View
214
Download
0
Category
Preview:
Citation preview
8/11/2019 704672_634271191456357500
1/37
Mergers and cquisitions
8/11/2019 704672_634271191456357500
2/37
MEMBERS
KARAN SHETHPALAK PATNI
PRATIK DOTIAASHWINI SHETTY
POOJA MEHTAKULDEEP MANDAIVYA
8/11/2019 704672_634271191456357500
3/37
MEANING
MergerA transaction where two firms agree to integrate theiroperations on a relatively co-equal basis becausethey have resources and capabilities that togethermay create a stronger competitive advantage.
The combining of two or more companies, generallyby offering the stockholders of one company
securities in the acquiring company in exchange forthe surrender of their stock
Example: Company A+ Company B= Company C.
8/11/2019 704672_634271191456357500
4/37
ACQUISITION
A transaction where one firms buys another firm withthe intent of more effectively using a corecompetence by making the acquired firm a
subsidiary within its portfolio of businessIt also known as a takeover or a buyout
It is the buying of one company by another.
In acquisition two companies are combine togetherto form a new company altogether.
Example: Company A+ Company B= Company A.
8/11/2019 704672_634271191456357500
5/37
MERGER ACQUISITION
DIFFERENCE BETWEEN MERGER ANDACQUISITION:
i. Merging of two organization into one.
ii. It is the mutual decision.
iii. Merger is expensive thanacquisition(higher legal cost).
iv. Through merger shareholderscan increase their net worth.
v. It is time consuming and thecompany has to maintain somuch legal issues.
vi. Dilution of ownership occursin merger.
i. Buying one organization byanother.
ii. It can be friendly takeover or
hostile takeover.iii. Acquisition is less expensive
than merger.
iv. Buyers cannot raise their
enough capital.v. It is faster and easier
transaction.
vi. The acquirer does notexperience the dilution ofownership.
8/11/2019 704672_634271191456357500
6/37
8/11/2019 704672_634271191456357500
7/37
WHY IS IMPORTANT PROBLEM WITH ACUIQISITION
ACQUISITION:WHY & WHY NOT
i. Increased marketshare.
ii. Increased speed to
marketiii. Lower risk comparingto develop newproducts.
iv. Increaseddiversification
v. Avoid excessivecompetition
i. Inadequatevaluation of target.
ii. Inability to achievesynergy.
iii. Finance by taking
huge debt.
7
8/11/2019 704672_634271191456357500
8/37
8/11/2019 704672_634271191456357500
9/37
Terminologies contd
Dawn Raid
Grey KnightMacaroni Defense
Management Buy In
Hostile Takeover
Management Buy Out
8/11/2019 704672_634271191456357500
10/37
EXPERIENCES IN M&A
Learn from mistakes of others
Define your objectives clearly
Complete strategy to achieve goal.SWOT analysis for the merged business - amust
Conservative attitude necessary at evaluationdeskstrong arguments to support project
Pick holes in strategy to get the bestWill merged units be able to work at efficient /ideal level?
Acquire expertise to interprete changes
8/11/2019 704672_634271191456357500
11/37
M&A DEALS
8/11/2019 704672_634271191456357500
12/37
1. Tata Steel-Corus: $12.2 billion
January 30, 2007
Largest Indian take-over
After the deal TATAS
became the 5thlargest
STEEL co.
100 % stake in CORUS
paying Rs 428/- per share
Image: B Mutharaman, Tata Steel MD; Ratan
Tata, Tata chairman; J Leng, Corus chair;
and P Varin, Corus CEO.
8/11/2019 704672_634271191456357500
13/37
2. Vodafone-Hutchison Essar:$11.1 billion
TELECOM sector
11th February 2007
2nd largesttakeover deal
67 % stake holdingin hutch
Image: The then CEO of Vodafone
Arun Sarin visits Hutchison
Telecommunications head office inMumbai.
8/11/2019 704672_634271191456357500
14/37
3. Hindalco-Novelis: $6 billion
June 2008Aluminium andcopper sector
Hindalco Acquired
Novelis
Hindalco entered theFortune-500 listing of
world's largestcompanies by salesrevenues
Image: Kumar Mangalam Birla
(center), chairman of Aditya BirlaGroup.
8/11/2019 704672_634271191456357500
15/37
4. Ranbaxy-Daiichi Sankyo: $4.5 b
Pharmaceuticals sectorJune 2008
Acquisition deal
largest-ever deal in the
Indian pharma industryDaiichi Sankyoacquired the majoritystake of more than 50
% in Ranbaxy for Rs15,000 crore
15th biggest drugmakerImage: Malvinder Singh (left), ex-CEOof Ranbaxy, and Takashi Shoda,
president and CEO of Daiichi Sankyo.
8/11/2019 704672_634271191456357500
16/37
5. ONGC-Imperial Energy:$2.8billion
January 2009
Acquisition deal
Imperial energy is abiggest chinese co.
ONGC paid 880 pershare to theshareholders of imperialenergy
ONGC wanted to tapthe siberian market
Image: Imperial Oil
CEO Bruce March.
