Introduction Of Merger And Acquisition Management Essay

Introduction Of amalgamation And Acquisition Management EssayAcquisition- In this purchases of one federation by other in which no new federation is formed. The acquisition forge is very complex and various studies shows that only 50% acquisition is successful.Governing low- The confederation flake 1956 thus non define the term amalgamation or amalgamation. It deals with schemes of uniting or which acquisition are gives in s. 390.394 A,395 , 396 and 396 A.Classification of merger -Horizontal conjugationVertical merger signali recogniset extension mergerProduct extension mergerConglomerationCongeneric mergerPurchase mergerConsolidation mergerAccretive mergerDilutive mergerHP AND COMPAC MERGERIntroduction of HP - It every last(predicate) began in the year 1928 when two electrical engeerning gradutate from standard university called willam Hewlett and David Packard strated their parentage in a garage in palo alto. In a year time the Hewlett Packard was do and by the year 1 947, HP was incorporated.Hp enterprise task formly called TSG is the largest business segment of HP, according for 36% of HPs 2007 revenue , providind serfeebleness, storage, software and information applied science services that enables. The mathematical product and services from this organization serve HPbusiness of all sizes in more than than 170 countries.Organizational Structure - HPs operations are organized into seven business segmentEnterprise storage and servers (ESS)HP procurveHP servicesHP software and beginningsPersonal systems group (PSG)Imaging and printing Group(PSG)HP financial services (HPFS)Corporate Investments.The three business segment ESS , HPS and HP software effect are structured beneath the broader Enterprise Business (EB) group in order to capitalize selling cross selling opportunities and give a solution sale approach across the HP enterprises offering.INTRODUCTION OF COMPAQCopaq computer corporation is the spheres largest supplier of personal comp uters and as a result of its acquisition of Digital Equipment weed in 1998, is the second largest computer firm in the world . The company was formed by two senior managers at Taxes Instrument. The company had interpose from Compatibility Quality. scene Of HP before Merger.Stocks gradually rase a peak of $74.48 after Fiorina was hired from their value of $ 54.43 the day before she had joined HP, meeting growth tar excites turn up difficult as both the company and industry stabled As a result HP was forced to cut the jobs to ask employees to take unpaid leave. By September 2001, stock value had fallen to less than half of its take aim when fiorina was hired . so she decided to merge with Compaq. At that time Compaq in a stock transaction is net worth was 2 millio. And positon of Compaq is too soundly revenue increase. They do merge only for expansion the company. main reason of MergerTo com favoritee with IBM and other companiesThe combined service business will obtain 65000 s ervice professionals is 100000 plus for IBMReduce costBolster stockMain aim of mergerThe main aim of the merger was to enhance the trade competition.The newly formed company would be bigger than HPThe combined travail would result in a big computer and software services business.The new company would definitely uphold the management to increase the number of client in IT sector.HP wanted to enhance their market of computer hardware product.Problem of MergerThe merger totally opposed by both the companies.The enthronization and the other stakeholders though at the company would never be able to induce the loyalty of the Compaq nodes, if products are sold with HP logo on it.Synchorization of organizations constituent with each other.Change in the organization which are not accepted by the employees.These are the main conundrum which serve first after merger.The chief operating officer of HP , Fiorina justified that merger by following pointMerger would remove serious competit or in the over supplied PC market of those eldThe market conduct of the company is bound to increase with merge.The pastureing unit would doubleThese points helps to unfreezing the employee.Advantages of mergerLarge the market share in the market and units of action in any case double.Compete IBMBoth the companies would decrease as the internal costs on promotion, marketing and shipping would come down with the merger.New techniques or technology developCompany requires being consistent with creativity, improvement and modification.Advantages to the shareholder are as followUnique opportunityStronger companyCompelling company magnate to executeTransaction summeryStructure stock for stock mergerEx diverge ratio 0.6325 of HP share per Compaq shareCurrent value approx $25 billionOwnership HP share holder 64% Compaq shareholder 36%Accounting PurchaseExpected closing First