Lenovo eyes takeover, with IBM server unit in focus
Please Write Your Response in 500 Words
For Grade 8A
__________________________________
New Case Studies Discuss Question
Mergers and Acquisitions helps firms to grow their size exponentially and rise their growth prospects in the national and international markets. It provide greater market access, new technologies, capital assets and above all access to new markets.
Discuss whether firms always benefits from the mergers and acquisitions.
Submit your article before
February 2nd 2014
Please Write Your Response in 500 Words
Note:
1. Write with references.
2. Present market examples in support of your reasons.
3. Marks allocation for this article is 20
Rubrics for Marks.
A. Theoretical Explanation 5 Marks
B. References. 5 Marks
C. Use of Key words. 5 Marks
D. Examples from various Markets 5 Marks
A Merger is 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. A merger is basically when two or more firms in the same industry mutually agrees to combine or ‘merge’ to make one larger company. An acquisition is 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. Acquisitions can be either friendly or hostile. Friendly acquisitions occur when the target firm expresses its agreement to be acquired, whereas hostile acquisitions don't have the same agreement from the target firm and the acquiring firm needs to actively purchase large stakes of the target company in order to have a majority stake. In either case, the acquiring company often offers a premium on the market price of the target company's shares in order to entice shareholders to sell. For example, News Corp.'s bid to acquire Dow Jones was equal to a 65% premium over the stock's market price.
ReplyDeleteMerging, as said earlier, require the mutual agreement of the merger and the target firm, and generally, for a firm to reach an agreement on a potentially beneficial business opportunity, research and analysis are meticulously done to avoid any mistakes. Therefore an agreement from the two or more firms means they think it will benefit both of them respectively. A merge between firms can bring them more efficiency in manufacturing or the extracting of resources, and allow them access to a larger, if not new, market, which is why merging companies are generally in a similar or the same industry, such as mobile technologies, or oil and gas extraction, or cosmetics, etc. A merged company can reach extremely efficient production by reaching a very significant economies of scale. Two competing firms in the same industry, each wanting to increase its market share, can agree to a merger, and will benefit a very large market share, and outcompete other small firms in that industry. For example, ExxonMobil was formed in 1999 following an agreement by US companies Exxon and Mobil to merge their operations. The combined company is now one of the largest in the world, and is the second largest firm in the US in terms of the most market capital. They benefit from a large market share and significant economies of scale in oil and gas exploration, extraction, production, and sales.
However, another type of external or inorganic integration, better known as a takeover or ‘acquisition’, has a very disadvantageous effect on an uncooperative target firm that disagrees on the takeover. When a hostile takeover occurs it does not just affect shareholders. It impacts management, employees and even customers. A hostile takeover can have widespread effects as it trickles through an entire organization, both external and internal stakeholders. When a change in company control takes over often the corporation who becomes in charge often prefers to bring in their own staff members to assimilate and become the decision makers of their newly acquired business. As a result of the acquisition the original management may be dismissed or given notice. Sometimes the changes entail letting everyone go, other times the new corporation maintains some employees for good or to train their own people. Whatever the decision on employees, this can have a serious impact on employee morale. Even customers are affected by a hostile takeover. Granted it does not affect them probably as much as the management, employees or stockholders, but nonetheless it does impact them if they are loyal customers. An example of a hostile takeover occurred when the PepsiCo acquired the Quaker Oats Company, an American food company well-known for its breakfast cereals and oatmeal products. In 2001, PepsiCo, in an attempt to diversify its portfolio in non-carbonated drinks, primarily acquired Quaker Oats because QO owned the Gatorade brand. Even though this merger created the fourth-largest consumer goods company in the world, many of Quaker Oats’ managers were against the acquisition, claiming that such a merger was unlawful and contrary to the public interest.
ReplyDeleteIn conclusion, a merger brings more benefits and is generally advantageous to both sides of the merge, allowing access to a larger economies of scale and larger market or market share. A takeover or acquisition of a firm may be disadvantageous to the target firm, but benefits the company that took over.
Ivan Alexander 8A
Great work Ivan, Example of Pepsi Co company well goes with the writings.
DeleteThere are two main ways a firm can grow in size and expand it’s scale of production. It’s either by internal growth or external growth. Internal growth or external growth involves a firm expanding it’s scale of production through the purchase of additional equipment, increasing the size of it’s premises and hiring more labour if needed. External growth involves more firms joining in together to form a large enterprise, which is known as integration by merger or takeover.
ReplyDeleteA merger occurs when owner of one firm or more agree to join together to form a new enterprise. For example is Disney-Pixar merger. The movie of Cars, Toy Story, and Nemo are all released buy the collaboration of Disney and Pixar. Disney had released all of Pixar’s movies before, but with their contract about to run out after the release of “Cars,” the merger made perfect sense. With the merger, the two companies could collaborate freely and easily. But merger could also make the enterprise failed. For example is in the merging of sears and Kmart. investor Eddie Lampert purchased both a failing Sears and Kmart in 2005, and merged them to become Sears Holdings. However, Sears Holdings continued the downward spiral of both companies. Some blame their focus on “soft goods” (clothes and home goods) rather than hard goods (appliances and tools). Others think Sears tried to compete with mega giant Walmart with a variety of stores - Sears Essentials, for instance – that were utter failures. The advantages of merger is that it can gain economic of scale because increase output decrease average costs, it also provide greater efficiency, and protect a firm from bankrupt. While the disadvantages is there can be a conflict after joining into one enterprise.
While a takeover or acquisition occurs when one company buys enough shares in the ownership of other public company which can happen without the agreement of the owner of the other company. For example is when British petroleum takeover Amoco in 1998 for 48 billion and when Google takeover Motorola mobility in 2011 for nine billion and eight hundred million of dollar. The advantages of takeover are they increase market share and they increase financial gain. The disadvantage of takeover are it’s long to have break even point if the firm that we buy is to expensive and it required high cost.
