 Example of Merger
 Example of Acquisition
Merger and Acquisition
 A Merger is a tool used by companies for the purpose of
expanding their operations often aiming at an increase of
their long term profitability.

 An Acquisition, also known as a takeover, is the buying of


one company (the ‘target’) by another.
Differences

Mergers Acquisitions

Two firms are combined on a One firm buys another firm


relatively co-equal basis
 Existing shares continue to float in
 Parent stocks are usually retired and market but new shares of those
new stock issued companies are not issued.
 Name may be the original or a  Can be by means of controlling
combination share, a majority, or all of the target
 Board of directors of merging firm’s stock
companies friendly agree on merger  Can be friendly or hostile
Types of Mergers
 Horizontal – Between business competitors

 Vertical – Moving up or down the value chain

 Conglomerate – Unrelated sectors


Types of Acquisitions

 Asset Purchase

 Stock Purchase
Acquisition Procedure
In an acquisition one firm acquires the other, in either a
friendly
or hostile takeover

 Friendly Procedure
 Unfriendly Procedure
The Reasons Behind
Mergers & Acquisitions

 Synergies
 Growth
 Diversification to Reduce Risk
 Economies of Scale
 Taxation
 Increased Market Share
Example of Merger

NIB Bank Ltd.


 NIB Bank Ltd. merged with PICIC and PICIC Commercial Bank
on 31 December 2007
 Horizontal type
 NIB Bank Ltd is a subsidiary of Temasek Holdings of Singapore
Now NIB Bank is the 7th largest bank of Pakistan with 240
branches
Merger with PICIC was in order to expand the business and
enhance in innovative products
Example of Acquisition

Standard Chartered
 After the acquisition of Union Bank in September 2006,
the new entity Standard Chartered Bank (Pakistan)
Limited was incorporated in Pakistan on 30 December
2006 as a subsidiary of Standard Chartered PLC.
 5th largest bank in Pakistan in terms of profitability and
assets.