M&A and Private Equity: Analyzing ABinBev & SABMiller - LSBF Report

This report provides a comprehensive analysis of mergers and acquisitions, focusing on the ABinBev and SABMiller merger and the wave of acquisitions in the IT industry. It examines the combined entity's structure, impact on business operations and the labor force, and resulting synergies, including market access and financial considerations. The report also addresses the challenges faced post-merger, such as market competition and organizational restructuring. Furthermore, it delves into the IT industry's acquisition trends, emphasizing data collection and utilization strategies for competitive advantage and market power. Specific acquisitions are discussed in terms of benefits, costs, and impact on shareholders, along with the potential consequences of decreased competition. The analysis concludes with insights into the strategic implications of mergers and acquisitions in the modern business environment, particularly in the context of technological advancements and evolving market dynamics.

Merger and Acquisition
Mustafa Abbasi
London School of Business

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Contents
Introduction......................................................................................................................................3
Task1................................................................................................................................................3
Combined entity to transfer before the merger................................................................................3
Impact on business operations.....................................................................................................4
Impact on the labour force...........................................................................................................4
Synergies resulting from the merger............................................................................................4
Access to various markets............................................................................................................5
Financial Point.............................................................................................................................5
Challenges....................................................................................................................................5
Task2................................................................................................................................................7
A wave of acquisitions in the IT industry........................................................................................7
Data collection Utilization...........................................................................................................7
Data collection used for market power........................................................................................8
Specific Acquisition.....................................................................................................................9
Benefits and Cost.........................................................................................................................9
Shareholders’ objectives............................................................................................................10
Impact of decrease competition.................................................................................................10
Decrease in competition.............................................................................................................10

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Concluding Thoughts.....................................................................................................................11
Reference.......................................................................................................................................12

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Merger and Acquisition
Introduction
In the modern business practices, every business organization has an objective to develop and
grow and this is mainly related to creation of value for the shareholders. Businesses use various
methods to enhance their growth factor and also aspire to develop a strategy which is most
effective. The practice of merger and acquisition in this regard is mainly followed by companies
to get the optimum level of growth by increasing value of their market share and developing a
culture which is more adaptable to changing business requirements of the market.
The main objective of the business organization in the area of growth and development is to gain
higher financial stability. Merger and acquisitions provide business with effective utilization of
every resource mainly the human resource factor by providing an area where expert and
technical skill levels are accumulated on a single platform.
In current market practice, mergers and acquisitions provides the business organisation with the
opportunity to increase the market share with great potential. This has a significant effect on the
market demand leading to the growth of the business. Merger and acquisition in this market
provide the most effective and common factor supporting financial strength of the organisation.

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Task1
Combined entity to transfer before the merger
The merger of the ABinBev and SABMiller is based on the transaction factor where ownership
of both the companies is transferred in a manner that provides consideration to the forming of a
single entity. This provides both the companies to be combined into a single entity and transfers
all matters related to management and operations, which will enable both of these enterprises to
grow and develop by reforming nature of their core business values. This provides them a greater
competitive position at the global level (Parikh, 2016).
The legal consideration in this merger is related to consolidation of two business entities into a
single organisation where their whole ownership in the area of stock and equity-like assets and
profit factors must be combined to provide element of expansion for both organizations in the
market to be effectively identified as a single working organization (Brueller, Carmeli &
Markman, 2018). From a financial aspect, based on commercial and economic transaction, this
provides consideration equal to all assets, equity, interest, and liability to be merged into a clear
identified organisation. The merging transaction provides legal structure in the area of equally
dividing ownership and control factors for both organisations in a combined aspect of developing
a single entity.
Impact on business operations
The merger of ABinBev and SABMiller has brought out several changes within the single entity
that has been formed from the combination of these organisations. This merger changed the

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overall size of the organisation also influencing the stock price, share value, assets, and liability
also providing consideration to the control and ownership factor as was practiced in both of these
organizations when acting as a single unified entity.
All business operational matters related to the management and production process have been
directly influenced by this merger (Zhnag et al., 2015). The operational factor is influenced in the
area of changing roles and capacity of departments with providing high consideration to the clash
of culture that is a practice within the business environment of both these organisation (Michael,
et.al, 2018).
Impact on the labour force
The merger has greatly impacted the economic factor of all the employees mainly of the
workforce that are working in the production unit of this organisation. The merger will provide
difficulty for employees in the area of adapting to a new culture which may be more demanding
and put pressure on the performance level of every employee (Greve & Man Zhang 2017). The
merger could also result in the closure of certain business activities or departments which
provides consideration to the layoff factor which can negatively affect the business capability in
areas of development and progress which is the main objective of the Merger.
Synergies resulting from the merger
The merger will be a combination of two different organization having different ideologies and
objectives thus it can be said that on formation of this merger, value of the business will be
increased to a greater extent (Angwin & Meadows, 2015). Both these businesses can put in
combined efforts to come up with new segments and thus expand their business.

