MERGERS AND ACQUISITION MERGERS:-The combining of two or more companies, generally by offering the stockholders of one company securities

in the acquiring company in exchange for the surrender of their stock. Basically, when two companies become one. This decision is usually mutual between both firms. ACQUISITION:- A 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. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both. TheMainIdea One plus one makes three: this equation is the special alchemy of a merger or an acquisition. The key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies - at least, that's the reasoning behind M&A. This rationale is particularly alluring to companies when times are tough. Strong companies will act to buy other companies to create a more competitive, cost-efficient company. The companies will come together hoping to gain a greater market share or to achieve greater efficiency. Because of these potential benefits, target companies will often agree to be purchased when they know they cannot survive alone. Distinction:Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things.

When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "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 about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action 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 example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new

company,DaimlerChrysler,wascreated.

In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it's technically an acquisition. Being bought out often carries negative connotations, therefore, by describing the deal as a merger, deal makers and top managers try to make the takeover more palatable. Synergy Synergy is the magic force that allows for enhanced cost efficiencies of the new business. Synergy takes the form of revenue enhancement and companies hope to benefit from the following. y y y y
y y

cost savings. By merging, the

Staff reductions Economies of scale Acquiring new technology Improved market reach and industry visibility VARIETIES OF MERGERS:Horizontal merger - Two companies that are in direct competition and share the same product lines and markets.

Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.

Market-extension merger - Two companies that sell the same products in different markets.

Product-extension merger - Two companies selling different but related products in the same market. Conglomeration - Two companies that have no common business areas.

Acquisitions As you can see, an acquisition may be only slightly different from a merger. In fact, it may be different in name only. Like mergers, acquisitions are actions through which companies seek economies of scale, efficiencies and enhanced market visibility. Unlike all mergers, all acquisitions involve one firm purchasing another - there is no exchange of stock

or consolidation as a new company. Acquisitions are often congenial, and all parties feel satisfied with the deal. Other times, acquisitions are more hostile.

Another type of acquisition is a reverse merger, a deal that enables a private company to get publicly-listed in a relatively short time period. A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly-listed shell company, usually one with no business and limited assets. The private company reverse merges into the public company, and together they become an entirely new public corporation with tradable shares. EXAMPLES ARE:Hindalco acquired Canada based Novelis Tata Steel acquired Corus Group plc. Dr. Reddy's Labs acquired Betapharm Ranbaxy Labs acquired Terapia SA The acquisition of Daewoo Electronics Corp. by Videocon. HPCL acquired Kenya Petroleum Refinery Ltd.. AMALGAMATION DEFINITION:- In general term , when two or more companies engaged in similar nature of business join together and form a new company for runing the business is called amalgamation. EX:-Centurion bank of Punjab is merge with hdfc bank.

COLLABORATION:Collaboration is a recursive process where two or more people or organizations work together in an intersection of common goals for example, an intellectual endeavor[1][2] that is creative in nature[3] by sharing knowledge, learning and building consensus. Most collaboration requires leadership, although the form of leadership can be social within a decentralized and egalitarian group. EX:- MINEX and SURPAC

DISINVESTMENT DEFINITION:The action of an organization or government selling or liquidating an asset or subsidiary. Alsoknownas"divestiture". A reduction in capital expenditure, or the decision of a company not to replenish depleted capitalgoods. A company or government organization will divest an asset or subsidiary as a strategic move for the company, planning to put the proceeds from the divestiture to better use that garners a higher return on investment.

. A company will likely not replace capital goods or continue to invest in certain assets unless it feels it is receiving a return that justifies the investment. If there is a better place to invest, they may deplete certain capital goods and invest in other more profitable assets.

Alternatively a company may have to divest unwillingly if it needs cash to sustain operations EX:-PSU Disinvestment HIVING Hive off - remove from a group and make separate; "The unit was hived off from its parent company. EX:- Diesel Locomotive Works at Varanasi REMITTANCES The act of transmitting money, bills, or the like, esp. to a distant place, as in satisfaction of a demand, or in discharge of an obligation. To make a payment by any non-credit means. Examples of remittance include cash, check and electronic transfer.