half of 2002 bump off Litwin Model.BURKE LITWIN MODLEThis is second order change. Its a big change for the com panies.And all the features of second order change are used in this merger revolution - this merger is done on discounting bases. Both the company combine and form a new vision, new name , polices, subtlety procedure all changes.Redical military service - Everything is change in one time so it si redical overhaul.Revalutionery - Fiorna chief operating officer of HP come with massive change she is one who ask about merger so, she come with massive cahngeSo all features are cover under this merger so, according to me its second order change.In this Merger Transformational Leader is Carly Fiorno CEO of HP companyFiorno announced HPS plan to aquire the Compaq in stock transaction valued at $ 25 billion idea for the merger with Compaq a Houston bas swordr founded in 1982 had grow out of a phone conversion betwixt Fiorina and Compaq chairman CEO Michal Capellas IN JUNE 2001. By the first week of September, the merger had been approve boards at both companies.KURT- LEWIN MODELThis mo del include three pointsUnfreezingMovementRefreezingUnfreezing- for doing unfreezing both the companies firstly establish a sense of unrgency in the organization. Than analyze the organizational change need. So doing unfreezing CEO of HP explain that the need of change that what the company condition and its important for the company to make a change and also introduce what the aim behind the merger as I discusse above.. we can say what the desired state companies want the people of HP and Compaq see the offer what exists and what will exist. Than the people move to repress the gap and achieved the desiered change. So that in this way both the companies do unfreezing.Movement - The second measure is movement. HP and Compaq sincerely helped their employees and other member for accepting the change and new culture which formed by those two companies. They ask all the advantage of merger to their employees. So that it is mild for employees to move from their position. Employees se e the advantages and accept the change and move further.Refreezing - the third step but not the least is refreezing. So to give again same level of comfort to employees Fiorno arranged the meeting with investor or employee. Give more information regarding the merger. And also given more information to employees that now company will help in future. In meeting she said this company has never been about looking in the real view mirror .But Fiorina strat are as fallow Tried to change the culture in HPAutocratic managementA centralized ApproachSo, new CEO was Mark Huld come and he take following step.Educating the HP employees and manager to make them for talented.Exploting the possibilities of the mergerTook inintaitives to cut down cost and layoff employees.CONCLUSIONAccording this merger is set and well for economy. Basically this merger is need of HP. Fiorina knows that without taking this merger HP faces so legion(predicate) problem. So a very good step and make it possible. In strating she faced problems but afterwards she solved all the problems. But most(prenominal) of their strategies are not good and she resigned in 2005 and new CEO come Mark Hurd taken good step for HP.So in the end conclude this merger faces many up and down. But in the end it successful. And this merger is good for the world.2ND PARTPROCTER GAMBLEP G is American multinational corporation gunpointquatered in downtown , in cin cinnan, quio U.S which manufacturs a wide range of consumer goods . P G was founded by William procter and james ganble in 1837. It is 6th in fortune most advired companies 2010 list. Bob MC Donalds is incumbent CEO and president for the same.Vision of admonisher gamble- vision of P G unifies them in common cause and growth strategy of improving more consumers lives in small but meaningful shipway each day. It inspires P G people to make posture contribution everyday.Consumer products offered by PG are in areas of pharmaceutical , cleaning supplies, personal care and pet supplies.GILLETTE COMPANTYGillette is a brand of proctor gamble currently used for safety razors , among other peesaral hygiene products. Based in Boston. It was one od some(prenominal) brands earlier owned by Gillette company, a various brands which was conveyd by P G in 2005. Their slogan is the best a man can get. The original Gillette in 1995 as a safety razor manufactures.Old Gillette products now Gillette productsDisposable blade razor (1902) Trac ii (2 blade razor)Super speed model TT design (1997) trac plus (lubricating razor)Adjustable razor (1958) atra plus Sensored (spring locaded blaids sensor encec sensor 3MERGER DETAILS On october 1st 2005 , portor gamble finaly purchased the Gillette which resulted merger between the 2 . this merger grateddue would largest personal care and household products campany. intially Gillette company assets were incarnated into a P G linit known internally as international Gillette, in july 2007 internationa l gillete was discounted and incorporated into proctor gamblesOther two main divisions, proctor gamble beauty and procure care. Gillette brand and products were divided between the two accordingly.Merger was financed by 60% of stock and 40% cash cash and P G accured gittelles for US $ 57 billion in stock.