Upload
rishabhkumar
View
219
Download
0
Tags:
Embed Size (px)
DESCRIPTION
NA
Citation preview
Session 1 : Course Objectives and StructureMERGERS AND ACQUISITIONS
Presented by Prof. (Dr.) Manish Popli
1
Evaluation Criteria and Weightage
2
• Class participation : 10%
• Quiz : 20%
• Term Paper : 30%
• End Term examination : 40%
Evaluation Criteria and Weightage
3
• Form groups of 5-6 members each
• Send the group details to your CR by 10:00 PM, Date: 8th September , 2015
• Each group shall look for an M&A deal (Either Domestic and Cross-border)
• Another way to approach this term-paper could be an industry-analysis
• Strategic Group analysis
• Case study (from secondary sources only)
Term Paper
4
• India registering a #3 fold increase in M&A activities in the first quarter of 2015. The total value is around $12 Billion.
• Ranbaxy-Sun Pharma Deal
• Merck-Sigma
• Thomas cook India- Sterling Resorts
• Kotak Mahindra- ING vysya
Some Recent Deals
5
• A two stage project report submission• Stage 1: Interim report
– Analysis of the firms involved and their respective industry scenarios– Analysis of merger intent, expectations from the deal– Deadline: 21st September-2015
• Stage 2: final report– The structuring of the deal– The merger performance vis-à-vis expectations – Synergies, Economies of
Scale and Scope and/or Market Power gained etc.– Deadline: 28th November-2015
Submission details
6
• Quote exact reference – plagiarism (presentingdata/information/views/opinions without reference to original source) will beseverely penalized
• Word limit 3000 words (excluding appendices comprising of charts, tables,figures & graphs, and references)
• One possible approach: assume the role of M&A consultants hired by thechairman of the company for making recommendations for their overallstrategy in future
• Professionalism is expected !!• Sequencing and proper flow• Index; page numbers…• References for data downloaded should include URL as well as date of access
Guidelines: Term-Paper
7
Lets begin the Journey
8
• To provide a strategic perspective of M&A– As a Vehicle of Corporate Strategy– M&A versus Strategic Alliances (the Choice!)
• Motives of M&As
• To provide an understanding on how to identify and evaluate targets for M&A.
• To introduce different valuation techniques and discuss the pros and cons of each technique.
Course Objectives
9
• To critically examine different types of deal structures and their impact on the success of M&A.
• To look at post-merger integration issues– Case of “Tata motor’s integration of Daewoo Commercial Vehicle company”
• To provide an overview of the legal, regulatory environment and its importance to the success of M&As.
Course Objectives
10
• Strategic issues
• Issues arising due to External Environment
• Economic issues
• Accounting and Financial issues
• HR/Cultural issues
• Behavioral issues
• Legal/Regulatory issues
A Highly Multidisciplinary Subject
11
• Modules
Introduction (Merger motives)
M&A Process
Valuation and Deal Structuring
Post Merger integration (Organizational issues)
Legal and Regulatory issues
Course structure
12
Historical Activity of Mergers and Acquisitions
13
Historical US M&A waves
Time Reasons for Rise Reasons for Fall
1893-1904 Horizontal Mergers. Created giants in steel, mining, railroad (through trust or ‘holding companies’)
Supreme court judgement in 1904 against trusts
1919-1929 Vertical Mergers Great Depression
1955-1973 Post-war Slowdown in defense-expenditures and resultant growth
Conglomerate mergers
Crash of Conglomerate stocks since benefits were not realized
1974-1989 Financial Innovation, Investment Banking Collapse of Junk bond market
1993-2000 Age of deregulation , globalization, technology
Dotcom Bubble Burst
2003-2008 Private equity Sub-prime crisis
15
India Story
16
17
Institutional Shock Description of significant changes in financial liberalization (year-wise)
Year Changes in financial policies
1999/ 2000-01 (1) Withdrawal of neutrality condition: condition in which the amount invested in form of outward FDI is repatriated in full in a period of five years. The repatriation could be in the form of dividend, royalty etcetera.(2) Upper limit for automatic approval was raised to US$50 million per annum.(3) Investment in an overseas JV/WOS may be funded out of one or more of the following sources:
(a) Balances held in Exchange Earners Foreign Currency account.(b)Withdrawal of foreign exchange including capitalization of exports from an authorized dealer in India.
(4) Two stage approval process (Ministry of Finance and Department of economic affairs) of ADR/GDRs abolished in 2000.