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The merging process will affect both the investor as well as the management of the companies in
different areas by influencing various elements like current financial situation of both companies,
the size of organisation emerged after the Merger and the formation of Management role and
responsibilities in the area of controlling every process of the new organisation (Haucap, et.al,
2016).
The main effect of the merger is in the area of stock prices of the organisation which is expected
to be higher than both of these companies (Dunlap, McDonough, Mudambi & Swift, 2016). The
highest stock prices will benefit the shareholder and revenue generation aspect of the
organisation as providing long term sustainable improvement in performance and profit area.
Access to various markets
The merger will provide benefits in the areas of reducing competition and higher market access
at a global level. It will up lift the economic abilities of the organization generating higher
output which will be both energy-efficient as well as flexible. This will also help in reducing the
overall cost of doing business and developing a new and diverse range of products at a lower
competitive price that will help in capturing a larger segment of consumers at the global level
(Tanriverdi & Bülent Uysal, 2015). The Merger also benefits the organisation in the area of
increased budget allocation researches and development programs thus enhancing the growth
factor for the new organization in a sustainable and long-term manner.
Financial Point
The corporate merger of the ABinBev and SABMiller has resulted in the emergence of a new
company that provides consideration to the financial aspect of this company. Financial

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consideration is provided in the area of stock prices, cash value, market share, liabilities, and
assets.
The major aspect on which the whole financial consideration is provided after the merging
process is related to the stock for a stock exchange based ratio (Lebedev, Peng, Xie & Stevens,
2015). The merger often results in the provision of control and monitoring factors to the
management of the organisation in consideration with the ratio of shares provided in the area of
the merging process.
The cash price factor resulting from the Merger also provides consideration in the area of
payment of a certain amount to complete the merger process. This provides the financial aspect
of completing the merger process in legal aspects by paying for each share of the target company
which in this case is of the SABMiller to form the base for strong and effective Merger (Bessen,
2017).
Challenges
The challenge which the organisation has to face after the merging process is in the area
of market competition mainly related to fair competition level, retailing of high skill employees
and workforce. The challenge which the merging process provides for the new form entity is
related to the aspect of maintaining and developing new relations at both corporate and consumer
level in the global market.
The most significant impact of the merger for the company will be in the area of maintaining
business dynamics which provides consideration in the area of competitive advantage in the
market (Vazirani, 2015). The merging of both companies into a larger and more effective
organisation will help in strengthen the factor related to generation of high competitive

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advantage at a global level and at the same time improving business ability in the area of
development and progress.
The merging process also provides consideration to the whole factor of restructuring the
organizational working area in every business unit mainly related to the production department
(Angwin, Mellahi, Gomes & Peter, 2016). Merging also sometimes leads to changing job roles
which may lead to a high turnover ratio that can negatively impact the newly merged entity to
maintain its level of competitiveness in the market so that it successfully achieves the set
business objective.

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Task2
Wave of acquisitions in the IT industry
The current market is based on the element of Information and Technology and is considered as
the most expanding and progressive business industry at the global level. Various IT related
businesses to increase their stock market value have adopted means of co relatedness with other
organisation thus giving into the merger and acquisition wave in the whole industry (Yılmaz &
Tanyeri, 2016). The wave of acquisition in the IT industry is also in the area of enhancing the
market value of an organisation which provides high consideration to the element of competitive
dynamics with a greater advantage over others in the business of Information Technology.
Acquisition and Merger wave in the current market context of the information technology
industry is due to the factor of activities that are taking place in the information technology that
include changing economic conditions, technological advancement and innovation in the
industry (Benitez, Ray & Henseler, 2018). All of these factors provide high consideration to the
merging facility to create business dynamics in the area of entering or lowering the competitive
advantage in a particular gap that exists in a specific area of Technology.
The high consideration in the area of changing market practice is related to technological
developments and more innovative product being introduced in the market. Business related to
this development sector focuses more in the area of gaining an advantage in skills and technical
knowledge level to produce and develop technology which is Innovative as well as cost-effective
thus providing competitive advantage to the businesses (Benitez, et.al, 2018).
Data collection Utilization

