Q&A - Explain what is meant by acquisitions or takeovers

Acquisitions (often also called “takeovers”) are the main method of external growth for firms.  They are also a source of significant change for businesses – both the business being acquired and the business doing the buying!

What is an acquisition? Here is a definition:

“Where one business acquires a controlling interest in another business”

As you look through the business media you should come across many examples of acquisitions.  Here are some for you to look at:

December 2005
Buyer – ITV plc
Target – Friends Reunited
Price - £175million
http://www.telegraph.co.uk/finance/2927757/ITV-buys-Friends-Reunited-for-175m.html

December 2006
Buyer – First Choice
Target – Late Room
Price - £120million
http://www.manchestereveningnews.co.uk/news/business/s/231/231640_first_choice_snaps_up_120m_lateroomscom.html

March 2004
Buyer – WM Morrison
Target - Safeway
Price - £3bn
http://news.bbc.co.uk/1/hi/business/3542291.stm

January 2007
Buyer – Tata
Target - Corus
Price - £5.8bn
http://news.bbc.co.uk/1/hi/business/6315823.stm

The reasons for a firm making an acquisition vary enormously. A good way of thinking about the type of acquisition made by a firm is in terms of its direction:

Forward + vertical: Acquiring a business further up in the supply chain – e.g. manufacturer buys a distributor. 
Backward + vertical: Acquiring a business operating earlier in the supply chain – e.g. a retailer buys a wholesaler
Horizontal: Acquiring a business at the same stage of the supply chain – e.g. a manufacturer buys a competitor
Conglomerate: Where the acquisition has no clear connection to the business buying it

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6 Essential M&A Cases: Tata Group buys Jaguar Land Rover [21 May 2012]
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6 Essential M&A Cases: BA & Iberia Merge to Form IAG [23 Apr 2012]
BUSS4: 6 Essential M&A Cases [22 Apr 2012]
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Takeovers and Mergers - Cost Synergies in Action at BMI [17 Apr 2012]
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Revision Presentation - Emerging Markets [7 Apr 2012]
BUSS4 M&A - the Benefits of Foreign Takeovers of UK Firms [7 Apr 2012]
IAG bid for BMI receives approval [3 Apr 2012]
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Starbucks chooses strategic alliance in bid to enter the Indian market [13 Mar 2012]
Tata & Jaguar Land Rover - Culture and Strategy [11 Mar 2012]
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M&A: 8 ways to make a success of a takeover [12 Feb 2012]
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Insights on takeovers and mergers from KPMG’s 2011 global survey [12 Feb 2012]
Takeovers - the search for cost synergies [7 Feb 2012]
The story of a failed takeover - Fred Goodwin, RBS & ABN-Amro [6 Feb 2012]
Takeovers in the UK - the long-term trend [5 Feb 2012]
Cadbury’s Law - Should UK Firms be Protected from Takeover? [2 Feb 2012]
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BUSS4 research - some initial ideas [31 Jan 2012]
BUSS4 2012 - Mergers and Takeovers on the Business Studies Blog [31 Jan 2012]
The Guardian on Takeovers and Mergers [31 Jan 2012]
Strategic choice: What should Facebook do with cash from the IPO? [30 Jan 2012]
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Consolidation on the cards as IAG claims deal to acquire BMI [6 Nov 2011]
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External growth - Diageo on the acquisition trail [21 Feb 2011]
Takeovers: What happens next? [16 Feb 2011]
Cadbury and Kraft One Year On - Culture and Change [12 Feb 2011]
Q&A - Why do acquisitions often fail to deliver acceptable returns? [28 Dec 2010]
Q&A - What is meant by “synergy” in the context of a business acquisition [28 Dec 2010]
Q&A - Why are acquisitions so popular as a method of business expansion? [21 Dec 2010]
Q&A - Explain “organic” or internal growth [21 Dec 2010]
Q&A - How can the expansion of a firm be measured? [21 Dec 2010]
Growing market share by stealth?  Tesco and One Stop [17 Dec 2010]
Nestle completes takeover of Jenny Craig’s - great synergies??? [15 Dec 2010]
Kraft’s CEO on why it bought Cadbury’s [22 Oct 2010]
Google, Profits and Diversification [16 Oct 2010]
CEO admits “the biggest mistake in corporate history” [29 Sep 2010]
Lesson Worksheet - Business Growth Basics [29 Sep 2010]
Strategy in Action: “Buying Growth is Not a Strategy” [20 Sep 2010]
Chicken Takes Over Burger, But Where’s The Beef? [19 Sep 2010]
External growth strategy - takeovers back in fashion for large UK firms post recession [29 Aug 2010]
Kraft’s Cadbury takeover triggers management exodus [26 Jul 2010]
Is the mega-merger falling out of fashion? [7 Jun 2010]
Growth strategy - takeovers return to building supplies [3 Jun 2010]
Strategy in Action - the Return of External Growth [28 May 2010]
Strategy Case Study - Asda Nets Netto [28 May 2010]
BUSS4 - A Clash of Two Cultures [16 May 2010]
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Unilever in the recession - the CEO on strategy [25 Mar 2010]
Strategy in the UK Recession - What 69 UK CEOs Did About It [22 Feb 2010]
AQA BUSS4 Section B Practice Question - ITV & News Corp [7 Feb 2010]
AQA BUSS4 Section B Practice Question - Royal Bank of Scotland [7 Feb 2010]
Stakeholders in action - the Bournville demonstration [28 Jan 2010]
Teaching strategy - Cadbury and why takeovers rarely work [24 Jan 2010]
Reflections on the ‘Worst Deal in History’ – and the Best [6 Jan 2010]
What’s behind the BA and Iberia Merger? [19 Nov 2009]
Could mergers come back into fashion? [25 Sep 2009]
A Takeover with a Difference [24 Sep 2009]
Revision Presentation - Acquisitions [9 Sep 2009]
Video case study - Rebranding acquisitions [1 Jun 2009]
How to buy a £1 for 60p [1 Oct 2008]
Lining up a Buyer for Bradford & Bingley [22 Sep 2008]

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