There are two main types of integration between firms, horizontal integration and vertical integration. Horizontal integration occur when a firm merge or takeover another firm which doing the same type of business activity. While vertical integration occurs when a firm merge or takeover another firm which engage different type of business activity. The example of horizontal integration is when Delta Airlines takeover Northwest Airlines which both of them working in the airlines business activity, or when Microsoft takeover Yahoo. The advantages of Horizontal integration are Lower cost because of higher output leads to greater economic of scale and higher efficiency and increased market power. The examples for vertical integration are American apparel, Warner Brothers, and Apple Inc. The advantages of the vertical Integration are more control over value chain and offers significantly ability to control costs throughout the distribution process.
For me firms won’t always benefits from the mergers and takeover.
Good work Nicolas. You have included many cases representing the success of mergers/ Acquisitions.
ReplyDeleteFirms are able to expand by internal growth or external growth. Internal growth refers to a situation where a firm increases its size by investing in its existing product range or developing new products. Internal growth is a much slower form of business growth, and it does not involve any change in management or work methodology. External growth, in contrast, involves a larger amount of money, but is much quicker. It takes place by the use of mergers and takeovers. A merger occurs when two firms conbine, with the consent of both groups of shareholders and directors. It is generally done by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. This decision is usually mutual between both firms. An acquisition (also known as a takeover) happens when more than 50% of the stocks in a firm is purchased by another, usually larger, firm. Therefore, the predator firm would gain full control over the newly acquired company. An acquisition can be either hostile or friendly. In a ‘hostile’ takeover, a raider makes a tender offer directly to the shareholders of the target company, without consulting the incumbent management. Each shareholder decides individually whether or not to tender his shares. In contrast, a ‘friendly’ takeover has to be approved by shareholders and management.
ReplyDeleteMergers and acquisitions are advantageous for businesses. External growth is much faster compared to internal growth, as the firm can immediately obtain the benefits of the acquired business. Larger firms with increased outputs can reduce production costs. Cost efficiency is another beneficial aspect of merger and acquisition. This is because any kind of merger actually improves the purchasing power as there is more negotiation with bulk orders. Apart from that staff reduction also helps a great deal in cutting cost and increasing profit margins of the company. Apart from this increase in volume of production results in reduced cost of production per unit that eventually leads to raised economies of scale. Firms may therefore gain larger profits. Firms will also gain access to quality staff and new skills. Many firms merge or take over another firm to attain a certain technology that they do not possess. Mergers are able to Protect an industry from closing. Mergers may be beneficial in a declining industry where firms are struggling to stay afloat. For example, the UK government allowed a merger between Lloyds TSB and HBOS when the banking industry was in crisis. Both mergers and acquisitions allow a wider customer base and a larger market share. This offers new areas and new sales opportunities for the business. It is easier to merge two businesses or acquire a business which has its own market rather than developing your own market. Mergers and acquisitions will also reduce competition between two or more businesses. For instance, The Royal Dutch Shell Group was created through the merging of two rival companies: Royal Dutch Petroleum and Shell Transport & Trading. Commonly known as Shell, the company is one of the world’s most valuable companies, and it is the largest company in the world based on revenue. Its transaction value in USD is equal to $ 74,559,000,000. In 2012, Microsoft acquired Skype, the popular voice-over-IP service for $8.5 billion, giving the software company a major foothold in the growing market for Internet telephony services. Another example of a successful merger is Disney-Pixar. Pixar has plans for twice-yearly films, unthinkable before the merger, and has certainly gained the expert advice from Disney when it comes to advertising, marketing plugs, and merchandising.
However, mergers and acquisitions are not always successful. Mergers require an adjustment period of the combining of two firms. During this period, production processes may be disrupted as the newly formed entity institutes new processes. As a result, customers might not receive their orders in timely fashion. Employees need to be retrained which increases costs and takes time. The uncertainty surrounding mergers can create a high level of stress for employees. Even before the merger becomes official, there can be uncertainty about its impact on jobs, as mergers sometimes cause the need for job elimination. Even if employees keep their jobs, they may worry that the merger will not be successful and they could still lose their jobs at some point. After the merger takes place, workers may experience stress if they must adapt to a new role. Mergers are less flexible than small, independent entities. Decisions need to pass through many levels of management, causing slower decision-making. Slow decision-making may result in lost opportunities in the market. Lastly, There is no guarantee that a merger will succeed. Mergers can fail for a number of reasons, such as a poorly structured financial arrangement. Even if the merger deal is financially sound, it is always possible that divergent corporate cultures will not mesh or that workers will not be able to adapt to the changes required of them. Customers of one or both of the previous companies may not be happy with the change and decide to take their business elsewhere, creating a challenge for the new entity of reestablishing a customer base. A high percentage of acquisition difficulties and failures are the result of defective management. Target companies are strategically sought and stalked, but then the follow-up acts are poorly orchestrated. Often people in both firms will be seriously troubled about how the acquisition may affect their personal careers. A good part of the merger/acquisition planning should be aimed at deciding how these concerns will be addressed. For instance, Novell's merger with WordPerfect caused people in both organizations to experience dismay and the combined company teetered subsequently on the brink of disaster. After buying WordPerfect for US$855 million, Novell sold it to Corel less than two years later for only US$115 million. Media companies faced similar problems of acquisition binge. The conventional wisdom in the industry that spurs such maneuver was to grow the business by acquisition. Sony Corporation (Japan) was a case in point of being one of the first to venture aggressively into music and films. The same course of action was adopted by Vivendi Universal (French), Bertelsmann (German) and AOL Time Warner (US). It was believed that a product could be developed, then marketed through a wide range of in-house channels, from compact disks, DVDs, Web sites and even theme parks. This led to a proliferation of businesses requiring different skills and expertise, resulting in the failures of these acquisition ventures. Combining two firms depends on the culture of each firm. A company that has an authoritarian structure might purchase a company which is more flexible, and workers might not be happy if the buyer applies too many changes to previous workplace policies. Labour productivity will fall and industrial disputes may happen, resulting in go-slows or labour strikes. In an acquisition, the company will have many employees doing similar jobs in both firms. In order to cut costs, the buyer may fire excess employees if it has too many workers doing the same tasks after the buyout. Because employees are concerned about a future layoff, some employees will start looking for other jobs or quit after the company announces its acquisition plan.
ReplyDeleteIn conclusion, mergers and acquisitions are not always beneficial to firms. They can only be beneficial when all members of the business entity agree with the decision and are treated fairly.
