Business Law- Huda n Friends

THE FATE AND ACTIONS OF EMPLOYEES

AT COMPANIES THAT ARE MERGING

Nurul Huda (36110007)

Eko Haryadi Syamsuddin (36110009)

Eko Budi Harto (36110024)

Imam Heriawan (36110028)

CHAPTER I

INTRODUCTION

1.1  Background

In business practice is not uncommon to encounter a company with a variety of reasons to join (merge) with other companies, merged into one name and organization.

Entered the era of the free market, competition among existing firms increasingly stringent. This condition requires the company to continuously develop the company's strategy in order to survive or even thrive. For the company to develop a strategy that the company could develop its presence and improve its performance. Appropriate strategy in order to enhance the company's growth is pursued by both internal expansion and external. Performed internally by adding production capacity or build new business division. Whereas external expansion can be done in the form of business combination.

Merger can be done in various ways that are based on consideration of the legal, taxation or other reasons. In Indonesia is driven by the growing capital markets, merger transactions increasingly done about that issue had been hotly discussed both by economists, scientists, and business practitioners since 1990.

In general, the goal is to get the merger synergies or added value. Decision to merge not just make two plus two equals four, but the merger should make two plus two equals five. Added value in question is a long-term added value than temporary. Therefore, the presence or absence of a merger synergies can not be seen shortly after the merger took place, but it takes quite a long time. Synergy that occurs as a result of the merger could be the ups and downs of economies of scale, and synergies in the form of increase in car finance.

Merger decisions in addition to bringing the benefits can not be separated from the problem, including the cost to implement the merger is very expensive, and the results are not necessarily in accordance with what is expected.

1.2  Problem Statement

The fate and actions of employees at companies that are merging

1.3  Purpose Of Writing

To know how the fate and actions of employees at companies that are merging

CHAPTER II

DISCUSSION

2.1  Review Of The Literature

A.    Definition, Types, Reasons, Advantages And Disadvantages Of Mergers

1.      Terms Of Merger

Merger is a merger of two companies into one, where the companies take / buy all the assets and liabilities in a merger with a company that is so companies have at least a 50% stake and the other company ceased operations and its shareholders receive amount of cash or shares in the new company.

Another definition is the merger as the absorption of a company by another company. In this case the company will continue to buy the name and identity. Corporate buyers will also take both assets and liabilities of the purchased company. After the merger, the company purchased will lose / stop operation.

2.      Type Of Merger

The types of mergers can be distinguished:

a.       Vertical Merger

The company is still in the industry but different level or operational level. Example: fast food restaurants joined the poultry company.

b.      Horizontal Mergers

Companies in the industry to buy companies operating at the level of the same. Example: computer manufacturer to join the factory computer.

c.       Conglomerate Mergers

No industrial relations in the merged company. Aims to increase the company profits from the various sources or business units. Example: an alternative company to join the wireless mobile phone companies.

d.      Congeneric Merger

Occurs when companies in the same industry but not in the same line of business with a supplier or customer. The advantage is that the company can use the same sales and distribution.

3.      Reasons Companies Merge

There are several reasons companies are merging, namely:

a.       Growth Or Diversification

Company that wants fast growth, good size, market share, and diversification can be merged. Companies do not have the risk of new product. Besides, if expanded by merger, then the company can wade competitor or reduce competition.

b.      Synergy

Synergies can be achieved when the merger generate economies of scale levels. Level of economies of scale occur because overhead costs increase revenue mix that is greater than the amount of revenue the company when no merger. Synergy was evident when the company merged are in the same business as the function and excessive labor can be eliminated.

c.       Increase Funds

Many companies are unable to obtain funds for internal expansion, but it can get funding for external expansion. The company merged with a company that has high liquidity resulting in increased power and reduced corporate lending and financial obligations. This allows increased funds at a low cost.

d.      Add Management Skills Or Technology

Some companies can not develop properly due to a lack of efficiency in management or technology. Companies that can not streamline its management and can not pay to develop the technology, can merge with a company that has management or technology experts.

e.       Tax Considerations

Company may carry tax losses to be 20 years or until the tax losses can be covered. Companies with tax losses can be merged with the profitable company to utilize tax losses. In this case the company will merge a combination of after-tax income increase by subtracting the pre-tax income of the merged company. However, not only due to the merger of the tax benefits, but based on objective welfare to maximize owners.

f.       Increase Liquidity Owner

Mergers between firms allow companies have greater liquidity. If the larger company, then the stock market will be wider and easier to obtain and share so that more liquid than smaller companies.

g.      Protect Themselves From Takeover

This happens when a company became the target of a hostile takeover. The target firm merge other companies, and finance the its takeover with debts, because burden this debt, obligation the company became too high for borne by bidding firm

4.      Advantages and Disadvantages Of Mergers

Excess of the acquisition through a merger is simpler and cheaper than other takeovers. Lack the merger must be approved from shareholders of each company, while to obtain such approval can take longer.

