1. Mergers and Acquisitions: IS IT
RIGHT STRATEGIC MOVE FOR
BUSINESS?
Presented by
Ashok Gupta
Daljinder Singh
Vishesh Vij
Anmol Thaman

2. MERGER
A merger is when you integrate the business with
another and share control of the combined
businesses with other owner. A merger involves the
mutual decision of two companies to combine and
become one entity. i.e. a + b = c
Merger: 2 firms combine all Assets and Liabilities
Acquirer Target
Usually take a new name

3. ACQUISITION
Acquisition may be defined as an act of
acquiring effective control over assets or
management of a company by another
company without any combination of
businesses or companies. i.e. a + b = a

4. Distinction between mergers and
acquisitions
Mergers Acquisitions
• Both firms share the • One firm acquires the
liabilities. liabilities of the other
firm completely
• Both firms together • Business continues
create a new firm under under the buyer firm
a new name. name.
• Both firms have a say in • The target firm has no
the transactions of the say in the transaction
new firm

5. Regulations governing Merger and
Acquisition in India
• The provision of the Companies Act,1956.
• The Competition Act ,2002
• The Foreign Exchange Management Act,1999.
• The Income Tax Act,1961
• SEBI take over code,1994

6. Legal procedures
• Permission for merger: The amalgamation of two
companies should be permitted under their
memorandum of association. The acquiring company
should have the permission in its object clause to carry
on the business of the acquired company.
• Information to the stock exchange: The acquiring and
the acquired companies should inform the stock
exchanges (where they are listed) about the merger.

7. • Approval of board of directors: The board of directors of the
individual companies should approve the draft proposal.
• Application in the High Court: The draft proposal approved by the
board of directors should be made to the high court.
• Shareholders' and creditors' meetings: The individual companies
should hold separate meetings of their shareholders and creditors for
approving the amalgamation scheme.
• Sanction by the High Court: The amalgamation is sanctioned after it
is satisfied that the scheme is fair and by the high court.

9. Vodafone-Hutchison Essar: $11.1 billion
• On February 11, 2007, Vodafone agreed to buy out the
controlling interest of 67% held by Li Ka Shin
• Holdings in Hutch-Essar for $11.1 billion.
• This is the second-largest M&A deal ever involving an
Indian company.
• Vodafone Essar is owned by Vodafone 52%, Essar Group
33% and other Indian nationals 15%.

10. About HUTCH
• Hutchison Whampoa and its Max Group, established a
company 1994
• Later in 2000 Essar acquired its 33% share
• In February 2007, Hutchison Telecom announced agreement
with a Vodafone Group to sell 67% shares for $11.1 billion.
• Later in 2011 Vodafone Group buys out its partner Essar for
$5.46 billion

11. About VODAFONE
• Vodafone Group is a British multinational
telecommunications company
• It has headquartered in London, United
Kingdom.
• It is world’s second largest telecommunication
company in the world.

12. Why Merged?
• Vodafone wanted to expand into the Asian markets.
• Hutch was Fourth largest mobile operator in India
with 24.41million subscribers
• Hutch wanted to sell –mutual distrust.
• Li Ka-Shing thought it the right time to quit Indian
operations to finance other operations.

14. About Air Deccan
• It is a low cost subsidiary of Deccan Aviation.
• It was started by Captain G R Gopinath.
• The company operates only on domestic routes in
India.
• In August 2008, Air Deccan has merged with another
Indian airline, Kingfisher Airlines for Rs.550 crores.

15. About Kingfisher
• Kingfisher Airlines, through its parent company UB
Group.
• The airline started commercial operations on 9 May
2005 .
• Kingfisher Airlines serves 25 domestic destinations
within India .

16. Why Merged?
• Kingfisher’s merged with Air Deccan to get entity rights to fly
international.
• Any Indian airline requires five years of domestic flying
experience and a fleet of 20 aircraft to get permission to fly
international.
• Kingfisher Airlines was only two years old in 2007, when it
acquired over four-year-old Air Deccan.

17. Tata Steel-Corus: $12.2 billion
• On January 30, 2007, Tata Steel purchased a 100%
stake in the Corus Group at 608 pence per share in an
all cash deal, cumulatively valued at $12.2 billion.
• The deal is the largest Indian takeover of a foreign
company till date and made Tata Steel the world's
fifth-largest steel group.

18. Google bought YouTube ($1.65B in 2006)
• Google bought a rival. Why??
• YouTube had four times as many hits as Google Video
• YouTube streamed nine times as many clips as Google
Video.
• YouTube = 53% of video users in the world.

19. Few Mergers, Acquisitions, Take over
• New Bank Of India merged with Punjab National bankBank
• Global Trust Bank Taken over by OBC
• Western United Bank taken over by IDBI
• India Aluminium and copper giant Hindalco Industries purchased
Canada-based firm Novelis Inc
• Suzlon Energy obtained the Germany-based wind turbine
producer Repower.
• Ashok Leyland By Hindujas
• Spensers By Goenkas
• Tata Fertilizers Merged With Tata Chemicals
• Mittal Steel’s acquistion of Arcelor

20. Motives & Benefits of M&A
• Economies of large scale
• Reducing competition
• Increased Revenue/ Increased Market Share
• Expansion and Growth
• Surplus Resources
• Wider customer base and increase in market share
• Product , services and business diversification
• Developing new product mixes