References:
ReplyDelete1. http://www.s-cool.co.uk/a-level/business-studies/business-organisation/revise-it/the-growth-of-business
2. Schnitzer, Monica (Feb., 1996) “Hostile versus Friendly Takeovers”, Economica, New Series Vol. 63, No. 249, pp.37-55
3. http://www.mbda.gov/node/1394
4. http://www.mergersandacquisitions.in/benefits-of-merger-and-acquisition.htm
5. http://www.economicshelp.org/microessays/competition/benefits-mergers/
6. http://www.rasmussen.edu/degrees/business/blog/best-and-worst-corporate-mergers/
7. http://www.businessandlaw.com/articles/business-acquisitions
8. http://www.ehow.com/info_7756671_disadvantages-business-acquisition.html
A*
DeleteExcellent Work Alicia. Well done great deal of research work has been done by you. Keep it up. :)
Mergers and acquisitions (abbreviated M&A) are both an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can 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. From a legal point of view, a merger is a legal consolidation of two companies into one entity, whereas an acquisition occurs when one company takes over another and completely establishes itself as the new owner (in which case the target company still exists as an independent legal entity controlled by the acquirer) there are some example of merger company. This example is Sony Ericson and smart fren. An acquisition or takeover is the purchase of one business or company by another company or other business entity. Such purchase may be of 100%, or nearly 100%, of the assets or ownership equity of the acquired entity. Consolidation occurs when two companies combine together to form a new enterprise altogether, and neither of the previous companies remains independently.
ReplyDeleteThe very first advantage of M&A is synergy that offers a surplus power that enables enhanced performance and cost efficiency. When two or more companies get together and are supported by each other, the resulting business is sure to gain tremendous profit in terms of financial gains and work performance. Cost efficiency is another beneficial aspect of merger and acquisition. This is because any kind of merger actually improves the purchasing power as there is more negotiation with bulk orders. Because if they wanted to start from the beginning, they will doubt that the companies will succeed. So, they will only acquisition so their company will succeed quickly and cheaper rather than starting new company that will need more money and time to train the employees. With a merger it is easy to maintain the competitive edge because there are many issues and strategies that can be well understood and acquired by combining the resources and talents of two or more companies. A combination of two companies or two businesses certainly enhances and strengthens the business network by improving market reach. This offers new sales opportunities and new areas to explore the possibility of their business. With all this benefit, a merger and acquisition deal increases the market power of the company which in turn limits the severity of the tough market competition. This enables the merged firm to take advantage of hi-tech technological advancement against obsolescence and price wars
There are some disadvantage of merger and acquisition. The first one is culture clashes. One company and other company have some different culture. If the two companies combine together, they find a hard time against each other. For example, if your culture is based on the idea of meeting deadlines and the acquired company has a more relaxed view of delivering work or products on time, you may find yourself disciplining the management of the acquired company. The second is conflicting objectives. The two companies have some hard time together. Why? Because each companies have different objectives. For example, your original company may embrace the objective of expanding in to new markets, while the acquired company may be in pullback mode, with the objective of reducing costs. The resistance you meet as you try to spend on marketing initiatives can undermine your efforts. The third one is increasing debt. If you borrow money to acquire a company, that debt goes on the books of the original company. In order to service that debt, you need revenues from the acquired company. In addition, acquired companies tend to have their own debt, which you assume when you buy them. The growing debt may outpace new revenues.
ReplyDeleteSo, in conclusion, mergers and acquisition are not always beneficial. Because each company has different types of business. They have different culture and system so it is hard for them to change their tradition in their business.
References:
http://en.wikipedia.org/wiki/Mergers_and_acquisitions
http://yourbusiness.azcentral.com/disadvantages-business-acquisition-11688.html
http://www.mergersandacquisitions.in/benefits-of-merger-and-acquisition.htm
WINSON
Good work Winson. Keep it up.
DeleteMergers and acquisitions (abbreviated M&A) are both an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can 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.
ReplyDeleteFirm usually grow in size. There 2 ways that firm can grow in size. The first is the internal growth. The internal is organic growth. Usually internal growth refer to grow for inside and it’s a slow process. The internal growth usually take a year or many year to grow. The example of the internal growth are increase in capital so the business can buy new machines or premises, the other is increase in employee number or they can hire more professional labor, and expansion of business. For example Penabur now have a capital of $ 2 billion. Penabur can hire more teacher and expand the school.
External growth is the growth of firm by buying another business or they can be a join of many firms. The joint of many firm is also called industry. The external growth is an inorganic growth. The external growth is the growth from outside. The external growth is a fast process. The way of external growth is mergers and acquisitions. Merger is 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. Merger happen when two company become one. This decision is usually mutual between both firms and become one large firm. The example of successful merger is the Exxon and Mobil company. Exxon and Mobil company signed a $ 81 agreement and to form Exxon Mobil. The merger was so big, in fact, that the FTC required a massive restructuring of many of Exxon & Mobil’s gas stations, in order to prevent monopolization. Now Exxon Mobil remains the strongest leader in the oil market. In 2008, ExxonMobil occupied all ten spots in the “Top Ten Corporate Quarterly Earnings” (earning more than $11 billion in one quarter) and it remains one of the world’s largest publicly held company (second only to Walmart). The example of failed merger is Quaker and Snapple. In the 1994, the Quaker company purchased the new company, Snapple. Fresh from their success with Gartorade. The Quaker Company just want to make their drink product as famous as the Snapple drink. However, their efforts failed miserably. Snapple had become so successful because they marketed to small, independent stores; the brand just couldn’t hold its own in large grocery stores and other retailers nationally. The Quaker and Snapple drink lose with Pepsi and Coca Cola. After just 27 months, Quaker Oats sold Snapple for $300 million. The loss is $ 1.6 billion dollar. Then the CEO reputation was tarnished forever and some of the executive were fired.
Acquisitions/takeover is the purchased of one company. In UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company. The example of acquistions is Google Company is going to buy Boston Dynamics, a company that produce military robots. The era of the development of Google's robots will soon be made, which is rumored to follow the plan of the creator of the Android platform, Andy Rubin. He probably impressed with the robot that Boston Dynamics made, that is the first 4 legged robot called Cheetah. Google's founders, Larry Page, was reluctant to say what is the mission behind the company purchases. "It's too early to say what we do, but I can not wait to see the progress," he said through a Google+ account reported by The New York Times, Tuesday, December 17, 2013. The plan of Google company is going to be revealed in the next 5 years.