2001-02 (1) Indian companies are allowed to utilize up to 100 per cent proceeds of ADRs/GDRs for overseas investments instead of the existing ceiling of 50 per Cent.(2) Abolition of profitability pre-condition which required that Indian companies applying for OFDI must have earned a net profit in preceding three years.(3) Upper limit for automatic approval was raised to US$100 million per annum.(4)Companies registered under the Indian Partnership Act, 1932, are also allowed to make OFDI.
18
Institutional Shock (Contd…) 2002-03 (1) Firms were allowed to invest up to 100 percent of their net worth under automatic approval
route (with overall ceiling at $100 million).(2) Removal of the condition of the ‘same core activity’ for OFDI removed and companies are allowed to invest in ‘any bona fide business activity’
2003-04 (1) Prior permission of RBI is dispensed for OFDI by way of share swap and investment in JV/WOS abroad is permitted through the route of SPV under the automatic route and the overall ceiling of investment of $100 M is removed.(2) Fund raised through Foreign currency convertible bonds (FCCBs), external commercial borrowing (ECB) can be used in overseas direct investment in JV/WOS including M&As.(3) Indian banks were permitted to provide credit to wholly owned or majority-owned subsidiaries of Indian firms abroad up to 10 percent of their unimpaired capital funds
2005-2006 (1) Firms are allowed to invest up to 200 per cent of their net worth under the automatic route.
2006-2007 (1) Automatic approval route limit is increased up to 300 per cent of the net worth in June 2007 and up to 400 per cent of the net worth in September 2007
Source: www.rbi.org.in › Notifications [RBI Circular, A.D. (DIR. Series) Circular No. 32, April 28, 2001; RBI Circular, A.D.(DIR. Series) Circular No. 32, April 28, 2001. RBI Circular, A.P. (DIR. Series) Circular No. 27, March 2, 2002; (RBI Circular, A.P. (DIR. Series) Circular No. 83, March 1, 2003); RBI Circular A. P (DIR Series) Circular No. 41, December 6, 2003; RBI Circular RBI /2004/11 A. P.(DIR Series) Circular No.57, January 13, 2004; RBI Circular AP (DIR Series) Circular No.42, May 12, 2005; RBI Circular AP (DIR Series) Circular No.75, June 14, 2007; RBI Circular AP (DIR Series) Circular No.11, September 26, 2007]; Apte (2006); Nayyar (2008).
19
Examples
20
Deal Examples (Industry wise)
21
Pharmaceuticals
22
Ranbaxy Laboratories Ltd
Target Name Announcement Date Percent of Shares Acquired Ohm Laboratories 9/25/1995 100
Ranbaxy(M)Sdn Bhd 11/17/1995 10Rima Pharmaceuticals Ltd 1/11/1996 100Gufic Labs(Gufic Group) 1/13/1997 100
Croslands Research Laboratories Ltd 1/13/1997 100Vorin Laboratories Ltd 2/14/1998 30
Bayer-Generics Pharmaceutical Business 4/27/2000 100Specialty Ranbaxy Ltd (Specialty Laboratories
Inc, Ranbaxy) 2/9/2001 50Procter & Gamble GmbH- Veratied Brand 6/27/2002 100
Signature Pharmaceuticals Inc- Liquid Drug Manufacturing Facility 7/23/2002 100
RPG Aventis 9/3/2003 100Efarmes SA-Generic Drug Portfolio 6/9/2005 100
Senetek PLC-Certain Assets 3/20/2006 100Terapia SA 3/29/2006 96.7Ethimed NV 3/30/2006 100
Zenotech Laboratories Ltd 7/17/2006 11.31Be-Tabs Pharmaceuticals Ltd 12/1/2006 100Be-Tabs Pharmaceuticals Ltd 2/27/2007 6.4
