Merger and Acquisition Essay
Category : Free Essay Writing Samples, Mergers & Acquisitions
Merger and Acquisition
Owners seek to merge companies for several reasons including combining breakeven or profitable companies to become more profitable, combining competitors for succession planning or combining for synergistic reasons. In the Article provided below, it can be seen that OMRON Corporation, which is a global leader in automation, sensing as well as control technology have shown their interest to merger with its wholly owned subsidiary which is the Omron Semiconductors CO., Ltd., through absorption. The main reason of the merger is to strengthen the market ability and competitiveness of the corporation, by combining the CMOS capabilities of OMRON Semiconductors with the application technologies as well as expertise of OMRON Corporation in terms of component enhancement and to add other value across the industry’s product lines. The article has also been show other details of the merger including the merging method used which is absorption which means that Omron Corporation will be the surviving industry in the market while the OMRON Semiconductors Co., Ltd. will be dissolved in the market.
Practically, it can be said that the combining efforts of two companies like Omron and its subsidiart were expected to reap many benefits which can be use to justify that the merging of these two companies are appropriate. Some of these benefits include the importance the said process in terms of competition, financial management, innovation especially in the product lines of the OMRON Corporation. The merger can also be considered as an an effective solution and way to combat the widening competition any specific business or industry (Market Research 2000). Through this merging, OMRON’s organisational capability has been boost by providing the needs to attain tremendous growth and positioned its products as dominating forces in the particular area of operation. More specifically, merger may permit the newly merged companies to enter new product and geographical markets this will show acquiring the sources of revenue, as well as new customers; it will also acquire new technologies in support of the prior objective; will reduce costs through economies of scale and scope; increase in the operational efficiency; avoid becoming a target for acquisition or unwelcome merger; and will extend local exchange carriers or embrace for long distance carriers the temporary economic power of major regional or national local exchange carriers to finance expansion.
Similarly, merger and takeover permits the sharing of sale warehousing, distributing, and other logistical services. It reinforces ongoing sales and profit growth rates, thus, maximizing the resources of both companies involved. Strategic alliances like M&A has helped pressure some firms to link with others. Additionally, M&A redefine corporate boundaries, corporate growth, capabilities, and consolidation. All in all, it can be said that the merging through absorption of OMRON and its subsidiary is a strategic way of the company to ensure competitive advantage and position in the market place.
Market Research (2000). Retrieved March 17, 2008, from www.marketresearch.com
Copy of the Article
OMRON Announces Subsidiary Merger (Simple Share Exchange and Short Form Merger)
OMRON Corporation (TOKYO: 6645, ADR: OMRNY; ‘Omron’, ‘the Omron Group’), a global leader in automation, sensing and control technology, decided at a board of directors meeting held on January 30, 2008, to merge its wholly owned subsidiary, OMRON Semiconductors Co., Ltd., by absorption. Details are as follows. As this is a simple merger through absorption of a wholly owned subsidiary, some details have been omitted from this disclosure. 1. Object of Merger Omron Corporation offers a range of MEMS sensors and ICs based on microprocessing technologies. This merger will combine the CMOS capabilities of OMRON Semiconductors Co. Ltd. (which began operations in April 2007) with Omron’s application technologies and expertise in component development to add further value across the product line. The resulting management structure will reflect the Omron Group’s corporate-wide strategy of fusing semiconductor-related technologies with existing businesses. As it works to strengthen this business, Omron will move ahead with the integration of its Minakuchi Factory, which currently handles semiconductor production, and related development, marketing and planning functions. 2. Overview of Merger (1) Schedule Merger approval at board of directors meeting January 30, 2008 Signing of merger contract January 30, 2008 Date of merger (effective date) July 1, 2008 (scheduled) (Note) Pursuant to the simple share exchange method set forth in Articles 796-3 and 784-1 of the Company Law of Japan, this merger is not subject to approval by general meetings of Omron Corporation or OMRON Semiconductors Co., Ltd. respectively. (2) Merger method The merger will be implemented by way of merger by absorption, in which Omron Corporation will be the surviving company and OMRON Semiconductors Co., Ltd. will be dissolved. (3) Merger grants No new shares will be issued and there will be no compensation paid due to the merger as OMRON Semiconductors Co., Ltd. is wholly owned by Omron Corporation. (4) Handling of stock acquisition rights and bonds with stock acquisition rights OMRON Semiconductors Co., Ltd. will not issue stock acquisition rights or bonds with stock acquisition rights. 3. Outline of OMRON Corporation and OMRON Semiconductors Co., Ltd. (as of March 31, 2007) (1) Trading name OMRON Corporation (Merging company ) OMRON Semiconductors Co., Ltd.(Merged company) (2) Description of business Development, manufacturing, sales and service of FA (Factory Automation) systems, control equipment, electric components, social systems, traffic systems and others. Development, production, and marketing of semiconductor products (3) Date of incorporation May 19, 1948 December 4, 2006 (4) Headquarters Shiokoji, Horikawa, Shimogyo-ku, Kyoto 600-8530, Japan 686-1 Ichimiyake, Yasu, Shiga, 520-2362, Japan (5) Representative Hisao Sakuta, President and CEO Kazuma Wada, President (6) Capital 64,100 million yen 1,500 million yen (7) Number of shares outstanding 249,121,372 2 (8) Net assets 241,733 million yen (non-consolidated) 2,981 million yen (non-consolidated) (9) Total assets 389,247 million yen (non-consolidated) 3,541 million yen (non-consolidated) (10) Fiscal term March 31 March 31 (11) Major shareholders and their equity participation 1.State Street Bank and Trust Company 5.81% 2.Japan Trustee Services Bank, Ltd. (trust account) 4.00% 3.The Master Trust Bank of Japan, Ltd. (trust account) 3.82% OMRON Corporation 100% 4. Status after Merger (1) Trading name OMRON Corporation (2) Description of business Development, manufacturing, sales and service of FA (Factory Automation) systems, control equipment, electric components, social systems, traffic systems etc. (3) Location of headquarters Shiokoji, Horikawa, Shimogyo-ku, Kyoto 600-8530, Japan (4) Representative Hisao Sakuta, President & CEO (5) Capital 64,100 million yen (there will be no capital increase as a result of this merger) (6) Fiscal Term March 31 (7) Outlook The merger is expected to have negligible effect on Omron Corporation’s consolidated and non-consolidated financial outlook for the fiscal year ending March 2008.