ReplyDeleteThe conclusion of the statement above are not all mergers and acquisitions are profitable. They can also be a loss or none.
Reference:
http://www.investorwords.com/9652/external_growth.html
http://en.wikipedia.org/wiki/Mergers_and_acquisitions
http://www.investopedia.com/terms/m/merger.asp
http://en.wikipedia.org/wiki/Takeover
http://www.tempo.co/read/news/2013/12/18/061538297/Google-Beli-Perusahaan-Pembuat-Robot-Militer
Merger definition is 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.
ReplyDeleteAcquisition definition is 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.
Acquisitions can be either friendly or hostile. Friendly acquisitions occur when the target firm expresses its agreement to be acquired, whereas hostile acquisitions don't have the same agreement from the target firm and the acquiring firm needs to actively purchase large stakes of the target company in order to have a majority stake. In either case, the acquiring company often offers a premium on the market price of the target company's shares in order to entice shareholders to sell. For example, News Corp.'s bid to acquire Dow Jones was equal to a 65% premium over the stock's market price.
So, in simple explanation, a merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed. From a legal point of view, a merger is a legal consolidation of two companies into one entity, whereas an acquisition occurs when one company takes over another and completely establishes itself as the new owner.
Mergers have some advantages and disadvantages. Now, I’m going to discuss the advantages first. First, the advantage of mergers is economies of scale, this occurs when a larger firm with increased output can reduce average costs. Lower average costs enable lower prices for consumers. Different economies of scale include technical economies, bulk buying, financial, and organizational.
A vertical merger would have less potential economies of scale than a horizontal merger e.g. a vertical merger could not benefit form technical economies of scale. However in a vertical merger there could still be financial and risk-bearing economies. Some industries will have more economies of scale than others. For example, car manufacture has high fixed costs and so gives more economies of scale than two clothing retailers.
Second, mergers advantage international competition ( mergers can help firms deal with the threat of multinationals and compete on an international scale) . Third, mergers may allow greater investment in R&D. Fourth, mergers will allow greater efficiency ( redundancies can be merited if they can be employed more efficiently ). Mergers will also protect an industry from closing, mergers may be beneficial in a declining industry where firms are struggling to stay afloat. For example, the UK government allowed a merger between Lloyds TSB and HBOS when the banking industry was in crisis. And last, diversification, in a conglomerate merger two firms in different industries merge. Here the benefit could be sharing knowledge which might be applicable to the different industry. For example, AOL and Time-Warner merger hoped to gain benefit from both new internet industry and old media firm. And other examples of mergers is Uniphase Corp. in 1999 to form JDS Uniphase.
The disadvantages of mergers is first, culture clash, when the 2 firms have very different corporate cultures, conflicts can arise and the employees in the new organization would be likely to have difficulties working together. Second, there will be a dis-economies of scale, sometimes when two firms merge, being larger will actually create dis-economies of scale, where per unit production costs increase because of increased coordination costs. Third, there will be a disadvantage in consumer perceptions, when two companies merge, they need to consider how consumers view the two firms and whether or not they view them in a compatible way. For example, if an environmentally friendly soap company were to merge with
ReplyDeletean industrial detergent manufacturer with a poor environmental track record, it may alienate the customers of the environmentally friendly soap company who don't want to support a company that is not environmentally responsible. And last, it will create layoffs; it is the negative effect on employees because the cost savings for the company is already provided. Employees may become fearful of losing their job and may lose their trust in the organization. This can decrease employee motivation and reduce productivity. Example of a firm that fails to merge is T-Mobile.
Now, I’m going to discuss about the advantages and disadvantages of acquisition. The advantages of acquisition is high speed access to resources, avoid barrier to entry, less reaction from competitor, it can block competitor, relative price earnings ratio are effected, and asset valuation. Firms that do acquisition is Manulife financial corporation’s 2004 acquisition of John Hancock Financial Service.
Disadvantages of acquisitions are first, like mergers, there is culture clash. Second is redundancy, when you acquire a company, you may have employees who duplicate each other's functions. This can cause excessive payroll expenditures where you pay for two employees to do the work of one. That can reduce motivation among employees. If you get rid of excess employees, you may cause resentment among the workforce. The decreased morale can reduce productivity. For example, laying off excess production staff may cause remaining production personnel to fear they will lose their jobs. The resulting stress may distract them from the work at hand. Third is conflicting objectives, the acquired company may have different objectives than yours. In fact, this is likely, because the two companies have been operating independently up until the acquisition. For example, your original company may embrace the objective of expanding in to new markets, while the acquired company may be in pullback mode, with the objective of reducing costs. The resistance you meet as you try to spend on marketing initiatives can undermine your efforts. Fourth is increased debt, if you borrow money to acquire a company, that debt goes on the books of the original company. In order to service that debt, you need revenues from the acquired company. Since many companies become the target of acquisitions because they are struggling financially, you may find that the financial problems of the acquired company prevent you from generating the income you need to pay the new debt. In addition, acquired companies tend to have their own debt, which you assume when you buy them. The growing debt may outpace new revenues. And the last disadvantage is market saturation, if you acquire a company that is in the same line of business as your original company, your hopes for market expansion may hit a barrier: the two companies together already dominate the market. You may find it difficult to grow sales after the acquisition because not enough new customers exist outside of the customer base you and the acquired company have established.
So the conclusion is M&A’s are not always success, so many businesses fails because of M&A’s. But M&A’s also have many advantages that encourages firms to do it.