Jupiter Bioscience Ltd 4/6/2007 14.9Ochoa Laboratories Ltd- Dermatological &
Lifestyle Products Brands 5/21/2009 100Biovel Life Sciences(P)Ltd 1/7/2010
23
Sun Pharmaceutical Industries Ltd
Target Name Announcement Date Percent of Shares Acquired Milmet Laboratories Pvt Ltd 11/20/1998 100
MJ Pharmaceuticals Ltd 11/2/2001 20Caraco Pharmaceutical
Laboratories Ltd 2/3/2004 16MJ Pharmaceuticals Ltd 4/4/2005 28
ICN Co Hungary Ltd 8/10/2005Able Laboratories Inc 11/1/2005 100
Taro Pharmaceutical Industries Ltd 5/21/2007 48.7Taro Pharmaceutical Industries Ltd 2/19/2008 9.4
Caraco Pharmaceutical Laboratories Ltd 12/3/2010 24.5
Taro Pharmaceutical Industries Ltd 10/18/2011Ochoa Laboratories Ltd 2/15/2012STADA Arzneimittel AG 8/2/2012
Taro Pharmaceutical Industries Ltd 8/13/2012DUSA Pharmaceuticals Inc 11/8/2012 100
Enceladus Pharmaceuticals BV 3/13/2013 23.35Sun Pharma Medication Pvt Ltd 5/20/2013 100
Ranbaxy Laboratories Ltd 4/7/2014Pharmalucence Inc 7/16/2014 100
Neetnav Real Estate Pvt Ltd 10/1/2014 60Neetnav Real Estate Pvt Ltd 12/17/2014 40
24
Banking
25
ICICI Bank Ltd
Target Name Announcement Date Percent of Shares
Acquired Bank of Madura Ltd 12/8/2000 100
Industrial Credit & Investment Corp of India Ltd{ICICI Ltd} 10/24/2001 100
Standard Chartered Grindlays Bank Ltd-Branches(2) 7/8/2002 100
Transamerica Apple Distribution Finance Pvt Ltd 1/4/2003 30
Himachal Futuristic Communications Ltd 1/31/2004 12.65Govind Rubber Ltd 3/23/2004 18.73
Mysore Cements Ltd 3/31/2004 8.78B S Refrigerators Ltd 10/7/2004 5.33
Prudential ICICI Trust Ltd 3/11/2005 6Prudential ICICI Asset Management Co Ltd 3/11/2005 6
Jindal Vijayanagar Steel Ltd 3/21/2005 10.43Investitsionno-Kreditny Bank 5/19/2005 100
Sangli Bank Ltd 12/9/2006 100Lavasa Corp Ltd 1/15/2010
Bank of Rajasthan Ltd 5/18/2010 100GTL Ltd 7/26/2011 29.3
Gokaldas Exports Ltd 6/24/2014 5.62Gokaldas Exports Ltd 12/1/2014 4.5
26
IDBI
Target Name Announcement Date Percent of Shares Acquired Zen Technologies Ltd 8/23/2000
Securities Trading Corp of India{STCI} 2/25/2002 3.01
BNP Paribas SA-Merchant Acquisition Business,India 7/30/2002 100
Suman Motels Ltd,Mangoaon, Maharashtra 4/29/2003 100
Suman Motels Ltd 4/29/2003 100Tata Homefinance Ltd 5/30/2003 100Recron Synthetics Ltd 9/17/2003 5.51
IDBI Bank Ltd 2/20/2004 43Govind Rubber Ltd 3/23/2004 37.95
Soma Textiles & Industries Ltd 3/29/2004 12.11Mysore Cements Ltd 3/31/2004 6.77
Oil Country Tubular Ltd 3/2/2005 11.29
Amit Spinning Industries Ltd 9/21/2005 6.03United Western Bank Ltd 1/12/2006 100
Jayaswals Neco Ltd 4/5/2006 20.06Ispat Industries Ltd 4/8/2006 12.49
IDBI Trusteeship Services Ltd 10/1/2011 14.92
27
IT, Software
28
3i Infotech Ltd
Target Name Announcement Date Percent of Shares Acquired
Innovative Business Solutions Inc 9/27/2005 100FormulaWare Inc 11/1/2005 100
SDG Software Technologies 12/11/2005 100Datacons 4/17/2006 100
G4 Software Technologies (India)Ltd 9/4/2006 100Rhyme Systems Ltd 10/20/2006 100
Professional Access Inc 11/13/2006 51KNM Services Pvt Ltd 5/29/2007 60
aok in-house Factoring Services Pvt Ltd 5/29/2007 50.5aok in-house BPO Services Ltd 5/29/2007 50.5
Taxsmile.com India Pvt Ltd 9/11/2007 26
Linear Financial & Management Systems Pvt Ltd 12/4/2007Regulus Group LLC 4/29/2008 100
