Mergers & Acquisitions

 Coffee Day arm to buy 15% of Sical Logistics (November 14, 2010)
 Vedanta sticks to guns on Cairn deal (November 12, 2010)
 Higher spends, M&As power FMCG sector (November 11, 2010)
 Dollar Industries' acquisition (November 10, 2010)
 Coal India bids for stake in Colombian asset (November 07, 2010)
 Vijay Shanthi to merge High End Homes with itself (November 07, 2010)
 Southern Ispat in talks to buy New-Tech Forge (November 04, 2010)
 Bajaj Auto hikes stake in KTM Power Sports (November 04, 2010)
 SNC-Lavalin buys stake in Rayalaseema Expressway (November 03, 2010)
 Steel Strips Wheels board okays stake sale to Sumitomo (October 30, 2010)
 Elecon Engg buys UK group in Rs 180-cr deal (October 29, 2010)
 KGS Group acquires 60% in Cochin Kagaz (October 28, 2010)
 Cairn stake: Vedanta likely to miss Oct 30 deadline (October 26, 2010)
 Stake-sale: Cairn will need Govt nod for pre-NELP blocks too (October 22, 2010)
 Cairn-Vedanta deal likely to see longer wait (October 22, 2010)
 RPG Life Sciences to seal three tie-ups in Europe (October 22, 2010)
 ONGC asserts pre-emptive rights on Cairn India's assets (October 22, 2010)
 Scooters India stake sale may be delayed to next year (October 20, 2010)
 Twilight Litaka picks up 26% in S. Africa's Interpro (October 20, 2010)
 ABG Shipyard hikes stake in Western Shipyard to 60.26% (October 16, 2010)
 BHPV will be merged with BHEL soon: Deshmukh (October 15, 2010)
 Godrej Consumer Products board approves merger of sister co (October 15, 2010)
 Suzlon buys out forging arm's stake from IDFC Private Equity (October 12, 2010)
 MIC Electronics to buy majority stake in Avni Energy (October 12, 2010)
 Cairn India open offer price is final (October 12, 2010)
 Sujana mulls merger with Vijay Home Appliances (October 09, 2010)
 M&M to wrap up due diligence for SsangYong soon (October 09, 2010)
 Ashok Minda Group completes Aksys buy (October 06, 2010)
 Companies strike 225 deals worth $13.5 b in Q2 (October 05, 2010)
 Semler Research eyes acquisitions (October 02, 2010)
 SCI's move to acquire minority stake in shipyard: More to it than meets the eye? (October 01, 2010)
 Kuwait keen on strategic stake in IndianOil (September 28, 2010)
 ONGC Videsh changes acquisition strategy (September 27, 2010)
 No question of selling stake, says Dr Reddy's (September 25, 2010)
 ONGC ‘not passive' to Vedanta's offer for Cairn (September 24, 2010)
 Orient Ceramics to buy 63% in Bell Ceramics (September 23, 2010)
 Cairn Energy to seek shareholder nod on Oct 7 (September 22, 2010)
 Sujana Universal to buy EBC Bearings (September 21, 2010)
 Stemcor to buy 10% in Ispat Industries (September 18, 2010)
 United Spirits makes open offer for 20% of Pioneer Distilleries (September 18, 2010)
 Cairn Energy hopes to close Vedanta deal by year-end (September 17, 2010)
 Interserve UK brings in funds for joint venture (September 17, 2010)
 Sun Pharma closes Taro offer (September 16, 2010)
 D.B. Realty buys out L&T Bombay Developers (September 16, 2010)
 Cairn panel to assess Vedanta offer for minority shareholders (September 16, 2010)
 Tata Steel deal with Canadian co to stabilise ore price (September 16, 2010)
 KEC buys signalling co for Rs 14 cr (September 15, 2010)
 CCI to clear merger deals in 30 days (September 15, 2010)
 ABB to buy Metsys Engg (September 15, 2010)
 Sagar Cements to consider merger (September 15, 2010)
 United Spirits to acquire 54.7% in Pioneer Distilleries (September 15, 2010)
 UB to merge Millennium Alcobev, subsidiaries with itself (September 15, 2010)
 Faster M&As (September 15, 2010)
 Tata Steel picks up 80% in Canadian ore project for $279 m (September 15, 2010)