Audrey Tan 8A
References :
ReplyDeletehttp://en.wikipedia.org/wiki/Mergers_and_acquisitions
http://www.investopedia.com/terms/a/acquisition.asp
http://www.reference.com/motif/business/advantages-and-disadvantages-of-mergers
http://smallbusiness.chron.com/advantages-disadvantages-acquisition-another-company-same-industry-31362.html
http://wiki.answers.com/Q/What_are_the_advantages_of_acquisition?#slide=4
http://yourbusiness.azcentral.com/disadvantages-business-acquisition-11688.html
Acquisition means that a company who purchases another company and take over the company as an owner. By acquisition the the buyer will have the rights or will own the business or in other words the company was bought and was taken over by another company. While merger means the 2 or more companies that join together to become 1 company. This means that the 2 company was joined together and would work together to produce goods and services. Usually merger happens with the same size so they are equal. Both this merger and acquisition are in external growth or inorganic growth which means that the company or business is growing on the external such as growing by acquisition which means that they directly purchase another business to directly have an increase of the productivity and the skill or knowledge which they purchased from another company. By acquisition, the workers would also be owned by the new owner which bought the company, so the skilled workers and the knowledge of producing the product would be purchased or bought.
ReplyDeleteBy acquisition the business could directly or instantly grow and the skills and knowledge could instantly be owned by the business. For example now Lenovo is wanting to buy Motorola for the skill and knowledge to improve the Lenovo mobile, which by buying Motorola they could produce improved products to increase the sales which if they do not buy Motorola it could take years to directly improve the product and the knowledge and skill of which the Motorola have. They could both save time and to increase the revenue and the profit which would be very important for the business. By merging, they would produce more goods and services and the size of their business would be much large because 2 companies combine. As 2 company combine they would have an increase in capital and labour because they would both work together to produce the goods and services. Some example are Exxon and Mobil, they were merged at 1999 with $82 billion. Because both companies are a large company they join together which would be even more larger because now they both work together.
Even though by acquisition would make the growth of the company faster and more productive, by acquisition they would purchase another company but in an expensive price, if the company they bought was not successful or mot very beneficial for the owner, it could be a loss for the company and they could sell the company to other people in less price rather than the price they bought or the loss of value of the company. For example: Google bought Motorola for $12 billion while now Lenovo would purchase Motorola from Google for $2 billion. So by acquisition it could cause lose for the company. And for merger, the revenue of the sales would be divided so it means that the owner wouldn't receive full revenue and if the company has different size the larger company would be in disadvantage because the larger size company would be having higher capital or labour which would be unfair and would be more beneficial for the other company. And in merger they could be not trustable and there could occur corruption.
So in conclusion that even though acquisition and merger could make the business growth faster and could make benefit for the company, it could also cause loses which would not be beneficial for the owner. So it means that by acquisition and merger, it would not always be in benefit or beneficial.
Reference: http://www.billshrink.com/blog/6834/the-12-biggest-mergers- in-american-history/
http://onswipe.investopedia.com/investopedia/#!/entry/mergers-and-acquisitions-definition,5228b71dda27f5d9d0179824/1
Notebook
Brian.A
8A
Mergers and Acquisitions help firms to grow their size exponentially and rise their growth prospects in the national and international markets. Merger is a combination of two companies to form a new company and large enterprise, for example JDS Fitel Inc. and Uniphase Corp. in 1999 to form JDS Uniphase. While in other side, acquisition or takeover means the purchase of one company by other which there is no new company formed, this may happen with or without the agreement of owners of the other company. The example of acquisition company is Manulife Financial Corporation’s 2004 acquisition of John Hancock Financial Services Inc. Mergers and Acquisitions is a term to refer to the consolidation of companies and they both have advantages and disadvantages to the company.
ReplyDeleteFor merger, the advantage firstly is to acquire a larger share of an existing market. So there is an increase in the share that the company receive.They will also gain more skills and knowledge because they can make use from both companies to create better products.As a result,they can sell the product effectively and shareholder value is increased.Another one is economies of scale.Economies of scale is when more units of a good or service is produced on larger scale but it caused less input costs, higher size of firms have greater economies of scale.Different types of economies of scale included, they are technological economies,bulk buying,financial and organisational.Technological economies are the cost savings a firm makes as it grows larger, it involves more use of large scale of mechanical processes and machinery.Bulk buying is purchasing many goods with low prices, while financial benefit is gained by being able to do things on a large scales.Now, the disadvantages are culture clash, dis-economies of scale and consumer perceptions. When two firms merge, there may be a chance that the two firms have different corporate culture and conflict can rise.There can be difficulties in working together.Dis-economies of scale can happen when they merge as the unit production costs increase because of increase in coordination costs.They need to consider how consumers view them whether or not the two companies are in compatible way.For example an industry that produces large waste merge with another indutry that creates less waste.
As for acquisitions, there are also advantages and disadvantages. The benefit that a firm which is acquisition is speed, it provides the ability to acquire more resources and allows the entry to a new products and new markets and causing the risks and the costs of new product to decrease.Second, market power, this helps market share to increase and competition decreases.Excessive competition can be avoided by reducing the capacity.The disadvantages that the company might get are integration problems, this means the activities of new and old firms is difficult to combine.Aside from that, the firm will get high cost if hostile take over bids.Then, employee retention is another disadvantage, the employees at both firms might perform similar jobs after the purchase, the buyer may take out employees who do the same job and some employees will quit the job.
In conclusion, mergers and acquisitions will not always,as both of them may cause disadvantages to the firm.
Felicia Angeline 8A
Reference:
1. http://www.investopedia.com
2. http://www.retrenchmentassist.co.za/index.php/ra-newsletters/110-mergers-and-acquisitions
3. http://www.qfinance.com/dictionary
4. http://www.ehow.com/info_8199594_disadvantages-merging-companies.html
5. http://www.ehow.com/info_7756671_disadvantages-business-acquisition.html
6. http://businessofaccouting.blogspot.com
First of all, most of the business like to grow or expand in order to get greater and more profit, because it is used to buy goods and services, to fulfill our needs and wants. Mergers and acquisition are the external growth methods to determine how firms grow in size. So there are 2 methods of determine how firms grow in size, which is internal growth and external growth. Internal growth means organic growth, and they are slow growth while external growth have faster growth plan. External growth is divded into two, which is mergers and acquisition. Mergers means when two existing company decided to combine together and both of them have the same rights, they will have larger enterprise. Acquisition or sometimes known as ‘takeover’ occurs when one company buy shares in the ownership of the other company, and they take the overall control. Both mergers and acquisition bring many benefits for many firms, and we will discuss more about this in the next paragraph with the examples.