Locuz Enterprise Solutions Ltd 5/8/2008 26FinEng Solutions Pvt Ltd 6/11/2008 51
aok in-house Factoring Services Pvt Ltd 7/8/2009 49aok in-house BPO Services Ltd 7/8/2009 49
FinEng Solutions Pvt Ltd 7/8/2009 9Taxsmile.com India Pvt Ltd 7/8/2009 25
Elegon Infotech Ltd 7/14/2009 49Delta Services (India) Pvt Ltd 7/15/2009 49
29
HCL Technologies
Target Name Announcement Date Percent of Shares
Acquired 06-20-1996 Utilities Insurance Co Pty Ltd 100.0001-03-1997 CareAmerica Compensation & 100.00
01-09-1997 Colonial Mutual General 100.0002-07-1997 Sphere Drake Holdings-Protecti 100.00
07-18-1997 Colonial Mutual General Ins NZ 100.0012-08-1998 Nam Seng Insurance 24.6008-30-2001 Computech Corp 100.0008-30-2001 Systech Inc 100.00
10-27-2001 BT-Apollo Contact Centre 100.00
06-03-2002 Gulf Computers Inc 100.0001-18-2003 Aalayance Inc 19.0012-20-2004 Aalayance Inc 51.0012-23-2004 HCL Technologies BPO Service 10.0002-20-2008 CapitalStream Inc 100.0007-16-2008 Liberata PLC-Financial Service
08-25-2008 Control Point Solutions Inc 100.0008-04-2009 Undisclosed Data Centre 100.0001-12-2010 OLR
30
Telecommunication
31
Reliance Commun Ventures Ltd
Target Name Announcement Date Percent of Shares
Acquired
Reliance Telecom Ltd 3/12/2006 64.4
Reliance Communications Infrastructure Ltd 3/12/2006 55
Reliance Infocomm Ltd 3/12/2006 54.7
Formax Commercial(P)Ltd 4/28/2006 100
Reliance Business Management Pvt Ltd 4/28/2006 100
Ambani Enterprises Pvt Ltd 4/28/2006 100
Reliance Communications Technologies Pvt Ltd 4/28/2006 100
Reliance Software Solutions Pvt Ltd 4/28/2006 100
Reliance Communications Solutions Pvt Ltd 4/28/2006 100
32
Videsh Sanchar Nigam Ltd
Target Name Announcement Date Percent of Shares
Acquired
Tata Teleservices Ltd 5/28/2002 19.9
Shyam Telecom Ltd 3/31/2003 100
Gemplex Internet Inc 7/3/2003 100
DishnetDSL Ltd-Broadband Business 3/17/2004 100
Teleglobe International Holdings Ltd 7/25/2005 100
Tata Power Broadband Co Ltd 9/5/2005 100
Direct Internet Ltd 5/8/2006 100
33
Automobile
34
Amtek Auto Ltd
Target Name Announcement Date Percent of Shares
Acquired Indsil Auto Components Ltd 4/23/2002 89.66Ahmednagar Forgings Ltd 10/10/2002 30.72Ahmednagar Forgings Ltd 10/10/2002 14.8Ahmednagar Forgings Ltd 10/11/2002 20
Lloyds(Brierly Hill)Ltd 1/1/2003 100GWK Group Ltd 10/30/2003 100
Sigma Cast Group Ltd 2/7/2005 100JL French Automotive
Castings Inc-Aluminum Foundry 6/5/2007 100
Triplex-Ketlon Group 11/7/2007 100Amtek India Ltd 5/28/2010 26.25Amtek Auto Ltd 8/25/2011 6.24
Neumayer Tekfor Holding GmbH 3/11/2013 100
JMT Auto Ltd 6/27/2013 20.46JMT Auto Ltd 6/27/2013 26.61
HJ Kuepper GmbH & Co KG 12/24/2013Kaiser GmbH 6/4/2014 100
Scholz Edelstahl GmbH 7/17/2014 100
35
Mahindra & Mahindra Ltd
Target Name Announcement Date Percent of Shares Acquired Mahindra Nissan(Mahindra & Mahindra,Nissan Motor Co) 12/31/1992
Guest Keen Williams Ltd-Metal Processing Unit 11/21/1995 100
Gujarat Tractors(Gujarat) 8/20/1998 51Mahindra Europe SrI 5/31/2005
Tractorul UTB SA 10/29/2005 100Plexion Technologies(India)Pvt Ltd 12/12/2005 88.41
Stokes Forgings Ltd 1/4/2006 98.6Schoeneweiss & Co GmbH 10/25/2006 100DGP Hinoday Industries Ltd 11/24/2006 66
Punjab Tractors Ltd 3/8/2007 45Swaraj Engines Ltd 3/12/2007 0.06Punjab Tractors Ltd 3/12/2007 20