-after acquisition Gillette CEO James Kilts became vice -chairmar.6000 employees were eliminated and given pinkslips which reduced overlapping management positions. compose (POSITION BEFORE MERGER)gillette brand basically caters safety razors in the market. before due merger gillette products razors are not so technological savvy. And an comparatively enterprise with that of other companies. Due to companion company market declined to an intent. Which forced CEO of Gillette to merger with a juicy indite company like PG to gain good market share in market.PROCTOR GNABLE is a highly profiled company and ranked 79th in fortune global 500 list of world largest compnies . ti basica lly snarled in consumer good services and previsouly also acquired source of the companies.Main reasons for merger-To compete with other companies in the developing countries.The combined companies introduced new groundbreaking products and product line got increased.To gain high market growth.Complementary goods were introduced like PG given their hand in manduction products to complement safety razors etc.This merger is a friendly merger just to grow business.MAIN AIM OF MERGER-the evermore to enhance the market share of the company and to compete with the competitors. As 2 companies combine will be more satisfying than one alone.PROBLEM FACED WITH MERGER-basically less problem were faced during the merger taken place because the merger is friendly merger between two companies. But ab initio when the merger word where announced many employees were shocked as companies are good in profits. Some talented employees left their jobs as they not want to work in merged company and many worker were lay-offed . But restrained company is very cooperative with their employees and given them proper training for the merger. some employees were not competent the new culture of organization for this proper counseling is imparted to them for easy adaption.KURT -LEWIN MODEL APPLICATIONKurt lewin proposed three stage in change management programmer.Unfreezing (preparing ourselves, other to change)Movement (transition stage)Refreezing (freezing the new change)In case of PG and Gillette merger following stage occurred as follows.It was basically the decision of CEO of Gillette that two companies were will established and project making companies so it come as a shock to all the people when the merger of two companies was announced.Unfreezing stage To carry out this merger successfully a term was made to carry smooth integration which contain employees from various financial areas experienced personnel. A thought due divergence was done before any step was taken for mer ger of these companies. This special term selected employees (talented) from different departments of Gillette which PG wanted to retain. During this some employees were commenced with the idea of merger some left due job. To filldue gap due company does internal recruitment also based on enterprises of employees. Some valuable employees were not ready to join due merger company so several special packages were given to them. HR managers also worked very well in boosting due morale of employees. I this stage Gillette ensured that each stage the employees were kept certified , they were timely giving due updates and told them due steps clearly the organization is taking for future growth of employees as well as company.Driving forces re-straining forces red-hot sales growth and cost savingSeveral new packagesOpportunities for more innovationDedicated teamCapacity additionMerger PG GilletteLeak of news by press and resulting stock fearDifference in organizational structureJob insecur ity and layoffsThe driving force are so unchewable that they overcome restarting force in this merger.MOVEMENT STAGE- Most of the employees were counted as due employees trusted due management a lot. They are confident that management would make the best interest of the employees in attend.