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The information technology industry is based on the data collection method which is defined in
the technological aspect as gathering and gauging of informations. This collection of data by
technological industries is due to various interests which provide an organisation with a
competitive advantage.
Even in this age of digital era using, technological companies are involved in data collection in a
systematic order as this helps in finding solutions to business-related issues in an effective
manner. The data can be used to find out solutions to business problems thus enabling firms to
develop strategies that can help them in the growth and expansion (Sherer, et.al, 2015).
The main reason for data collection by the technological business is mainly related to developing
an understanding of consumer behaviour in the area of their needs and requirements for a
particular product or service. The data also helps business organisation to explore and develop
insight on changing behaviour of customers under the influence of market Trends or other related
circumstances. Data also assist the business in the area of categorizing consumers based on their
segment which is commonly termed as customer segmentation. Strategies to come up with new
products are generally based on data collected by the firms as these reflect wish of the customers.
Data Collection also provides consideration in the area of enhancing the overall working process
and infrastructure of a business organization (Finkelstein & Cooper, 2017). Data also helps in
implementing the change process within the business organisation by facilitating the decision-
making process. The data in the current market context also provides business with an effective
strategy and platform to resolve the issues related to any business working area. This also helps
in improving the overall quality of products and services and making modifications as per the
market requirement of the consumers. Direct interaction with the customers and obtaining their
feedback helps in bringing in improvisations in the products (Bari, et.al, 2016).

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Data collection used for market power
The current market situation has witnessed a greater shift in economic activities at every business
level mainly related to the industries related to information technology. The main change which
has been derived from the advent of the technology is the change in behaviour of consumer
towards shopping trend. This shift in activity is from offline to online marketing platform which
also creates a large amount of data providing businesses with greater dynamics and opportunities
to increase their development and growth aspects (Yaghoubi, Yaghoubi, Locke & Gibb, 2016).
The current market of the digital medium is running on user data which are extracted by making
use of typical marketing tools. Getting to know the choices and preferences of the customers
helps in coming up with products and services that they are demanding for thus gaining customer
loyalty. The example of tech giants like Google, Apple, Microsoft, and other big names in the IT
sector actively utilizing consumer data to enhance their influence in the market can be
considered. The main aim is to become customer friendly and give way to two way relationship
between the businesses and their target audience (Angwin, et.al, 2016).
Specific Acquisition
The acquisition of Fitbit by Google for the amount of $2.1 billion is considered as the most
expensive acquisition in the IT industry in the contemporary market practice. This acquisitions’
aim is expanding the scope of the IT sector to create an influence thus providing technological
Solutions and means to other industries as well. Acquisition of Fitbit by Google is also providing
evidence in the area of technological influence in the Healthcare system provided under the
utilization of technological factors related to the mobile application system like Android and
iOS.

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The Fitbit organization is mainly related to the health care system provided under the area of
fitness tracker by keeping a record of consumer data on a timely basis. It works more like smart
watches which provide consideration to Google in the area of creating a better competitive
advantage for itself (Angwin, et.al, 2016). The Fitbit organization offers a complete range of
Wellness programs based on the individual as well as corporate level by offering solutions for
businesses in the area of providing an application to keep a track of fitness levels for every
individual. This provides Google with a large number of data to enter in a market which has high
growth level potential in the area of acquiring consumer data to develop product and services
based on individual needs and requirement related to both personal as well as professional
aspects (Sherer, et.al, 2016).
Benefits and Cost
The acquisition of Fitbit by Google provides benefits in the area of entering into a market niche
by creating a competitive advantage for itself in the area of creating value for the business related
to Data Analytics. This also enhances Google's ability to acquire and analyze vast amounts of
data which will provide the organization of Google with the ability to enter into the Healthcare
sector. This is from the element of using individual database systems in creating an analytics
based on a predictive method to provide the Healthcare sector with the ability to develop
personalized intervention Healthcare systems based on individual requirements. This also
provides a competitive edge for the Google in area of enhancing its business portfolio in the
health care setting by making a business plan to develop a contract with Healthcare industries

