FIN302 – MERGERS AND ACQUISITIONS

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ASSIGNMENT

DRIVE	FALL 2018
PROGRAM	MBA
SEMESTER	3
SUBJECT CODE & NAME	FIN302 – MERGERS AND ACQUISITIONS
BK ID	B1732
CREDITS	4
MARKS	30

Note – The Assignment is divided into 2 sets. You have to answer all questions in both sets. Average score of both assignments scored by you will be considered as your IA score. Kindly note that answers for 10 marks questions should be approximately of 400 words.

SET I

Question.1. What are the sensible reasons in favor of merger?

Answer:

Reason # 1. Economies of Scale:

An amalgamated company will have more resources at its command than the individual companies. This will help in increasing the scale of operations and the economies of large scale will be availed. These economies will occur because of more intensive utilisation of production facilities, distribution network, research and development facilities,

Question.2. Explain the concept of synergy. What is Managerial Synergy?

Answer:Corporate synergy refers to a financial benefit that a corporation expects to realize when it merges with or acquires another corporation. Corporate synergy occurs when corporations interact congruently.

Question.3. Explain the characteristics of Demerger. List the process of spin-off.

Answer:Demerger is the business strategy wherein company transfers one or more of its business undertakings to another company. In other words, when a company splits off its existing business activities into several components, with the intent to form a new company that operates on its own or sell or dissolve the unit so separated, is called a demerger.

SET II

Question.1. Explain the characteristics of Joint Venture. What are the key rationales behind Joint Ventures?

Answer:A Joint Venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly emerging markets; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities.

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Question.2. Provide some recommendations for effective cross border acquisition.

Answer:Cross border mergers and acquisitions depend on a number of success factors that ought to be extensively considered if all the ambitions of the involved businesses are to be fully met. Logically, there must be differences in the way business is conducted in either side of the borders where the mergers and acquisitions are to take place.

1. PROPER MANAGEMENT: Cross border mergers

Question.3. Explain Amalgamation in the nature of Merger and in the nature of Purchase.

Answer:Amalgamation is defined as the combination of one or more companies into a new entity. It includes:

    Two or more companies join to form a new company

    Absorption or blending of one by the other

Thereby, amalgamation includes absorption.

However, one should remember that

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