-Training programme- one day session was provided to existing employees from Gillette who joined the merged company.CAREER PLANING-Gillette globally signed a contract with right management consultant to provide career transaction service. In India this project was handled by grow talent.COUNCELING- The attracters born at corporate and institutional head provided tremendous help to their teams, Internal mentors were appointed to guide implies to make right career choice and in dealing with anxiety, handling new friends and family.EMOTIONAL SUPPORT- By helping them to manage change of new job news of family and friends with new colleagues.INTERACTUAL SUPPORT- Preparing employees for improving th eir marketability salary negotiation and interviews etc .LANDING SUPPORT- By analyzing strengths and skills of employees to determine career decisions, interpersonal skills, time management skill, organizational skills this training is given to every employee of Gillette whether he stayed in the organization or laid off.Due to this career transition support and enabled employees to face the job market at least 90% of the employees who were being laid off got an offer even before they had left the company.FREEZING- the employees adapted this change as the company was very cooperative with them. Even people who lay off also got settled down. For this strategic transition Gillette got DMA Ere win innovation present in 2006 also. This deal created by the CEOS created a win- win situation for all stake holders and set a fine example in todays dynamic business environment preparing HR people for taking challenges.BRUKE LEWIN MODEL APPLICATION-This merger between the two companies P G and Gillette is a second order change with this merger the structure of two companies changed drastically as it is a radical change..TRANSFORMATION- due this merger PG AND Gillette transformed as policy, culture and produced all change.subverter CEO of Gillette wanted this merger they took the just step of merger between the two for growth and developing country.SUCCESS OR FAILURE OF MERGER this merger was a grand success because more than a merger its a friendly move by both companies. As it beneficiate both the company due market after the merger increased. In this merger basically innovation was focused rather than scale. It is unique case of acquisition where in innovative company expanded it product line by acquiring another innovative company. It was described as a perfect marriage by some analyst. CEO of PG AG lafley thinks it necessary to overtake close companies especially in developing countries so he acquired Gillette and expanded its product line by adding some shaving pr oducts. After this merger the market share of both companies increased tremendously.CONCLUSION-Merger of PG and Gillette acted as a boom for Gillette as we can see from figure Gillette market share raised up by 71.1% the merger is a perfect marriage of companies which contributed growth, innovations in the product line of the same. Through initially the changes are structured distributed the companies employees but afterwards it benefitted the companies a lot. And market share increased highly after the merger took place.3RD PARTORGANISATION PROFILEHINDALCO INDUSTRIES LIMITEDHindalco Industries Limited, a flagship company of the Aditya Birla Group, is structured intotwo strategic businesses atomic number 13 and copper with annual revenue of US $14 billion and amarket capitalization in excess of US $ 23 billion. Hindalco commenced its operations in 1962with an aluminium facility at Renukoot in Uttar Pradesh. Birla Copper, Hindalcos copperdivision is situated in Dahej in the Bharuch district of Gujarat. Established in 1958, Hindalcocommissioned its aluminium facility at Renukoot in eastern U.P. in 1962 and has today grown tobecome the countrys largest interconnected aluminum producer and ranks among the top quartile oflow cost producers in the world. The aluminium divisions product range includes aluminachemicals, firsthand aluminium ingots, billets, wire rods, furled products, extrusions, foils and deprave wheels. It enjoys a domestic market share of 42 per cent in primary aluminium, 63 per centin rolled products, 20 per cent in extrusions, 44 per cent in foils and 31 per cent in wheels.Hindalco has launched several brands in recent years, namely Aura for alloy wheels, Freshwrappfor kitchen foil and ever be for roofing sheets. The copper plant produces copper cathodes,continuous cast copper rods and precious metals like gold, silver and platinum group metal mix.sulphuric acid, phosphorous acid, di-ammonium phosphate, other phosphatic fertilisers andphosph o-gypsum are also produced at this plant. Hindalco Industries Limited has a 51.0%shareholding in Aditya Birla Minerals which has mining and exploration activities focused inAustralia. The company has two RD centres at Belgaum, Karnataka and Taloja, Maharashtra.They have been recognized by the Government of Indias Department of Scientific and IndustrialResearch (DSIR). Exhibit 1 Year over year, Hindalco Industries Ltd. has been able to growrevenues from 121.2B to 193.2B. Most impressively, the company has been able to reduce thepercentage of sales devoted to selling, general and administrative costs from 4.15% to 2.96%.This was a driver that led to a bottom