Mergers & Acquisitions: Definition and Examples
Corporate Secretary Service Indonesia – Merger & acquisition are two things that are familiar in the business world. Companies usually take these actions to maintain or expand their business to become more prominent than before. As with business development in general, mergers, acquisitions and consolidations are usually done to gain greater profits in the business run by the company.
Although the purpose of mergers and acquisitions may vary for each company, in general, companies conduct mergers and acquisitions to increase the value of a company so that it becomes even better than before.
Definition of Mergers and Acquisitions
Mergers and acquisitions are like two inseparable parts. However, mergers are actually different from acquisitions.
Definition of Merger
A merger is the merger of two companies and then the formation of a new legal entity or entity under the banner of one company name. Shareholders must first approve the merger action through the General Meeting of Shareholders (GMS).
Examples of Mergers
Examples of mergers in Indonesia include:
SOE Islamic Bank merger
SOE Islamic Bank merger is one of the major mergers in the country. Three Islamic banks merged as of 1 February 2021 and changed their name to PT Bank Syariah Indonesia Tbk (BRIS). The merged state-owned Islamic banks are PT Bank BRI Syariah Tbk, PT Bank BNI Syariah, and PT Bank Syariah Mandiri. The results of this Islamic bank merger will have assets of IDR 245.7 trillion. With this amount, BSI is the most prominent Islamic bank in Indonesia. While juxtaposed with commercial banks, BSI is ranked 7th largest bank in Indonesia in terms of assets. Furthermore, in 2025, the target is to become a global player. The target is to penetrate the top 10 Islamic banks in the world in terms of market capitalization.
Read Also: Here are the Requirements & Procedures for Closing a LLC
Gojek Tokopedia Merger
An example of another merger case is the Gojek Tokopedia merger. This merger gave birth to GoTo, the new company resulting from the ‘marriage’.GoTo’s valuation reached USD 17 billion or approximately IDR 243.1 trillion (assuming BI’s middle rate of IDR 14,300 per USD). This makes it the giant technology company with the largest valuation in Southeast Asia and the 12th largest valuation startup globally. GoTo, the result of the Gojek Tokopedia merger, is included in the 2022 IPO pipeline on the Indonesia Stock Exchange (IDX). Targeting funds of USD 1 billion or IDR 14.34 trillion and has appointed two underwriters, known as PT Mandiri Sekuritas and PT Indo Premier Sekuritas.
Indosat Tri Merger
The Indosat Tri merger is an example of the next company merger. PT Indosat Tbk (ISAT) and PT Hutchison 3 Indonesia merged, carrying the new name Indosat Ooredoo Hutchison as a mobile operator. Ooredoo Hutchison Asia Pte Ltd bought 1.76 billion Indosat shares at Rp 6,460 per share. The transaction value of the share purchase is around Rp 11.37 trillion.
Definition of Acquisition
An acquisition is one company buying another company outright. The acquiring company is the new owner. Acquisitions occur when one company takes over all operational management decisions of another company. Acquisitions require large amounts of cash, as they generally involve buying or acquiring most of a company’s shares.
Company acquisitions aim to increase economies of scale, obtain raw material supplies, and lower per-unit costs as production increases. In addition, the benefits of acquisitions are to increase the company’s market share, reduce costs, expand product lines, and gain technology from the acquired company.
Examples of Acquisitions
Examples of acquisition cases include:
- PT Bank Negara Indonesia Tbk (BBNI) will acquire Bank Mayora in 2022. The state-owned bank will acquire 63.92% of Bank Mayora’s shares. The acquisition value reached Rp 3.5 trillion.
- PT Elang Mahkota Teknologi Tbk (EMTK) bought 93% of PT Bank Fama International’s shares at the end of last year for Rp 908.95 billion.
- PT Bank Central Asia Tbk (BBCA) has acquired shares of Bank Royal Indonesia worth Rp 988 billion. Bank Royal officially became BCA’s Digital Bank.
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