 Aqua Logistics may buy stake in Star Distribution (September 14, 2010)
 Cairn Energy seeks formal Govt nod for Vedanta deal (September 14, 2010)
 Mittals want to offload Kazakh oil assets (September 14, 2010)
 IFGL Refractories arm buys two US cos (September 13, 2010)
 RIL completes stake buy in Marcellus Shale asset (September 13, 2010)
 Amrutanjan in talks to buy beverages co (September 13, 2010)
 I have the option of investing in Accelya, says Kale MD (September 11, 2010)
 Verdict paves way for Sun takeover of Taro (September 09, 2010)
 Abbott completes Piramal Health unit buy (September 09, 2010)
 Business across borders (September 09, 2010)
 Taking a cross-border deal through (September 09, 2010)
 Sun-Taro deal holds significant potential (September 09, 2010)
 RPG group co KEC buys US-based SAE Towers (September 08, 2010)
 KEC Intl gains foothold in American markets (September 08, 2010)
 R Power, RNRL shareholders approve merger (September 07, 2010)
 SV Sugars set to change hands (September 04, 2010)
 Market still figuring out reasons for RIL's stake buy (September 03, 2010)
 EIH Associated surges as EIH tumbles 7% (September 01, 2010)
 Reliance checks into Oberoi Hotels (August 31, 2010)
 ‘Cairn stake sale needs ONGC consent' (August 31, 2010)
 Reliance pays 36% premium for stake in EIH (August 31, 2010)
 Vedanta and its fallout (August 31, 2010)
 Ministry examining Cairn Energy response on Vedanta deal (August 30, 2010)
 Corus to sell Teesside plant to Thailand co for Rs 2,300 cr (August 28, 2010)
 Tata Steel may use sale proceeds to pare debt (August 28, 2010)
 UltraTech issues shares to Samruddhi investors (August 27, 2010)
 KKN Group buys Balaji Ispat; enters steel production (August 26, 2010)
 GAIL in ONGC's team on Cairn hunt baffles refiners (August 25, 2010)
 Tata Motors, Piaggio may join race for Scooters India (August 25, 2010)
 No Ministry fiat to oil PSUs on Cairn counter-bid (August 25, 2010)
 Religare promoters plan to hike stake to 66% (August 25, 2010)
 Commerce Ministry may step in to check MNC buys in pharma (August 23, 2010)
 Non-compete fee (August 22, 2010)
 Hind-Dorr Oliver firms up on stake sale buzz (August 20, 2010)
 ONGC has the financial muscle to bid for Cairn (August 19, 2010)
 Gammell seeks Govt nod for stake sale to Vedanta (August 18, 2010)
 Atul Auto eyes stake in Scooters India (August 18, 2010)
 Cairn deal: Oil PSUs rue missed opportunity (August 18, 2010)
 Vedanta to pay $9.6 billion for control of Cairn India (August 17, 2010)
 Cairn Energy reaps a windfall (August 17, 2010)
 Lower offer price, limited scope dampen Cairn (August 17, 2010)
 Vedanta-Cairn deal: Tax Dept hopes to collect a tidy sum (August 17, 2010)
 Sesa Goa plummets on Vedanta's move (August 17, 2010)
 Maytas Infra awaits nod to appoint SBG directors (August 17, 2010)
 Vedanta to fund Cairn buyout with debt, cash (August 17, 2010)
 It's business as usual, says Cairn chief (August 14, 2010)
 Vedanta set for ‘smart entry' into petroleum sector (August 14, 2010)
 McNally Bharat eyes English industrial pump maker (August 14, 2010)
 Can Vedanta be the next BHP Billiton? (August 14, 2010)
 Steering growth (August 13, 2010)
 Vedanta in talks to buy stake in Cairn India (August 13, 2010)
 ‘God, let there be no defects' (August 13, 2010)
 SBI Macquarie fund picks up 11% stake in Viom Networks (August 12, 2010)
 M&M in pole position for SsangYong as Renault-Samsung pulls out (August 12, 2010)
 Educomp picks stake in Vidya Mandir Classes (August 12, 2010)
 Vascon acquires GMP Technical Solutions (August 11, 2010)
 Pudumjee Pulp plans to buy Global Boards (August 10, 2010)
 We are also bidding: Ruia Group (August 08, 2010)