line growth from 15.8B to 26.9B.NOVELISNovelis is the world leader in aluminium involute, producing an estimated 19 percent of theworlds flat-rolled aluminium products. Novelis is the world leader in the recycling ofused aluminium beverage cans. The company recycles more than 35 billion used beveragecans annually. The company is No. 1 rolled products producer in Europe, South Americaand Asia, and the No. 2 producer in North America. With industry-leading assets andtechnology, the company produces the highest-quality aluminium sheet and foil productsfor customers in high -value markets including automotive, transportation, packaging,construction and printing. Our customers include major brands such as Agfa -Gevaert,Alcan, Anheuser-Busch, Ball, Coca-Cola, Crown Cork Seal, Daching Holdings,Ford, customary Motors, Lotte Aluminium, Kodak, Pactiv, Rexam, Ryerson Tull, Tetra Pak,ThyssenKrupp and others. Novelis represents a unique combination of the new and the5 old. Novelis is a new company, formed in January 2005, with a new velocity, a new philosophy and a new attitude. But Novelis is also a spin-off from Alcan and, as such,d birthday suits on a rich 90-year history in the aluminium rolled product marketplace . Novelis has adiversified product portfolio, which serves to the different set of industries vis--vi s ithas a very well geographical presences in four continents.POSITION OF NOVELIS BEFORE AQUISITIONNovelis was always a problem child. It was born in early 2005 as a result of a forced spin-offfrom its parent, the $ 23.6-billion aluminium giant and Canada-based Alcan. In 2003, Alcan wona hostile offer to wed French aluminium company Pechiney. But the marriage produced anunwanted child Novelis. Both Alcan and Pechiney had bauxite mines, facilities to produceprimary aluminium, and rolling mills to turn the raw metal into products such as stock for Pepsiand Coke cans and automotive parts. But the US and European anti-trust proceedings ruled thatthe rolled products business of either Alcan or Pechiney had to be divested from the mergedentity. Alcan cast out its rolled products business to form Novelis. It is now the worlds leadingproducer of aluminium-rolled products with a 19 per cent global market share. But in the spin-off execute, Novelis ended up inheriting a debt mountain of alm ost $2.9 billion on a capital base ofless than $500 million. That was just the beginning of its troubles.The situation is worse now.Though it marginally reduced debt, it made some losses too. On a net worth of $322 million,Novelis has a debt of $2.33 billion (most of it high cost). Thats a debt-equity ratio of 7.231.Soon, the unwanted child stumbled into another crisis. Novelis has a simple business model. Itbuys primary aluminium, processes it into rolled products like stock for soft drink cans,automotive parts, etc., and sells it to customers such as Coke and Ford. But the management tooka wrong call on aluminium prices. In a bid to win more business from soft drink manufacturers,it promised four customers not to increase product prices even if raw material aluminium priceswent up beyond a point. A few months after Novelis signed those contracts, aluminium pricesshot up 39 per cent (between 30 September 2005 and 2006). To these four customers, Noveliswas forced to sell its product s at prices that were lower than raw material costs. These fouraccount for 20 per cent of Noveliss $9-billion revenues. But the managements wrong ruling led to losses of $350 million (in 2006). For long, Noveliss former CFO Geoffrey P.Batt, former controller Jo-Ann Longworth and the finance team didnt quantify these losses.After the complicated spin-off from Alcan this involved large operations in over 35plants in 11 countries and four continents the finance team also struggled to file quarterly andannual results on time. some of the numbers it managed to file on time were wrong and werelater re-stated. The board stepped in. First, it replaced its CFO and controller (in December2005). When that didnt help much, it replaced CEO Brian W. Sturgell in August 2006. (It is stilllooking for a full-time CEO.) There are many more reasons for the distress in Novelis.NEED OF THE lurchPost acquisitions, the company will get a strong global footprint.After full integration, the joint entity w ill become insulated from the fluctuation ofLME Aluminium prices.The deal will give Hindalco a strong presence in recycling of aluminium business because as per aluminium characteristic, aluminium is infinitely recyclable and recycling it requires only 5% of the energy indispensable to produce primary aluminium.Novelis has a very strong technology for value added products and its latest technology Novelis Fusion is very unique one and it would have taken a minimum 8-10 years to Hindalco for building these facilities, if Hindalco takes organically route.As per company