“MERGER & ACQUISITION: WITH
SPECIAL REFERENCE TO KRAFT-
BRIEF INTRODUCTION OF THE TOPIC: -
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate
finance world. Every day, investment bankers arrange M&A transactions, which bring
separate companies together to form larger ones. When they're not creating big companies
from smaller ones, corporate finance deals do the reverse and break up companies through
spin-offs, carve-outs or tracking stocks. Not surprisingly, these actions often make the news.
Deals can be worth hundreds of millions, or even billions, of dollars or rupees. They can
dictate the fortunes of the companies involved for years to come. For a CEO, leading an
M&A can represent the highlight of a whole career. And it is no wonder we hear about so
many of these transactions; they happen all the time. Next time you flip open the newspaper’s
business section, odds are good that at least one headline will announce some kind of M&A
transaction. Sure, M&A deals grab headlines, but what does this all mean to investors? To
answer this question, this report discusses the forces that drive companies to buy or merge
with others, or to split-off or sell parts of their own businesses. Once you know the different
ways in which these deals are executed, you'll have a better idea of whether you should cheer
or weep when a company you own buys another company - or is bought by one. You will
also be aware of the tax consequences for companies and for investors.
Today mergers, acquisitions and other types of strategic alliances are on the agenda of most
industrial groups intending to have an edge over competitors. Stress is now being made on
the larger and bigger conglomerates to avail the economies of scale and diversification.
Different companies in India are expanding by merger etc. In fact, there has emerged a
phenomenon called merger wave.
The Main Idea one plus one makes three: this equation is the special alchemy of a merger or
an acquisition. The key principle behind buying a company is to create shareholder value
over and above that of the sum of the two companies. Two companies together are more
valuable than two separate companies - at least, that's the reasoning behind M&A. This
rationale is particularly alluring to companies when times are tough. Strong companies will
act to buy other companies to create a more competitive, cost-efficient company. The
companies will come together hoping to gain a greater market share or to achieve greater
efficiency. Because of these potential benefits, target companies will often agree to be
purchased when they know they cannot survive alone.
Objective of the Project
1. The purpose of the study is to study the process of merger.
2. To discusses the forces that drive companies to buy or merge with others, or to split-
off or sell parts of their own businesses.
3. To do valuation of one or two companies with the method enterprise value and
compare the value with peer group and analyze in detail
4. Gain an in-depth knowledge about various corporate valuation techniques
5. Critically examine the rationale behind the acquisition of Cadbury by Kraft Food ltd.
6. Study the regulations governing mergers & acquisitions in the case of a cross-border
7. To find conclusions to our project.
Research design is the basic framework which provides guidelines for the rest of research
process. It specifies the methods for data collection and data analysis .The data for the
research has been collected through primary as well as secondary source..
Types of Research
The research study under consideration is descriptive type and covering some areas of
Basically there are two broad kinds of researches
Exploratory Research : This seeks to discover new relationships.
Conclusive Research : It is designed to help executive choose the various
course of action.
As research design applicable to exploratory studies are different from objectives firmly in
mind while designing the research. Which searching for hypothesis, exploratory designs are
appropriate; when hypothesis have been established and are to be listed, conclusive designs
are needed. It should be noted however, that the research process tends to become circular
over a period of time. Exploratory research may define hypothesis, which are then tested by
conclusive research; but a byproduct of the conclusive research may be a suggestion of a new
opportunity or a new difficulty.
Other characteristics of exploratory research are flexibility and ingenuity, which characterize
the investigation. As we proceed with the investigating it must be on the alert to recognize
new ideas, as it can then swing the research in the new direction until they have exhausted it
or have found a better idea. Thus they may be constantly changing the focus of invest as new
possibilities come to attention.
Sources of Data
There are two type of method of data collection.
1. PRIMARY DATA
2. SECONDARY DATA
1. Personal Interview
2. Wholesaler & Distributor Survey
2. News papers