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which provides consideration is the space of developing a Healthcare plan system (Cuevas, et.al,
2015).
The cost which the Google organization has to bear for this acquisition is existence of larger
competitors in the Healthcare setting like Apple and Samsung that are also offering product and
services in the form of smart watches. These tech giants also offer gadgets that are much lower
than the process offered by the Fitbit which will increase the factor of focusing on the Research
and development aspect. This will increases the cost of investment to be made in the area of
developing products and services in a more innovative manner that will help in generating a
competitive advantage for the organization of Google.
Shareholders’ objectives
Google has acquired the organization of Fitbit for $2.1 billion to improvise consideration to enter
into the Healthcare Centre. This provides high consideration to the factor of benefit to the
shareholder that has invested in the organization of Fitbit. The share market value of the Fitbit
organization is $1.4 billion which has provided consideration to the share value to be raised by
27% after the acquisition has been made by Google. The share of the Fitbit as acquired by
Google has been finalized for $7.35 per share value on cash taken by the organization of Google
(Horwitz, et.al, 2015). This provides high consideration to the factor of meeting the expectations
and objectives of the shareholder who invested in any company mainly from the factor of
achieving high profit and revenue margin. The merger will enhance the market share value of
Fitbit organization by increasing the share value of the organization which also provides high
return value to the shareholder thus obtaining high-profit ratio in the form of dividend against the
investment made in the organization of Fitbit.

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Impact of decrease competition
The reduced level of competition in the tech industry provides consideration to the factor of the
low level of technological development which also affects bring out efficient and innovative
products which offer Great Value return against the investment being made in the development
process of better and effective product and services. The reduced level of competition will also
minimize the factor of technological development in the industry which will also affect the price
and service factor which will less efficient and more costly. this also will result in an area of less
benefit and value for customer satisfaction (Horwitz, et.al, 2015).
Less competition in the tech industry will create higher prices for a specific product which will
offer the same features at the same price. The reduction factor of competition also impacts the
innovative and technological aspects which are necessary for the development process for any
product and service to meet the constantly changing requirements of the consumer. The less
competition will also result in a monopoly of the market by the manufacturer and provide less
consideration to the consumer in the area of choosing a product is based on quality and price
factor.
Decrease in competition
There are the various factors which provide less consideration to the competition level in the tech
industry based on various elements like price, business dynamics, Investments made by various
companies in the technological area and high-profit ratio.
Due to a large number of acquisitions and merging processes in the tech industry, few
organizations are dominating the whole sector without facing less or no competition in the

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market (Eaton, 2016). This provides high consideration to the increase in price factor reducing
the output of the product and services to be offered in the Market. This also provides increased
concentration of specific brand in a market which in turn provides correlation to higher prices in
the area of creating a monopoly for a particular product scheme offered.
Higher investment made by different organizations in the tech industry leads to the generation of
creating business dynamics with a greater competitive advantage in the market. The acquisition
and merging factor provide investment to be made in the area of eliminating the factor of
competition and destroying consumer opinion and choosing of variety of product and services
that offers greater value and satisfaction in the area of acquiring product and services based on
innovative and technological factor (Eaton, 2016).
The high factor of profit and revenue generation aspects in the technology industry provides
business with consideration to neglect the factor of investment made in the area of creating
competitive pressure among rivals. Investment is also made in a specific sector of an industry to
achieve a higher dynamics and create an authority factor in the market gap (Christofi, Leonidou
& Vrontis, 2017). The high level of profit in the tech industry provides business with
consideration to reduce the level of investment in the area of generating high business dynamics
in the area of developing products and services that are more innovative and provides a
competitive advantage over others.
The tech industry has witnessed high profit which is continuously rising due to the factor of a
concentrated market which is increasing and reducing the factor of competition that exists
between various technological companies (Christofi, Leonidou & Vrontis, 2017). This also
provides business organization related to tech industry with increasing market power which
provides consideration to dominate a particular market segment in the area of technological

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product and services offered with direct relation to the requirement of the organization in the
area of having greater dynamic with reduction in competition.
Concluding Thoughts
The merging and acquisition in current market practice provides consideration in the area of
expanding business core function more effectively, provides consideration to the formation of
business strategies which enhances the factor of growth and development aspect of the
organization at the global level. Merger and acquisition system produces business synergies
which are mainly related to the economics of business operational matters by creating
effectiveness. Merger and acquisition in current market practice also enhance the business ability
in the area of generating higher dynamics and competitive advantage in the market which is the
main objective to gain market power with higher sustainability and effectiveness.

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