details, the reliever value of the Novelis is US $12 billion, so considering the time required and replacement value the deal is worth for Hindalco.SUCCESS OF MERGERHindalco has undertaken aggressive plans to increase its capacities through capacity expansion as well as by position up greenfield plants. Hindalco increased its capacity at Hirakud plant by 35,000 tonnes to one hundred thousand tonne. When Hindalco comp letes its entire project, smelting capacity has increase by about 10 lakh tonnes. Along with smelting capacities, the companies are expanding alumina capacities and setting up captive power plants. Domestic alumina capacity is set to increase by 9.5 million tonnes when all the outstanding projects are completed. In 2007 about 1.23 million tonnes of capacity has come on stream, catapulting aggregate capacity to 4.23 million tonnes. Large alumina capacities have not only feed captive aluminium smelters, but also leave surplus alumina to be exported to lucrative markets like China. Currently Hindalcos production is tied(p) up with clients. Also Novelis has similar contracts with its suppliers. But after 3-4 years it would start the operation of new plants. Then it can source excess capacity to the Novelis plants located in south East Asian countries. The merger looks not bad if the current financial valuations are ignored. Also we need to keep in mind that Hindalco is a very aggressi vely growing company, for it to build infrastructure that can match Novelis is very difficult.PROBLEM FACED BY THE ORGANISATION WHILE MANAGING THE CHANGEBuy- in and commitment from stakeholder It is not only the C-level management which has to buy-in to the globalization change but staff at all levels. In the aquisiton between Hindalco lmt. And Novelis the people were involved in the operation for off shoring that do not buy into the initiative and influence other team members, creating waves of resistance. It became critical to have a high degree of commitment from leaders and managers to effectively communicate the needs to the off shore.Employee resistance Any change is bound to attract resistance especially in merger between Hindalco and Novelis because of the politicized negative publicity and hence had a direct impact on the employee productivity.Complacement workforce The workforce of Hindalco lmt were comfortable and complacement about productivity and customer service cost and therefore resisted to change.KURT LEWIN MODELUnfreezingThe Unfreezing stage is probably one of the more important stages to understand in the world of change we live in today. This stage is about getting ready to change. It involves getting to a point of understanding that change is necessary and getting ready to move away from our current comfort zone.In this case, both the companies were ready to merge with each other and hence a change was going to be held in both the organization. Novelis is the world leader in aluminium rolling, producing an estimated 19 percent of the worlds flat-rolled aluminium products. Novelis is the world leader in the recycling of used aluminium beverage cans. With industry-leading assets and technology, the company produces the highest-quality aluminium sheet and foil products for customers in high -value markets including automotive, transportation, packaging, construction and printing. But Novelis has always suffered a lot of losses. Hence it need ed change its system otherwise it would have to pack up from the market.Hindalco lmt.businesses aluminium and copper with annual revenue of US $14 billion and amarket capitalization in excess of US $ 23 billion. It was ready to aquire Novelis because it had a high quality aluminium sheets and even had high technology but the company was going into losses. Therefore, the company had an opportunity to acquire the company and was ready to change and therefore it was following the unfreezing step of kurt lewin model.Change/TransitionKurt Lewin was aware that change is not an event, but rather a process. He called that process a transition. Transition is the inner movement or journey we make in reaction to a change. This second stage occurs as we make the changes that are needed. People are unfrozen and moving towards a new way of being.In this case as both the companies Hindalco and Novelis were merged together. While the process of Acquisition both the companies had faced a lot of prob lems. The employees of Novelis showed resistance towards change in the working condition as per the working model of Hindalco lmt.RefreezingIn this process simply, when employees minds move from Novelis to Hindalco lmt. then in this case Novelis have done the refreeze procees with employees because this time 2 different people come in one organization for work together that is why Novelis will have to definitately give some compensations, growth plans to their existing employees for