Mahindra Gesco Developers Ltd 3/30/2007 7.31G R Grafica Ricerca Design srl 3/7/2008 100
Kinetic Motor Co Ltd 7/30/2008 100Punjab Tractors Ltd 7/30/2008 35.36
Gippsland Aeronautics Pty Ltd 12/15/2009Aerostaff Australia Pty Ltd 12/15/2009
REVA Electric Car Company Private Ltd{RECC} 5/26/2010 55.2
Ssangyong Motor Co Ltd 11/23/2010 70.04Tech Mahindra Ltd 11/26/2010 5.49EPC Industrie Ltd 2/9/2011 0.12EPC Industrie Ltd 2/9/2011 38EPC Industrie Ltd 6/9/2012 31.01
Mahindra Navistar Engines Pvt Ltd 12/18/2012 49Mahindra Navistar Automotives Ltd 12/18/2012 49
36
Metals and Mining
37
Hindalco Industries Ltd
Target Name Announcement Date Percent of Shares
Acquired
Indian Aluminum Co Ltd 3/9/2000 54.62
Indian Aluminum Co Ltd 3/24/2000 20Bihar Caustic & Chemicals
Ltd 12/8/2000 10Indo Gulf Corp Ltd 7/21/2002 100
Indian Aluminum Co Ltd 7/21/2002 22
Indo Gulf Corp Ltd-Copper Business 7/22/2002 100
Maroochydore Copper Project 1/24/2003 50
Straits(Nifty)Pty Ltd 1/24/2003 100Bihar Caustic & Chemicals
Ltd 2/18/2005 0.08
Asset Reconstruction Co(India) Ltd-Certain Assets 1/16/2006 100Utkal Alumina International
Ltd 7/18/2007 45
38
Jindal Steel & Power Ltd
Target Name Announcement Date Percent of Shares
Acquired
El Mutun(Bolivia) 5/31/2006 50
Globeleq Singapore Pte Ltd 2/15/2007 40
Kiepersol Thermal Coal Mine 6/1/2009 100
Apollo Minerals Ltd 5/8/2012 13.84
CIC Energy Corp 7/18/2012 100
Jindal Steel & Power Ltd 8/30/2013 2.16
Legend Iron Ltd 11/20/2013 100Cameroon Mining Action
SA 11/20/2013 90
Wollongong Coal Ltd 4/25/2014 45
39
Textile
40
Spentex Industries Ltd
Target Name Announcement Date Percent of Shares
Acquired
Tai Chonbang Textile Industries Ltd-Assets 10/31/2005 100
Indo Rama Textiles Ltd 2/17/2006 20
Indo Rama Textiles Ltd 2/17/2006 49
Indo Rama Textiles Ltd 2/17/2006 15Amit Spinning Industries
Ltd 2/26/2006 31.8Amit Spinning Industries
Ltd 3/6/2006 6.77Amit Spinning Industries
Ltd 3/27/2006 12.4Tashkent-Toyetpa Tekstil
Ltd 7/24/2006 100
Schoeller Litvinov ks 7/3/2007 100
41
Indian Rayon & Industries Ltd
Target Name Announcement Date Percent of Shares
Acquired
PSI Data Systems Ltd (Bull SA) 5/22/2001 50.4
PSI Data Systems Ltd (Bull SA) 6/27/2001 20
Transworks Information Services Pvt Ltd 6/20/2003 100Idea Cellular Ltd 7/30/2005 16.5
Birla Global Finance Ltd 9/11/2005 100
Indo Gulf Fertilisers Ltd 9/11/2005 100
42
Construction Material
43
Gujarat Ambuja Cements Ltd
Target Name Announcement Date Percent of Shares
Acquired Modi Cements Ltd 7/4/1997 100
DLF Cements(India) Ltd(DLF Cements) 12/14/1999 21
DLF Cements(India) Ltd(DLF Cements) 12/14/1999 10
DLF Cements(India) Ltd(DLF Cements) 12/15/1999 24
DLF Cements(India) Ltd(DLF Cements) 12/15/1999 20
Associated Cement Cos Ltd 12/22/1999 7.2
Associated Cement Cos Ltd 5/9/2000 4
ING Vysya Life Insurance Co Pvt Ltd 5/28/2005 14.9
44
Carborundum Universal Ltd
Target Name Announcement Date Percent of Shares
Acquired
Webword Holdings & Management Pvt Ltd 11/5/2001 68
Southern Energy Development Corp Ltd 4/9/2003 12
OAO Volzhsky Abrasive Works 6/9/2007 84.1
IVP Ltd-Industrial Ceramics Division 8/21/2007 100
Prodorite Anticorrosives Ltd 1/28/2008 100
Cellaris Refractories India Ltd 8/4/2014 49
45
Thanks