ReplyDeleteAs it is said before, mergers occurs when there are two existing company decided to joined together and create larger enterprise or we can say the combination of two companies into one larger company. This involves stock swap or cash payment to the target. Stock swap allows the shareholders of the two companies to share the risk involved in the deal. A merger can resemble a takeover but result in a new company name (often combining the names of the original companies) and new branding. In some cases, terming the combination a “merger” rather than an acquisition is done purely for political or marketing reasons. Examples include the merger of Universal Bank with Paramount Bank and that of the Heritage Insurance Company with Africa International Insurance Company. There are three types of mergers, which is horizontal mergers, vertical mergers, and congloerate mergers. Horizontal mergers take place where two merging companies produce a similar product in the same industry. It is a strategy used by a business or corporation that seeks to sell a type of product in numerous markets. To get this market coverage, several small subsidiary companies are created. Each markets the product to a different market segment or geographical area. In Vertical mergers, two firms, each working at different stages in the production of the same good, combine. They are united through a hierarchy and share a common owner. Each member of the hierarchy produces a different product or service, and the products combine to satisfy a common need. Conglomerate mergers take place when two firms operate in different industries. There are several advantage of mergers, such as, reduced costs, merged company can reduce many of its expenses. Budgets for things like marketing might be trimmed, while the new, larger company enjoys greater purchasing power, which lowers the costs of raw materials and other necessities. More often than not, a merger results in staff layoffs as positions become redundant in the new single entity. Merged companies can also share office space and eliminate duplicate manufacturing facilities. Diversification also become the advantage mergers, Merged companies can offer a greater range of products and services. Because these may be complimentary, the merged company may be able to capture more consumers than they would as individual entities. For example, the result of merging two travel companies allows a greater range of options to be presented to the consumer at the point of sale.
An acquisition can involve a cash and debt combination, cash only, a combination of cash and stock of the purchasing entity, or stock only. In addition, the acquisition can take the form of a purchase of the stock or other equity interests of the target entity. A company may acquire another company by issuing high-yield debt to raise funds (often referred to as a leveraged buyout). The reason the debt carries a high yield is the risk involved. The owner does not want to risk his own money in the deal, but third party companies are willing to finance the deal for a high cost of capital (high interest yield). The combined company will be the borrower of the high-yield debt, and be on its balance sheet. This may result in the combined company having a low shareholders’ equity to loan capital ratio (equity ratio). A good example is the Coca-Cola Sabco Limited on its acquisition of various bottling companies and CFAO S.A. on its acquisition of D.T Dobie (Kenya) Limited. The advantages of acquisition is economies of Scale and Increased Efficiency. Acquiring a company in the same industry can result in reduced costs due to economies of scale. A major example of the economies of scale involves Wal-Mart, the world's largest retailer. Because of its sheer size, Wal-Mart can often decrease its expenses by buying in bulk and producing large quantities of goods in each production cycle. Acquiring a company in the same industry often results in enhanced economies of scale for a combined, larger entity, along with increased efficiency in production and other aspects of business operations.
ReplyDeleteIn conclusion, mergers and acquisition bring many benefits for the firms. Mergers bring benefit to both of the firms, because they enlarge their enterprise, while acquisition bring benefit only for the firms that take the overall control.
References :
http://www.africanexecutive.com/modules/magazine/articles.php?article=1015
http://www.investopedia.com/terms/m/mergersandacquisitions.asp
http://smallbusiness.chron.com/advantages-company-mergers-22476.html
http://smallbusiness.chron.com/advantages-disadvantages-acquisition-another-company-same-industry-31362.html
vienetta christina
8a
Acquisitions can be either friendly or hostile. Friendly acquisitions occur when the target firm expresses its agreement to be acquired, whereas hostile acquisitions don't have the same agreement from the target firm and the acquiring firm needs to actively purchase large stakes of the target company in order to have a majority stake. In either case, the acquiring company often offers a premium on the market price of the target company's shares in order to entice shareholders to sell. For example, News Corp.'s bid to acquire Dow Jones was equal to a 65% premium over the stock's market price.
ReplyDeleteMergers, acquisitions and takeovers have been a part of the business world for centuries. In today's dynamic economic environment, companies are often faced with decisions concerning these actions - after all, the job of management is to maximize shareholder value. Through mergers and acquisitions, a company can (at least in theory) develop a competitive advantage and ultimately increase shareholder value.
There are several ways that two or more companies can combine their efforts. They can partner on a project, mutually agree to join forces and merge, or one company can outright acquire another company, taking over all its operations, including its holdings and debt, and sometimes replacing management with their own representatives. It's this last case of dramatic unfriendly takeovers that is the source of much of M&A's colorful vocabulary.
Hostile Takeover - This is an unfriendly takeover attempt by a company or raider that is strongly resisted by the management and the board of directors of the target firm. These types of takeovers are usually bad news, affecting employee morale at the targeted firm, which can quickly turn to animosity against the acquiring firm. Grumblings like, "Did you hear they are axing a few dozen people in our finance department…" can be heard by the water cooler. While there are examples of hostile takeovers working, they are generally tougher to pull off than a friendly merger.
An example is a Saturday night Special. A Saturday night special is a sudden attempt by one company to take over another by making a public tender offer. The name comes from the fact that these maneuvers used to be done over the weekends. This too has been restricted by the Williams Act in the U.S., whereby acquisitions of 5% or more of equity must be disclosed to the Securities Exchange Commission.
Takeovers are announced practically everyday, but announcing them doesn't necessarily mean everything will go ahead as planned. In many cases the target company does not want to be taken over. What does this mean for investors? Everything! There are many strategies that management can use during M&A activity, and almost all of these strategies are aimed at affecting the value of the target's stock in some way. Let's take a look at some more popular ways that companies can protect themselves from a predator. These are all types of what is referred to as "shark repellent".
So a merger or acquisitions may or may not be beneficial for a growing firm. One of the firms might hostily take over the other firm and may take all the profit they earn.
