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M&AAn essential strategy for sustainable growth

August 2009

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Content

Mergers and Acquisitions (M&A)

Case studies

M&A strategy for FSOFT?

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Mergers and Acquisitions (M&A)Introduction

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M&A Introduction

MergerAcquisition

A merger is when youintegrate your businesswith another and sharecontrol of the combinedbusinesses with the otherowner(s).

An acquisition (buyout) iswhen you buy anotherbusiness and end upcontrolling it.

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Motivation & Benefit?

Qualified staff or Additional skills or Knowledge or Other bizintelligence: for larger biz

Funds or Valuable assets: better to buy than to build from scratch

Wider customer base and increasing market share

Products, services & businesses diversification

Synergy: reducing overlapped costs, overheads thru shared budgetsReducing competition

Organic growth: the existing business plan for growth, needs to beaccelerated

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M&A Motivation: Acquisition

SellerBuyer

Ready for an exit

Inability to compete

independently

Cost savings

Access to greater resources

Revenue

Cost reduction

Synergies

Reduce competitors

New market

New products and services

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M&A Motivation: Merger

Restructure the industry value chain

Synergies

Cost reduction (operation/marketing/R&D, etc)

Economies of scale & scope (HP/Compaq)

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Types of M&A

Horizontal mergers: Similar business

Vertical mergers:

Different stages of OperationsConglomerate mergers: Unrelated business activities

MergerAcquisition

Friendly

Hostile

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M&A movements

1 st movement 1893 to 1904: horizontal merger.

2 nd movement 1920s: vertical merger.

3 rd movement 1960s: the conglomerate merger.

4 th movement 1980s: financial innovation, junk bonds

5 th movement 1993 to now: the strategic megamegers

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M&A case studies

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M&A Process

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Antitrust policies

Sherman act of 1890: Sec 1: Prohibit to create a monopoly or

undue market control. Sec 2: Against dominant players

Clayton act of 1914: regulate biz behavior Sec 7: Against adverse competition

Hart-Scott-Rodino act of 1976: To strengthen the powers of DOJ& FTC

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" Endeavoring to benefit societyand the economy and maximizeenterprise value by fostering thesharing of wisdom and knowledgegained through the IT revolution. "

Masayoshi SonChairman & CEOSOFTBANK CORP.

Softbank Corp.28 B$USD in sales as of 2008 with 19K employees ww------------------------------------------------

2001: Acquired Yahoo!BB -> major player in ADSL market2006: Bought Vodafone Japan2006: Purchased 23% of Betfair2008: Partnership with Apple for iPhone in Japan

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HP-Compaq118 B$USD in sales as of 2008 with 321K employees ww------------------------------------------------

1963: HP joint venture with Yokogawa Electronics1997: Compaq bought Tandem Computers1998: Compaq acquired DEC2002: HP-Compaq merger to become a major player

(desktops, laptops, servers, printers, etc)2008: Acquired EDS

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M&A strategy for FSOFTOpen discussion

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SWOT analysis for FSOFT

Strength--------------------------------------

+ No.1 of ITO service in Vietnam (scale & scope)+ Wide customer base, specially in Japan+ Strong financial status

Weakness--------------------------------------- Low-end services- Lack of cross-border/culture management exp- ()

Opportunity

--------------------------------------+ ITO advent trends & China + 1 (Vietnam)+ Emerging ITO destination thanks to inexpensive IT workforce

Threat--------------------------------------+ ()