 M&M board gives green signal for SsangYong bid (August 08, 2010)
 M&M eyes Scooters India for 2-wheeler biz expansion (August 08, 2010)
 Ruia group buys German tyre-maker (August 06, 2010)
 Transgene Biotek acquires US-based Marillion (August 06, 2010)
 Covanta puts TN power projects on the block (August 06, 2010)
 Mergers — now playing out on multiplex screens (August 03, 2010)
 Bilcare to buy INEOS' films biz (August 03, 2010)
 Maytas Infra allots 20.8% stake to SBG Projects (August 02, 2010)
 IL&FS Investment acquires Saffron Assets (July 31, 2010)
 Open offer tax inequity (July 31, 2010)
 Ashok Leyland acquires 26% in UK's Optare (July 30, 2010)
 Optare association to help Ashok Leyland utilise Avia better (July 30, 2010)
 Bankers to decide fate of Vishal Retail (July 29, 2010)
 Japan's JFE to invest Rs 4,800 cr for 14.99% stake in JSW Steel (July 28, 2010)
 Opto Circuits buys US devices co (July 28, 2010)
 Engineers India keen on stake in ONGC's Barmer refinery (July 27, 2010)
 ICSA promoters to increase stake by 6% (July 25, 2010)
 Legrand to buy Indo Asian's switchgear business for Rs 495 cr (July 24, 2010)
 ‘It's business as usual in India' (July 22, 2010)
 Offer for Parkway: Khazanah gets 5% of target (July 22, 2010)
 BEML seeks majority stake in venture with Coal India, DVC (July 21, 2010)
 Kobe Steel mulls tie-up with NMDC for stake buy in Australian ore project (July 21, 2010)
 Nava Bharat Power unit stake sale (July 19, 2010)
 Nava Bharat gets Rs 84 cr from phase 1 of stake sale to Essar (July 18, 2010)
 MNCs look to bag Indian cement cos (July 17, 2010)
 Tata Steel sells stake in Malaysian co (July 17, 2010)
 Jyothy Labs plans to acquire fabric care brands (July 16, 2010)
 Parkway deal: Fortis offer to end on Aug 12 (July 16, 2010)
 Serum's healthcare stake: Investment, not acquisition (July 15, 2010)
 Corus' Teesside plant: Another group walks out of talks (July 14, 2010)
 Essar arm to buy Navabharat Power (July 14, 2010)
 ONGC in talks with Arrow for stake sale in 3 CBM blocks (July 12, 2010)
 French court okays Titagarh Wagons' buy of freight car co (July 10, 2010)
 UK's Eredene picks up 8% in Hyderabad marine services co (July 10, 2010)
 Khazanah extends Parkway offer till July 26 (July 09, 2010)
 Titagarh acquires sick French freight car co (July 09, 2010)
 ADAG firms hike stake in Fame to 15.77% (July 08, 2010)
 Bajaj Finserv promoters hike stake (July 08, 2010)
 RNRL share price set to decline (July 05, 2010)
 Swap ratio negative for RNRL (July 05, 2010)
 Focus Diagnostics buys first Joint MRI from GE (July 05, 2010)
 RNRL, RPower boards clear 4:1 swap for merger (July 05, 2010)
 Circor India acquires valves unit from Mazda (July 04, 2010)
 Mega deals stage a comeback (July 03, 2010)
 Singapore Govt not worried over battle for Parkway control (July 03, 2010)
 RNRL to be merged with Reliance Power (July 03, 2010)
 Fortis sweetens bid for Parkway (July 02, 2010)
 Sponge Iron merged with NMDC (July 02, 2010)
 India Inc on a buying binge in US (July 02, 2010)
 Blackstone to buy stake in Monnet Power (July 02, 2010)
 Mangalam Cement studying Mangalam Timber's merger proposal (July 02, 2010)
 It's advantage Fortis, as bidding war for Parkway hots up (July 02, 2010)
 Spice Mobiles to merge with parent company (June 30, 2010)
 Delisting decoded (June 27, 2010)
 Atul buys adhesive brand Polygrip (June 25, 2010)
 Piramal Healthcare signs pact to acquire BioSyntech's assets (June 23, 2010)
 Reliance ‘close to acquiring' second shale gas field in US (June 23, 2010)
 Maytas Infra will get tech support from new promoter (June 22, 2010)
 Saudi Binladin to pay Rs 195.30 for each share of Maytas Infra (June 21, 2010)
 The perils of betting on ‘takeover' news (June 20, 2010)