References : 1. http://www.investopedia.com/articles/01/050901.asp
2. http://www.investopedia.com/terms/m/merger.asp
3. http://www.investopedia.com/terms/a/acquisition.asp
Jonathan Santoso
8A
A merger is the joining together of 2 firms to create a bigger firm.Mergers can benefit firms, it can help them increase their capital and can grant them access to bigger markets.While acquisition happens when 1 firm buys half or all the shares of another firm,granting the buyer ownership of half or the whole firm.It can greatly benefit the buyer, they can definitely get more capital, their market share will increase, and they can get what they want from the new firm.1 example of an acquisition is when Apple bought AuthenTec for their fingerprint scanner, now because of this acquisition, one of iPhone's most unique and recent feature is its fingerprint scanner.And 1 example of a merger is when American Airlines agreed to merge with other smaller carriers to create 1 very big firm that can compete with Delta Airlines and United Airlines.
ReplyDeleteAs said, one of the most significant advantage gained from merger is the power to increase sales and market share.Both of the firms can combine their capital for financial expansion and for further growth of the new firm.They can also combine their ideas and research to create a certain unique product that can increase their sales.Like when American Airlines agreed to merge with other carriers, it can give them a chance to increase their total capital and soon they can compete with much larger firms.By merging, the new firm can gain access to a bigger market, when American airlines decided to merge with other small carriers, the new firm will be able to access all the markets from its merging firms.As for acquisition, it can grant the firm the ideas and research of the firm they bought and use it to their own advantage. Like when apple bought AuthenTec, they used their research and ideas to add the fingerprint scanner feature to their new phone.Which attracted more people,soon their sales will increase because of this acquisition.Apple also gained a better technology.Also, by acquiring another firm, you can increase the size of your own firm, by using their capital.
The disadvantages of merger is that you need to make the other firm agree to merge with your firm, and it's hard to make the other firm agree to merge with you.Your firm will have to offer something very advantageous for the other firm that will merge with you, or they won't agree to merge.Also, from the example, when american airlines decided to merge with other smaller carriers, it can make the new firm harder to manage. By merging, you also created a new firm, the process of creating that new firm is hard and complicated.Also, you can lose some shares of the new firm because you have to equally share your ownership with the owner of the firm you merge with.As for acquisition, when you buy another firm, it will cost you a lot money. And you also have to make the firm agree to sell their firm to you. Also, using the example, Apple didn't really acquire much from getting the new finger print scanner feature because most of the customers complaint to them because of the malfunctions. The sales of the firm is not guaranteed to increase.
The conclusion is that merger and acquisition will be beneficial to the new firm or to the buyer firm, because even if the sales won't be guaranteed to increase, in most cases they do increase. And it will also grant a greater market access to the firm and a bigger capital for further growth of the firm's size.
By: Jovan Pan 8A
References:
http://dealbook.nytimes.com/2013/02/13/american-and-us-airways-said-to-vote-for-merger/
http://appleinsider.com/articles/12/08/16/apple_scrambled_to_buy_authentec_to_get_its_fingerprint_scanner_into_new_devices
http://www.investopedia.com/terms/m/mergersandacquisitions.asp
Firms can grow in size by two ways, which is internal and external growth. Internal growth or organic growth is the growth of firms by increase quantity of capital, number of employees, and expansion in the market share. External growth or inorganic growth is the growth of outside in firms. There are two ways of the method itself, mergers and acquisitions. Merger is a combination of two companies in order to form a new company. The example of Merger Company is merging of JDS Fitel Inc. and Uniphase Corp. in 1999 and they formed JDS Uniphase. While acquisition is the purchase of one company by other company, where there will be no company is formed. The example of Acquisition Company is Manulife financial Corporation’s 2004 acquisition of John Hancock Financial Services Inc.
ReplyDeleteDisciplinary mergers theory suggests that M&As discipline target firms’ managers who pursue objectives other than profit maximization. Managers who do not maximize profits presumably would focus attention on goals other than profitability. Since this difference in focus can come at the expense of operating efficiency, a firm’s performance may suffer. Poor performance does not go unnoticed, however. Opportunistic buyers may observe the poor performance accompanied by good assets and discipline the poorly performing plant by acquiring it. Thus, the disciplinary theory suggests that acquiring firms merge with poorly performing targets and improve their performance as new management realizes the full potential of a target’s assets. Synergistic mergers theory holds that firm managers achieve efficiency gains by combining an efficient target with their business and then improving the target’s performance. Buyers recognize specific complementarities between their business and that of the target. Thus, even though the target is already performing well, it should perform even better when it is combined with its complementary counterpart, the buyer firm. The synergistic theory implies that target firms (or plants) perform well both before and after mergers. Example of Acquisitions is when Lenovo buy Motorola, it makes Lenovo become the world’s largest maker of Personal Computer (PC).
On another hand, the disadvantages of acquisition such as firstly are redundancy, where the company may have employees who duplicate function of each other. This can cause excessive payroll expenditures where the company pays for two employees to do the work of one. Second are conflicting objectives, both companies that acquired may have different objectives. In fact, this is likely, because two companies have been operating independently up until the acquisition. And the advantages of mergers such as, firstly the merger can bear conflict of objectives between different in running businesses, meaning decisions are more difficult to make and may cause disruption in the running of the business. Second, diseconomies situation because if the scale become too large, which business can occur, reducing the effectiveness of the integration. Also, can make some workers redundant, especially at management levels.
On conclusion, firms are not always benefits from the mergers and acquisitions. Merger enables company to restructuring and strengthening the organization as firms involved in the transaction shares strategies to strengthening the organization, and eliminates weaknesses in the firm. While acquisition can quickly gain the know-how, good will and assets of other businesses. Acquisition also creates a conflict between management and employees between acquired companies.
References:
1. http://dealbook.nytimes.com/2014/01/30/lenovos-merger-spree-challenges-investors-faith/?_php=true&_type=blogs&_r=0
2. http://www.investopedia.com/terms/m/mergersandacquisitions.asp
3. http://wikianswers.com
4. http://www.ask.com
Merger is the combining of Two or more companies, generally by offering the stockholders of one company in exchange for the surrender of their stock. Whether Acquisition is 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. But sometimes firms got their own benefit from the mergers and acquisition. Because they could get more profits and more consumers. There are some advantages and disadvantages that will be faced by the firms if they use merger and acquisiton methods.
