On the way to achievement stated above the company is more whole develops concrete strategy of the activity. In this light the company constantly estimates the position in the market, the strong and weak positions, looks for such directions of the activity, following which she will achieve the greatest competitive advantages. Proceeding from it by the company the following main strategy, or concepts, the development can be chosen:
However and there is the back. Shareholders of each of the united companies willy-nilly are compelled to guarantee recoverability of loans of the partner in merge, endowing the dividends and receiving nothing in exchange. That is their welfare does not increase, and more likely on the contrary, decreases. This contradiction is the reason of that this factor does not increase the cost of the company.
Management of the company target can advise shareholders to accept the offer or to resist intentions of the potential buyer. The tender offer can be realized in various ways.
Assumes merger of companies from absolutely untied and unrelated branches. An example – merge of the tobacco company R.J. Reynolds and the producer of Nabisco Brands foodstuff therefore the RJR Nabisco company was formed.
How it is possible to define, what such merges and absorption? In principle, in special literature similar activity is called in a word – merges (mergers) which in a broad sense is understood as such process during which of several companies one is formed. However the jurisprudence and accounting demand crushing of the given category on procedures for merge (mergers) and absorption (acquisitions). Most simply these two concepts can be characterized as follows.
As it was already told, activities for merges and absorption assume not only association of economic entities, but also allocation of structural divisions. Proceeding from it, we will divide all merges and absorption into two groups – expansion of business and allocation of business.
Proceeding from it, carrying out a complex of protective measures by the top management of the company target often assumes a certain conflict of interests between it and shareholders of the company – the desire of managers to keep the positions in the company quite often blocks aspiration to increase welfare of shareholders. In order to avoid the similar conflicts the mechanism of "golden parachutes" (golden parachutes) which assume a certain encouragement (and enough considerable the size the managing director of the company in case of their shift from positions as a result of the carried-out absorption is used.
(*) further in a broad sense, and also at the description of procedure of merge the concepts "getting" and "acquired" of the company will be used. The concepts "absorbing" and "absorbed" of the company will be used at the description of transactions of absorption.
Everything that was told above, belongs to so-called to "friendly acquisition" (friendly takeover) when the decision on merge or absorption is accepted during civilized negotiations of two companies. Often the absorbing company behaves aggressively, without wishing to conduct any negotiations with the company - "target". In this case it is about "hostile absorption" (hostile takeover). Thus the absorbing company seeks for replacement of "objectionable" directors and managers.
There is other option when the company where owing to illiterate management there are unused opportunities of reduction of costs of production, and also increases of sales level and level of profitability becomes potential object of absorption. Then the absorbing company sets as the purpose full replacement of the existing control system with extraction from this all possible benefits. In this case absorption is used as the effective instrument of replacement of old team of managing directors of the new.
As bright confirmation the example of the most large and dramatic deal of repayment with the lever of the last twenty years – acquisition of the RJR Nabisco company by known group of venture capitalists of Kohlberg, Kravis & Roberts (KKR) for 25 billion dollars 1 can serve all aforesaid