Английский язык. Практический курс для решения бизнес-задач

Technically, what differentiates a merger from an acquisition is how it is financed:

Merger

A «merger» or «merger of equals» is often financed by an all stock deal (a stock…….). An all stock deal occurs when all of the owners of stocks of either company get the same amount of stock in the new combined……. The term…… is sometimes used to indicate the effective opposite of a merger, where one company splits into two.

Acquisition

An acquisition (of un-equals, one large buying one small) can involve a cash and…….. combination, or just cash, or a combination of cash and stock of the…… entity, or just stock. In addition, the acquisition can take the form of a purchase of the stock or other…….. of the target entity, or the acquisition of its assets.

High-yield

In some cases, a company may acquire another company by issuing…….. debt to raise funds (often referred to as a……). The reason the debt carries a high yield is the……. involved. The owner can not or does not want to risk his own money in the deal, but…….. are willing to finance the deal for a high……. The combined company will be the……..of the high-yield debt and it will be on its balance sheet. This may result in the combined company having a low……… to loan capital ratio.

Motives behind M&A

The following M&A motives are considered to add shareholder value:

………: This refers to the fact that the combined company can often reduce……… departments or operations, lowering the costs of the company relative to theoretically the same revenue stream, thus increasing profit.

Increased revenue/Increased market share:

This motive assumes that the company will be absorbing a major competitor and increasing its power (by………. increased market share) to set prices.

……….: For example, a bank buying a stock broker could then sell its banking products to the stock broker’s customers, while the broker can sign up the bank’s customers for brokerage……… Or, a manufacturer can acquire and sell…….. products.

……….: Better use of complementary resources.

Taxes: A profitable company can buy a…….. to use the target’s tax……..

Geographical or other………: This is designed to smooth the earnings results of a company, which over the long term smoothes the stock price of a company, giving………. investors more confidence in investing in the company. However, this does not always……… to shareholders.

The following motives are considered to not add shareholder value:

Diversification: While this may hedge a company against a……… in an individual industry it fails to deliver value, since it is possible for individual shareholders to achieve the same hedge by diversifying their……… at a much lower cost than those associated with a merger.

Overextension: Tend to make the organization fuzzy and………..

Manager’s ambitions: Often the executives of a company will just buy others because doing so is newsworthy and increases the…….. of the company.

………: Managers have larger companies to manage and hence more power.

Manager’s сompensation: In the past, certain executive management teams had their……….based on the total amount of profit of the company, instead of the profit per share, which would give the team a perverse……… to buy companies to increase the total profit while decreasing the profit per share (which hurts the owners of the company, the shareholders).

Source: Wikepidia

Terms:

overlapping, risk, economies of scale, incentive, borrower, portfolios, profile, write-offs, high-yield, cross selling, corporate finance, due diligence, empire building, conservative, shareholder value, swap, entity, «demerger», debt, acquiring, equity interest, leveraged buyout, cost of capital, shareholder’s equity, capturing, accounts, complementary, synergy, loss maker, diversification, deliver value, downturn, unmanageable, remuneration, third parties

Exercise 5. Translate into English.

Абрамович свое получит

«Газпром» заплатит $13 млрд за 72,6% акций «Сибнефти».

Заключена крупнейшая в истории России сделка: «Газпром» покупает 72,6% акций «Сибнефти» за $13 млрд. Продавец, самый богатый россиянин Роман Абрамович, возможно, навсегда покончит с бизнесом внутри страны, оставив здесь лишь благотворительные проекты.

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