 Saudi Binladin Group unit to acquire 20% in Maytas Infra (June 20, 2010)
 Dabur set to close Fem Care buy (June 19, 2010)
 Rel Capital picks up 18% in Bloomberg UTV (June 17, 2010)
 Fortis gets time till July 30 to decide on counter offer for Parkway (June 17, 2010)
 Murdoch's BSkyB buy seen a safe bet (June 16, 2010)
 How M&As work (June 13, 2010)
 IL&FS Milestone buys 74% in HCC project for Rs 574 cr (June 11, 2010)
 Orchid Pharma acquires US company Karalex (June 11, 2010)
 ADAG firms hike stake in Fame India (June 08, 2010)
 NTPC readies Rs 1.6 lakh cr war chest for next 5 years (June 08, 2010)
 Lupin too fears MNCs buying pharma cos will raise drug prices (June 06, 2010)
 Ceat buys remaining stake in ACHL (June 05, 2010)
 M&M, Ruias shortlisted for SsangYong bid (June 05, 2010)
 DuPont buy-out may bolster United Phosphorus portfolio (June 04, 2010)
 United Phosphorus buys DuPont's global fungicide biz (June 04, 2010)
 Clearance of merger plans by CCI will be speeded up: Khurshid (May 30, 2010)
 M&M ‘yet to bid' for Ssangyong (May 30, 2010)
 Asset sale vis-à-vis demergers (May 30, 2010)
 Govt voices concern over M&A deals in pharma sector (May 28, 2010)
 Malaysia's Khazanah queers Fortis pitch for Parkway (May 28, 2010)
 Mahindra buys 55% stake in electric car co Reva (May 27, 2010)
 Marico arm buys Singapore co's aesthetics biz (May 26, 2010)
 The hole in Piramal's stock valuation (May 23, 2010)
 Abbott buys Piramal health unit for $3.72 b (May 22, 2010)
 Piramal shares fall 12% in volatile trading (May 22, 2010)
 Piramal-Abbott deal: A reiteration of India story (May 22, 2010)
 Booster dose for Abbott's India plans (May 22, 2010)
 Avantha Group acquires Pyramid Healthcare Solutions (May 22, 2010)
 Jindal Steel, Oman firm talks fail (May 17, 2010)
 Zicom-Schneider deal sealed (May 15, 2010)
 Grasim fixes May 28 as record date for de-merger (May 15, 2010)
 Godrej Consumer: Known deal, but valuations a surprise (May 14, 2010)
 Vedanta to pay Rs 6,155 cr for Anglo American Zinc (May 11, 2010)
 EIH to buy out jt venture partner for global business (May 07, 2010)
 Jagran to buy Mid-Day's print business (May 06, 2010)
 Mid-Day print business valuation is expensive (May 06, 2010)
 Hitachi Transport, Flyjac in buyout deal (May 05, 2010)
 IOC-Oil India team withdraws offer to acquire Gulfsands (May 05, 2010)
 IOC-Oil India bid to buy Gulfsands ‘open till May 4' (May 02, 2010)
 Trident Life merges with Aurobindo (May 01, 2010)
 Zee board okays 1:71 swap ratio for 9X buy (April 30, 2010)
 EID Parry to buy 65% in GMR Industries (April 26, 2010)
 DLF arm buys out PE stake in group firm for Rs 3,085 cr (April 25, 2010)
 FIPB defers decision on Star India Holding proposal (April 24, 2010)
 Piramal buys Bharat Serums' product (April 23, 2010)
 French major Vickat buys 51% in Bharathi Cement (April 21, 2010)
 JSW Energy to buy majority stake in S. Africa coal mine (April 17, 2010)
 M&M to buy out Renault stake, make Logan on its own (April 17, 2010)
 Bajaj Auto hikes stake in Austrian co KTM Power (April 17, 2010)
 Anu's Lab buys plant for Rs 8 cr (April 17, 2010)
 TRF buys UK company Hewitt Robins International (April 17, 2010)
 Corpus Media buys Denver co (April 16, 2010)
 Takeover of UK cos could trip on Labour Party's ‘Cadbury Law' plans (April 14, 2010)
 Atlas deal gives triple advantage to Reliance (April 13, 2010)
 Heavy Engineering Corpn eyes acquisition of HMT arm (April 09, 2010)
 Essar says ‘no certainty' in Shell refineries buyout (April 09, 2010)
 The Kraft of branding (April 08, 2010)
 Greenko acquires LVS Power (April 08, 2010)
 Godrej Consumer buys Indonesian co for Rs 1,200 cr (April 07, 2010)