8/11/2019 704672_634271191456357500
17/37
6. NTT DoCoMo-Tata Tele: $2.7 b
November 2008
Telecom sector
Acquisition deal
Japanese telecom giant
NTT DoCoMo acquired26 per cent equitystake in TataTeleservices for aboutRs 13,070 cr.
Image:A man walks past a signboard ofJapan's biggest mobile phone operator
NTT Docomo Inc. in Tokyo.
8/11/2019 704672_634271191456357500
18/37
7. HDFC Bank-Centurion Bankof Punjab: $2.4 billion
February, 2008Banking sector
Acquisition deal
CBoP shareholdersgot one share of HDFCBank for every 29shares held by them.
9,510 crore
Image: Rana Talwar (rear) Centurion
Bank of Punjab chairman, Deepak
Parekh, HDFC Bank chairman.
8/11/2019 704672_634271191456357500
19/37
8. Tata Motors-Jaguar LandRover: $2.3 billion
March 2008 (just ayear after acquiringCorus)
Automobile sector
Acquisition deal
Gave tuff competition toM&M after signing the
deal with ford
Image: A Union flag flies behind a
Jaguar car emblem outside a
dealership in Manchester, England.
8/11/2019 704672_634271191456357500
20/37
9. Sterlite-Asarco: $1.8 billion
May 2008
Acquisition deal
Sector copper
Image: Vedanta Group chairman
Anil Agarwal.
8/11/2019 704672_634271191456357500
21/37
10. Suzlon-RePower: $1.7 billion
May 2007
Acquisition deal
Energy sector
Suzlon is now thelargest wind turbinemaker in Asia
5thlargest in theworld.
Image: Tulsi Tanti, chairman &
M.D of Suzlon Energy Ltd.
8/11/2019 704672_634271191456357500
22/37
11. RIL-RPL merger: $1.68 billion
March 2009Merger deal
amalgamation of its
subsidiary ReliancePetroleum with theparent companyReliance industries
ltd.Rs 8,500 crore
RIL-RPL mergerswap ratio was at16:1
Image: Reliance Industries'
chairman Mukesh Ambani.
8/11/2019 704672_634271191456357500
23/37
8/11/2019 704672_634271191456357500
24/37
Deals in India for first financial
quarter 2010Sector No. of Deals
Value in USD
million
Share in per
cent
Telecom 3 22732.26 67.19
Pharmaceutical 4 3958.29 11.02
BFSI 6 2651.54 7.84
Metal and Mining 4 1483.15 4.38
Energy 4 1320 3.90
Other sectors 39 1919.00 5.67
8/11/2019 704672_634271191456357500
25/37
PROCESS OF MERGER & ACQUISITION IN INDIA:
The process of merger and acquisition has the following steps:
i. Approval of Board of Directors
ii. Information to the stock exchange
iii. Application in the High Court
iv. Shareholders and Creditors meetingsv. Sanction by the High Court
vi. Filing of the court order
vii. Transfer of assets or liabilities
viii.Payment by cash and securities
Maximum Waiting period:210 days from the filing of notice(or the order ofthe commission - whichever earlier).
8/11/2019 704672_634271191456357500
26/37
Impact of Mergers and Acquisitions
ImpactEmployees
Competition
Management
Public
Shareholders
8/11/2019 704672_634271191456357500
27/37
8/11/2019 704672_634271191456357500
28/37
Why Mergers and Acquisitions Fail?
Cultural Difference
Flawed Intention
No guiding principles
No ground rules
No detailed investigating
Poor stake holder outreach
8/11/2019 704672_634271191456357500
29/37
How to Prevent the Failure
Continuous communicationemployees,
stakeholders, customers, suppliers and
government leaders.
Transparencyin managers operations
Capacity to meet new culture higher
management professionals must be ready to
greet a new or modified culture.
Talent management by the management
8/11/2019 704672_634271191456357500
30/37
RECENT M&A HAPPENINGS
India Inc runs up an M&A bill of Rs 1.8 lakh cr inH1
M&A deals touch $14 billion in June
Value of telecom M&A deals touched USD 23billion in Q1: Assocham.
Godrej acquires Argentine firm
Oil India eyes shale gas acquisition overseasRIL acquires Pioneer stake for $1.32 bn
Indian hunger for new technology fuels foreignacquisitions
8/11/2019 704672_634271191456357500
31/37
8/11/2019 704672_634271191456357500
32/37
Amongst BRIC Nations, India second most targetedcountry for Mergers & Acquisitions(2010):
8/11/2019 704672_634271191456357500
33/37
8/11/2019 704672_634271191456357500
34/37
ICICI BANK & BANK OF RAJASTHAN(19thMAY,2010):
8/11/2019 704672_634271191456357500
35/37
ADVANTAGES FROM THIS MERGER:
This amalgamation would substantially enhance
ICICI Bank's branch network (23 % increaseapprx).
Strengthen ICICI banks presence in northern and
western India.ICICI has now moved to a branch-led businessmodel.
The acquisition will help ICICI increase CASA
(current and savings account) flows, as also helpin cross-selling products.
Both banks working on the same platform,
integration will also be less taxing.
8/11/2019 704672_634271191456357500
36/37
SUCCESS & FAILURE RATE(2009-10):
36
8/11/2019 704672_634271191456357500
37/37
Recommended