Transcript Mergers and Acquisitions

Strategic management
Collaboration, Alliances,
Mergers and Acquisitions
Prof.Dr. E. Vatchkova
Contents
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Definitions
Advantages
Disadvantages
Reasons why firms merge
Evidence for successful mergers and
acquisitions
The process of mergers and acquisitions
Smithkline Beecham’s benefits of the
merger
A success or failure to Glaxo Wellcome?
Definitions
Merger
The coming together
of two
organisations, often
with the similar size.
Usually negotiations
are friendly and the
merger is mutually
desired.
Acquisition
This is an action by
which one company
purchases a
controlling interest
in another company.
Advantages of Mergers and
Acquisitions:

High - speed access to resources

Less vengeance from competitors

Blocking competition

Ability to restructure the operation
environment
Disadvantages of Mergers and
Acquisitions:

Cultural mismatch

Mismatch in managerial salaries

Risk when purchasing the organisation

Disposal of Assets
Reasons for mergers and
acquisitions:
Speed
 Lack of resources
 Competitive situation may require it
 Cost efficiency
 Financial motives
 Stakeholders’ expectations
 Deregulation

Evidences for successful
Acquisitions and Mergers:
1.
2.
3.
4.
Methods for evaluation:
Opinions of company personnel
Whether the required organisation is
retained in the long - run
Comparison of profitability before and
after the merger
Effect on stock market evaluation
The process of Acquisitions
and Mergers:
Step 1: Targeting
Step 2: Negotiating
Step 3: Implementing
Smithkline Beecham’s benefits
of the merger:

Decrease of potential threat in
success

Better synergy effect

Access to detailed patience,and thus
improving drug discovery
A success or failure to Glaxo
Wellcome?
The best benefit was financial
 The company was brought into a
field, which it had not been exploited
before
 Yet analysts wonder how the
company has succeeded, because the
company relied on too much disposal
materials to gain its earnings.

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