 Reliance ADAG hikes stake in Reliance Infra (April 02, 2010)
 M&M to merge tractor ventures in China (March 31, 2010)
 Crompton buys UK co for Rs 204 cr (March 31, 2010)
 GVK Power buys 9.5% stake in Gautami from Nagarjuna Const (March 30, 2010)
 Jupiter Media takes 26% stake in Kannada Prabha (March 29, 2010)
 Nitin Fire Protection near deal for UAE firm buy (March 26, 2010)
 Genpact picks up equity in technology developer for mortgage industry (March 25, 2010)
 AT&T buys 8% stake in Tech Mahindra for $197 million (March 24, 2010)
 Sanofi-aventis buys out UB stake in Aventis Pharma (March 23, 2010)
 Shree Renuka concludes Brazilian buy (March 23, 2010)
 Air India–Indian Airlines merger hits ‘pause mode' (March 20, 2010)
 Elder Pharma increases stake in Bulgarian subsidiary (March 20, 2010)
 Strides to buy out Aspen stake in 2 ventures for $117 m (March 19, 2010)
 Maharashtra Scooters zooms to 52-week high on HC order (March 18, 2010)
 AP High Court approves IVR Prime merger move (March 16, 2010)
 Hind Construction to buy 66% in Swiss realty co (March 16, 2010)
 Kiri Dyes buys DyStar of Germany for Rs 310 cr (March 16, 2010)
 Fortis looking at more global acquisitions (March 13, 2010)
 Fortis buys 23.9% stake in Singapore's Parkway (March 12, 2010)
 Game-changer in healthcare (March 12, 2010)
 Siva group buys 50% in Norwegian mineral water co (March 11, 2010)
 Daimler to shed stake in Tata Motors (March 09, 2010)
 Essar to pay $600 m for US co Trinity Coal (March 07, 2010)
 Schneider to buy Zicom security system business for Rs 225 cr (March 06, 2010)
 Elgi Equipments buys French co (March 04, 2010)
 Hindustan Dorr's purchase opens doors to power, oil and gas sectors (March 03, 2010)
 Corus sells 50% stake in Cindu Chem (March 03, 2010)
 India studying Chinese circular on indirect acquisitions (February 25, 2010)
 French group buys TexTech (February 24, 2010)
 Renuka Sugars: Sweet deal, but debt holds the key (February 23, 2010)
 Fame hogs limelight as takeover war hots up (February 23, 2010)
 SEBI no to Marathon Realty on exemption from takeover (February 22, 2010)
 Airworks Engg buys UK aircraft refinishing co (February 19, 2010)
 Reliance Capital scales up stake in Fame Cinemas (February 19, 2010)
 Godrej Consumer eyeing buys in 6-12 months (February 19, 2010)
 Texmaco sells 10% in Gobind Sugar (February 17, 2010)
 Ruchi Soya to acquire Palm Tech (February 16, 2010)
 Eveready to expand FMCG business (February 06, 2010)
 Israel court stops Sun from picking more Taro stake (February 05, 2010)
 Indoco-Watson Pharma alliance for US market (February 04, 2010)
 Fame's acquisition to help Inox increase number of screens (February 04, 2010)
 Inox buys Fame Cinemas' promoter stake for Rs 66 cr (February 04, 2010)
 ArcelorMittal hikes stake in Uttam Galva (February 02, 2010)
 Dalmia Cement hikes stake in OCL (January 31, 2010)
 ACC buys Encore Cement (January 30, 2010)
 McNally Bharat arm buys Buildmet (January 30, 2010)
 SK Bangur group buys out Ramsinghanis' stake in Rama Newsprint (January 28, 2010)
 Indian Hotels offloads entire stake in ELEL Hotels (January 27, 2010)
 Triveni to demerge steam turbine biz (January 22, 2010)
 Cadbury-Kraft deal wrapped in controversies (January 22, 2010)
 ArcelorMittal, BHP Billiton likely to combine some iron ore assets (January 20, 2010)
 Ranbaxy acquires Biovel's assets (January 20, 2010)
 FIPB nod likely for StanChart stake hike in stock broking arm (January 20, 2010)
 Cadbury board accepts sweetened Kraft offer (January 20, 2010)
 Zenith sells 2 million shares in Strides (January 16, 2010)
 McNally Bharat to acquire niche construction firm (January 14, 2010)
 SHV India snaps up Caltex in all-cash deal (January 13, 2010)
