Friendly and hostile mergers and acquisitions of companies
Posted: Sun Dec 22, 2024 10:18 am
As a rule, two types of takeovers are distinguished: friendly and hostile. In Europe and the USA, hostile takeovers are most often associated with the acquisition of a controlling stake without the consent of the company's owners. This can happen for various reasons. For example, due to poor management efficiency, short-sightedness of the main shareholders, or even secret agreements between top managers and shareholders.
Friendly and hostile mergers and acquisitions of companies
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In 2005, Oracle acquired PeopleSoft for $12.6 billion in a takeover. The deal was not exactly friendly, as it involved laying off half of the company's workforce.
There is no clear definition of "company indonesia number list takeover" in Russian legislation. Instead, the terms "merger" and "accession" are used. In this regard, the hostile process has a broader meaning - from a simple purchase of a controlling stake to illegal schemes. However, takeover differs significantly from corporate raiding, which is spelled out in the Criminal Code of the Russian Federation.
When the actions of those seeking to seize control of a third-party enterprise violate the law, this is considered corporate raiding. In such situations, a variety of criminal methods may be used, ranging from threats and fraudulent tricks to violence to force transactions.
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If the judicial method of resolving the conflict proves useless, the company can increase its value by acquiring assets of other organizations or by issuing bonds. If it is known for sure that the acquiring enterprise is most interested in a certain asset of the company, it can be sold to a third party, but this is associated with the risk of reducing profitability.
You can also buy back your own shares at a higher price than your competitor is offering.
In addition, there is an option in which conditions are included in the company's charter that make it difficult for an opponent to influence the composition of the board of directors.
A distinctive feature of friendly mergers of companies in Russia is the fact that they are carried out on the basis of voluntary consent of both organizations. The forms of such mergers are implemented in accordance with current legislation. The fundamental element of M&A transactions carried out by voluntary consent is the principle of consensus, according to which one company acquires another, thereby "buying a business."
Types of company mergers
There are different types of fusion:
Horizontal
In a horizontal merger, companies operating in the same field, producing similar products or providing similar services are combined. An example is the merger of M.Video and Eldorado, as well as the merger of oil and gas companies Exxon and Mobil. Such transactions occur to monopolize the market and eliminate competitors. A horizontal merger can lead to a reduction in the cost of manufactured products or services, as well as to an increase in their profitability. In addition, the unification of the supplier and buyer base is of great importance.
Types of company mergers
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Vertical
This is an association of organizations engaged in different types of activities, but forming a single technological chain. For example, this could be a merger of a metallurgical enterprise with a manufacturer of metal products, an oil producing company with a manufacturer of oil products, or an agricultural enterprise with a manufacturer of dairy or meat products.
The main goal of such a merger is to expand the range of products and sales markets, as well as to reduce production costs.
Mixed
We are talking about the merger of businesses from different industries that are not connected to each other either by sales markets or by supplies. For example, the acquisition of a food delivery or passenger transportation service by a bank, or a producer of agricultural products by a gas company. The main goal of such a non-core merger is to diversify the business.
Parallel (or generic)
In such a merger and restructuring, two companies that produce related products enter into an alliance. For example, a laptop manufacturer and a company that specializes in the production of batteries for them. Such a merger allows one organization to take over the entire production process, which leads to improved performance and quality of products.
Friendly and hostile mergers and acquisitions of companies
Source: shutterstock.com
In 2005, Oracle acquired PeopleSoft for $12.6 billion in a takeover. The deal was not exactly friendly, as it involved laying off half of the company's workforce.
There is no clear definition of "company indonesia number list takeover" in Russian legislation. Instead, the terms "merger" and "accession" are used. In this regard, the hostile process has a broader meaning - from a simple purchase of a controlling stake to illegal schemes. However, takeover differs significantly from corporate raiding, which is spelled out in the Criminal Code of the Russian Federation.
When the actions of those seeking to seize control of a third-party enterprise violate the law, this is considered corporate raiding. In such situations, a variety of criminal methods may be used, ranging from threats and fraudulent tricks to violence to force transactions.
Read also!
"Selling price list: 5 marketing tricks + 10 tips for design"
Read more
If the judicial method of resolving the conflict proves useless, the company can increase its value by acquiring assets of other organizations or by issuing bonds. If it is known for sure that the acquiring enterprise is most interested in a certain asset of the company, it can be sold to a third party, but this is associated with the risk of reducing profitability.
You can also buy back your own shares at a higher price than your competitor is offering.
In addition, there is an option in which conditions are included in the company's charter that make it difficult for an opponent to influence the composition of the board of directors.
A distinctive feature of friendly mergers of companies in Russia is the fact that they are carried out on the basis of voluntary consent of both organizations. The forms of such mergers are implemented in accordance with current legislation. The fundamental element of M&A transactions carried out by voluntary consent is the principle of consensus, according to which one company acquires another, thereby "buying a business."
Types of company mergers
There are different types of fusion:
Horizontal
In a horizontal merger, companies operating in the same field, producing similar products or providing similar services are combined. An example is the merger of M.Video and Eldorado, as well as the merger of oil and gas companies Exxon and Mobil. Such transactions occur to monopolize the market and eliminate competitors. A horizontal merger can lead to a reduction in the cost of manufactured products or services, as well as to an increase in their profitability. In addition, the unification of the supplier and buyer base is of great importance.
Types of company mergers
Source: shutterstock.com
Vertical
This is an association of organizations engaged in different types of activities, but forming a single technological chain. For example, this could be a merger of a metallurgical enterprise with a manufacturer of metal products, an oil producing company with a manufacturer of oil products, or an agricultural enterprise with a manufacturer of dairy or meat products.
The main goal of such a merger is to expand the range of products and sales markets, as well as to reduce production costs.
Mixed
We are talking about the merger of businesses from different industries that are not connected to each other either by sales markets or by supplies. For example, the acquisition of a food delivery or passenger transportation service by a bank, or a producer of agricultural products by a gas company. The main goal of such a non-core merger is to diversify the business.
Parallel (or generic)
In such a merger and restructuring, two companies that produce related products enter into an alliance. For example, a laptop manufacturer and a company that specializes in the production of batteries for them. Such a merger allows one organization to take over the entire production process, which leads to improved performance and quality of products.