B.     Requirements In Merger

Requirements that must be met in order to be classified as a pooling of interest designed to ensure that the merger would substantially reflecting merger and continuity of ownership interests embodied in the concept. Requirements issued by the board's accounting principles can be categorized as follows:

                       1.         Attributes Of Companies That Join

a.       Each of the merged company is autonomous and not subsidiaries or divisions of other companies in the two years before the merger plan was initiated.

b.      Companies that join are independent of each other

                       2.         How To Combine Interests

a.       Incorporation done in a single transaction or resolved according to the specific plan within one year after the plan was initiated

b.      One of the company's offering and issue ordinary shares, with identical rights with the majority of voting rights of common stock that are outstanding, as a replacement for virtually all common shares entitled to vote from other companies after the date of the merger plan is reached.

c.       None of the merged company changed their equity interests in the form of common stock entitled to vote that initiated the merger or amalgamation between the date of initiation and execution of the merger; alteration in this case could be a distribution of shares to the shareholders or controlling additional shares, exchange and withdrawal of papers securities.

d.      Each company that joins regain the form of shares of common stock entitled to vote may not be used for the merger, and no company can earn above normal number of shares between the date of initiation and implementation of the merger plan.

e.       The ratio between the interests of ordinary shareholders in a company that joined the same as a result of the stock exchange in order to achieve the merger.

f.       Voting rights embodied in the right of ownership of common stock in the combined company may be used by shareholders concerned; shareholders should not be prohibited or restricted to use those rights in a period

g.      Merger was completed on the balance sheet date and there is no end to the placement and the plan provisions relating to the issuance of securities or other consideration.

                       3.         No Transactions Planned

a.       Companies that are incorporated directly or indirectly not agree to withdraw or buy back all or part of the issued ordinary shares in favor of the amalgamation

b.      The combined company does not cooperate former of a merged company, such as a loan guarantee to the shares issued in the merger, the exchange of letters in fact negate the right of ownership.

c.       The combined company does not intend or plan to release (sell) most of the assets of the merged company in two years after the merger apart from the ordinary to the release of the previously separate companies and also do not intend to eliminate the same facility function or excess capacity.

2.2  The Analysis Of The Problem

The fate and actions of employees at companies that are merging rumors that the company will merge always make the employees feel uneasy. Whereas, the effects of mergers do not always end badly.

Company's merger with major layoffs? not necessarily. Mergers do not always have an impact on the termination of employment for employees. Motivation merger, which he defines as a decision to combine or merge two or more companies into a new company, generally based on a variety of motifs. Among others, aims to enhance shareholder value by combining two or more companies have different strengths.

Then, what should be done if the merger issue was till to ear? Merger process generally takes a long time, due to the negotiation of each company, of course, there will be concern or anxiety of employees, especially regarding the future of jobs.

Therefore, rather than constantly feeling frantic, employees should start looking for a reliable source of information. Other than that, generally three months before the company carrying out the merger, HRD division will issue a notice in the form of a newsletter or other information regarding the merger that accurate. Predict whether including employees who would be fired or not is quite difficult. If you are uncertain about a career at the company, it does not hurt job another glance. But, do not be a top priority. An employee must actually improve the performance of the work, because that's where the quality of work will be assessed.

If it turns out there are affected employees efficiency, still no need to worry, as long as it acquired the rights according to applicable regulations. Government has set the compensation to be given in such cases, the severance pay or bonuses, as contained in the Employment Act no. 13 of 2003.

After that, an employee needs to do the job properly handover. Conversely, if there are employees include employees who maintained, keep in mind the struggle does not stop at that.

CHAPTER III

CLOSING

3.2  Conclusion

Merging two or more companies, many changes will occur automatically and new problems arise. New culture is not always fun. aware of changes have occurred, an employee should begin to be involved in these changes. New way to study the surrounding environment so as to understand how to handle themselves.

3.2  Suggestion

Merging should observe the condition of company which become the partner in merge in order to minimize something that we don’t want to happen. Great explanation to employee should we do also in order to they understand about something that we consider to do merge.