14.Poison Pill Defence For News Corp

Media giant News Corp is mustering its forces to make sure the Murdoch family stays in control and to ward off a possible takeover bid.

It is planning a "poison pill" defence, allowing shareholders to increase their stakes if anyone buys more than 15% of the company.

The Murdoch family owns 29.5% of the firm.

The plan comes days after US cable group Liberty Media moved to raise its holding from 9% to 17%.

Liberty boss John Malone was a long-time ally of Mr Murdoch.

The move could be a prelude to a full-scale bid, or alternatively to merge the two empires.

News Corp said it had not been told in advance about Mr Malone's move. "It's too early to tell what Liberty's intentions are, but we're not necessarily treating them as friendly," a spokesman said.

Protection

If implemented, the poison pill plan gives existing shareholders the right to double their holdings at half the current share price if anyone takes control of 15% of the company's shares.

The rule does not apply to Mr Malone just yet.

Liberty's existing 9.1% stake and its option on another 8% currently held by investment bank Merrill Lynch are both declared, exempting them from the plan.

But if Liberty were to buy more than a further 1% of News Corp's voting shares, all other shareholders would immediately be allowed to expand their stake.

The effect would be massively to dilute Liberty's - or another potential bidder's - holding.

News Corp has been based in Australia since its inception, but is shortly to move its headquarters and its incorporation to the US from Australia.

VOCABULARY:

full-scale bid – крупномасштабная попытка поглощения ( bid – см. примечания к тексту 4)

voting shares - голосующие акции (акции, дающие право голоса на собрании акционеров; обычно право голоса дают только обыкновенные акции)

TRANSLATION NOTES:

But if Liberty were to buy more than… voting shares… - Если бы фирма Либерти захотела приобрести больше… «голосующих» акций…

Форма глагола to be с инфинитивом в условных предложениях означает намерение, цель.

Например: If we are to keep the prices down… Если мы намерены сдерживать рост цен… (См. часть Ш, раздел 3, §3, п.3.4)

VOCABULARY CHECK

1. Процесс слияний и приобретений очень тесно связан с динамикой рынка капитала.

2. Поглощение компании, которое происходит путем скупки ее акций на рынке против воли руководства, является враждебным.

3. Пять государственных банков были объединены в единый конгломерат.

4. Используя термин «слияние» руководство компании пытается представить процесс поглощения в более выгодном свете.

5. Крупнейшая мировая сталелитейная компания Mittal Steel Co.сообщила, что делает предложение о покупке своего ближайшего конкурента Arcelor SA по цене 28,21 евро за акцию.

6. Руководитель компании Arcelor заявил, что Arcelor - стопроцентная жертва недружественного предложения о поглощении. Руководство же Mittal заявляет, что это дружественное предложение.

7. Акции Centrica plc – крупнейшей газораспределительной компании в Великобритании – на торгах в среду выросли на слухах о возможном поглощении со стороны европейских конкурентов.

8. Разводнение акционерного капитала - выпуск новых акций не для продажи по рыночному курсу, а для распределения или продажи по цене, которая значительно ниже рыночного курса, персоналу в качестве поощрения.

9. "Золотой парашют" может быть использован как средство борьбы с нежелательным поглощением.

10. Часто компания - объект поглощения - борется с попытками рейдеров "методом отпугивания акул" (techniques). Если приобретаемая компания не предпринимает никаких действий, она называется "спящая красавица" (sleeping beauty).

11. Ядовитая пилюля - стратегия объекта поглощения, направленная на выставление своих акций в непривлекательном свете. Например, выпуск новых серий привилегированных акций, что вызывает разводнение акционерного капитала и может предотвратить попытку поглощения, увеличив расходы поглотителя.

CASE STUDY:

Why M&As Can Fail

It's no secret that plenty of mergers don't work. Those who advocate mergers will argue that the merger will cut costs or boost revenues by more than enough to justify the price premium. It can sound so simple: just combine computer systems, merge a few departments, use sheer size to force down the price of supplies, and the merged giant should be more profitable than its parts. In theory, 1+1 = 3 sounds great, but in practice, things can go awry.

Historical trends show that roughly two thirds of big mergers will disappoint on their own terms, which means they will lose value on the stock market. Motivations behind mergers can be flawed and efficiencies from economies of scale may prove elusive. And the problems associated with trying to make merged companies work are all too concrete.

Mergers are often attempts to imitate: somebody else has done a big merger, which prompts top executives to follow suit.

A merger may often have more to do with glory-seeking than business strategy. The executive ego, which is boosted by buying the competition, is a major force in M&A, especially when combined with the influences from the bankers, lawyers and other assorted advisers who can earn big fees from clients engaged in mergers. Most CEOs get to where they are because they want to be the biggest and the best, and many top executives get a big bonus for merger deals, no matter what happens to the share price later.

On the other side of the coin, mergers can be driven by generalized fear. Globalisation, or the arrival of new technological developments, or a fast-changing economic landscape that makes the outlook uncertain are all factors that can create a strong incentive for defensive mergers. Sometimes the management team feels they have no choice and must acquire a rival before being acquired. The idea is that only big players will survive a more competitive world.

The Obstacles of Making it Work

Coping with a merger can make top managers spread their time too thinly, neglecting their core business, spelling doom. Too often, potential difficulties seem trivial to managers caught up in the thrill of the big deal.

The chances for success are further hampered if the corporate cultures of the companies are very different. When a company is acquired, the decision is typically based on product or market synergies, but cultural differences are often ignored. It's a mistake to assume that people issues are easily overcome. For example, employees at a target company might be accustomed to easy access to top management, flexible work schedules or even a relaxed dress code. These aspects of a working environment may not seem significant, but if new management removes them, the result can be resentment and shrinking productivity.

More insight into the failure of mergers is found in the highly acclaimed study from the global consultancy McKinsey. The study concludes that companies often focus too intently on cutting costs following mergers, while revenues and, ultimately, profits suffer. Merging companies can focus on integration and cost-cutting so much that they neglect day-to-day business, thereby prompting nervous customers to flee. This loss of revenue momentum is one reason so many mergers fail to create value for shareholders.

But remember, not all mergers fail. Size and global reach can be advantageous, and strong managers can often squeeze greater efficiency out of badly run rivals. But the promises made by dealmakers demand the careful scrutiny of investors. The success of mergers depends on how realistic the dealmakers are and how well they can integrate two companies together while maintaining day-to-day operations.

1. Suggest, with reason, the motivation of your company for a merger.

2. Why might a merging strategy carry more risks than an organic growth of a

company?

3. Evaluate the benefits of a merger for top managers.

4. Analyse why some mergers do not work.

5. Evaluate the likely reaction of the employees of a target company to a potential

merger.

6. Make a list of what you consider to be the necessary pillars of a successful

merger.

7. Explain the combination 1+1=3

VOCABULARY REVISION – UNIT 1

Компания, предприятие, фирма; бизнес, дело, предпринимательство; свободное предпринимательство; малый бизнес; международная компания; ТНК; отрасль промышленности; распродавать (имущество, компанию); коммунальные предприятия; дочерняя компания; акционер; контрольный пакет акций; совместное предприятие; обрабатывающая промышленность; государственный сектор; второстепенное участие в капитале (меньшая доля); государственный; основная деятельность; «ключевой» бизнес; концентрироваться на определенных видах деятельности; неосновные (второстепенные) активы; продажа активов компании, не участвующих в основной деятельности; отделять, отторгать; рационализация; рисковый капитал; выкуп контрольного пакета акций корпорации ее управляющими и служащими; поглощение; объект поглощения; слияние; предложение о поглощении; «белый рыцарь».