ReplyDeleteThe advantages of mergers and acquisitions are, First, Obtaining quality staff or additional skills, knowledge of your industry or sector and other business intelligence. For instance, a business with good management and process systems will be useful to a buyer who wants to improve their own. Ideally, the business you choose should have systems that complement your own and that will adapt to running a larger business. Second, Accessing funds or valuable assets for new development. Better production or distribution facilities are often less expensive to buy than to build. Look for target businesses that are only marginally profitable and have large unused capacity which can be bought at a small premium to net asset value.Third, Your business underperforming. For example, if you are struggling with regional or national growth it may well be less expensive to buy an existing business than to expand internally.Fourth, Accessing a wider customer base and increasing your market share. Your target business may have distribution channels and systems you can use for your own offers.Fifth, Diversification of the products, services and long-term prospects of your business. A target business may be able to offer you products or services which you can sell through your own distribution channels.Sixth, Reducing your costs and overheads through shared marketing budgets, increased purchasing power and lower costs.Seventh, Reducing competition. Buying up new intellectual property, products or services may be cheaper than developing these yourself. Last, Organic growth, is the existing business plan for growth, needs to be accelerated. Businesses in the same sector or location can combine resources to reduce costs, eliminate duplicated facilities or departments and increase revenue.
And the disadvantages of mergers and acquisitions are, First, Loss of skilled employees other than employees in leadership positions. Second, Retrenchment of employees causing panic and a loss in motivation, which could in turn also lead to a loss of productivity and a reduction in revenues. Third, Improper or incomplete alignment of employment terms, conditions and benefits leading to anger, resentment and a drop in motivation. Forth, Rushed or improper population of new organizational structures. Fifth, Increase in costs could result if the proper management of change and the implementation of the merger and acquisition transaction are delayed. Sixth, Unhappy customers and the eventual loss of customers as a result of the market of the targeted company resenting a sudden take over and will consider going to other suppliers for their goods and services. Last, Build up of resistance to any future change initiatives.
In conclusion, merger and acquisition will be beneficial to the new firms because its useful for them to increase their market size and their profits. And with those types, firms can make their own target to increase their own size to get more profits. And the cost for the firm who use merger and acquisition is more cheaper rather than firms who does not use those methods.
References :
- http://onswipe.investopedia.com/investopedia/#!/entry/,5228a54eda27f5d9d0178105
www.mbda.gov/node/1394
- http://www.retrenchmentassist.co.za/index.php/ra-newsletters/110-mergers-and-acquisitions
- http://www.mbda.gov/node/1394
- Celia Pricilla Mesatania 8A-
Mergers and acquisitions are both an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector. Why do firm merge with or acquire with other company? Because mergers can give the acquiring company an opportunity to grow market share without having to really earn it by doing the work themselves - instead, they buy a competitor's business for a price. For example, a beer company may choose to buy out a smaller competing brewery, enabling the smaller company to make more beer and sell more to its brand-loyal customers. Mergers and acquisitions are a way for some companies to improve profits and productivity, while reducing overall expenses. While good for business, in some cases they are not good for employees. With a merger and acquisition come the requisite lay–offs, leaving many employees worried about their positions or the changing culture of the company. The advantages for merger and acquisition is that it will benefit both of the company where they could do more research to increases their product's quality and have more demand for the product. The disadvantages for merger and acquisition is that the company may have conflict with there objective, the debt where were owed may increase due to the merger and market loss.
ReplyDeleteThe conclusion is mergers and acquisition may sometimes be benefit able to both of the company but also it may effect some disadvantages to some of the company who merger together.
Reference:
1.http://www.investopedia.com/ask/answers/06/mareasons.asp
2.http://en.wikipedia.org/wiki/Merger_and_acquisition
Robin 8a
Merger is 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. Acquisition is 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.
ReplyDeleteInvestors in a company that are aiming to take over another one must determine whether the purchase will be beneficial to them. In order to do so, they must ask themselves how much the company being acquired is really worth.
Naturally, both sides of an Merger & Acquisition deal will have different ideas about the worth of a target company: its seller will tend to value the company at as high of a price as possible, while the buyer will try to get the lowest price that he can.
There are, however, many legitimate ways to value companies. The most common method is to look at comparable companies in an industry, but deal makers employ a variety of other methods and tools when assessing a target company. Here are just a few of them:
1. Comparative Ratios - The following are two examples of the many comparative metrics on which acquiring companies may base their offers:
o Price-Earnings Ratio (P/E Ratio) - With the use of this ratio, an acquiring company makes an offer that is a multiple of the earnings of the target company.
o Enterprise Value to Sales Ratio (EV/Sales) - With this ratio, the acquiring company makes an offer as a multiple of the revenues.
2. Replacement Cost - In a few cases, acquisitions are based on the cost of replacing the target company. This method of establishing a price certainly wouldn't make much sense in a service industry where the key assets people and ideas are hard to value and develop.
3. Discounted Cash Flow (DCF) - A key valuation tool in Merger & Acquisition, discounted cash flow analysis determines a company's current value according to its estimated future cash flows. Forecasted free cash flows are discounted to a present value using the company's weighted average costs of capital (WACC).
Key word:
So merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed. Merger and acquisition always make profit because comparative ratios make target company and revenue increase multiple, replacement cost can establishing a price, discount cash flow can estimated a future cash flow.
Example: Exxon-Mobil (merger)
Big oil got even bigger in 1999, when Exxon and Mobil signed a $81 billion agreement to merge and form Exxon Mobil. Not only did Exxon Mobil become the largest company in the world, it reunited its 19th century former selves, John D. Rockefeller’s Standard Oil Company of New Jersey (Exxon) and Standard Oil Company of New York (Mobil). The merger was so big, in fact, that the FTC required a massive restructuring of many of Exxon & Mobil’s gas stations, in order to avoid outright monopolization (despite the FTC’s 4-0 approval of the merger).
ExxonMobil remains the strongest leader in the oil market, with a huge hold on the international market and dramatic earnings. In 2008, ExxonMobil occupied all ten spots in the “Top Ten Corporate Quarterly Earnings” (earning more than $11 billion in one quarter) and it remains one of the world’s largest publicly held company (second only to Walmart).
Reference:
1. www.investopedia.com
2. http://www.rasmussen.edu/
BTC To Paypal No Fee NO Minimum Required - 0.005 btc to usd Service in New york city and venezuela convert satoshi 0.005 btc to usd current exchange rate trade sell btc to paypal no fee no minimum amount required.
ReplyDelete