 IVR Prime to convene meeting for name change, amalgamation (January 07, 2010)
  SVC Resources acquires mine in MP (January 06, 2010)
 Marico strengthens Malaysian presence (January 05, 2010)
 IL&FS open offer for Maytas Infra gets poor response (January 03, 2010)
 Taro shareholders vote against promoter group (January 01, 2010)
 Cadila Healthcare completes S. African co Simayla buy (January 01, 2010)

http://www.thehindubusinessline.com/cgi-bin/bl.pl?mainclass=02&subclass=345

ntroduction
The Indian economy has been growing with a rapid pace and has been emerging at the top, be it IT,
R&D, pharmaceutical, infrastructure, energy, consumer retail, telecom, financial services, media, and
hospitality etc. It is second fastest growing economy in the world with GDP touching 9.3 % last year. This
growth momentum was supported by the double digit growth of the services sector at 10.6% and
industry at 9.7% in the first quarter of 2006-07. Investors, big companies, industrial houses view Indian
market in a growing and proliferating phase, whereby returns on capital and the shareholder returns are
high. Both the inbound and outbound mergers and acquisitions have increased dramatically. According
to Investment bankers, Merger & Acquisition (M&A) deals in India will cross $100 billion this year, which
is double last year’s level and quadruple of 2005.
In the first two months of 2007, corporate India witnessed deals worth close to $40 billion. One of the
first overseas acquisitions by an Indian company in 2007 was Mahindra & Mahindra’s takeover of 90
percent stake in Schoneweiss, a family-owned German company with over 140 years of experience in
forging business. What hit the headlines early this year was Tata’s takeover of Corus for slightly over
$10 billion. On the heels of that deal, Hutchison Whampoa of Hong Kong sold their controlling stake in
Hutchison-Essar to Vodafone for a whopping $11.1 billion. Bangalore-based MTR’s packaged food
division found a buyer in Orkala, a Norwegian company for $100 million. Service companies have also
joined the M&A game.
The taxation practice of Mumbai-based RSM Ambit was acquired by PricewaterhouseCoopers. There are
many other bids in the pipeline. On an average, in the last four years corporate earnings of companies in
India have been increasing by 20-25 percent, contributing to enhanced profitability and healthy balance
sheets. For such companies, M&As are an effective strategy to expand their businesses and acquire
global footprint.
Mergers or amalgamation, result in the combination of two or more companies into one, wherein the
merging entities lose their identities. No fresh investment is made through this process. However, an
exchange of shares takes place between the entities involved in such a process. Generally, the company
that survives is the buyer which retains its identity and the seller company is extinguished.
Definitions:
Mergers, acquisitions and takeovers have been a part of the business world for centuries. In today's
dynamic economic environment, companies are often faced with decisions concerning these actions -
after all, the job of management is to maximize shareholder value. Through mergers and acquisitions, a
company can (at least in theory) develop a competitive advantage and ultimately increase shareholder
value. The said terms to a layman may seem alike but in legal/ corporate terminology, they can be
distinguished from each other:
# Merger: A full joining together of two previously separate corporations. A true merger in the legal
sense occurs when both businesses dissolve and fold their assets and liabilities into a newly created
third entity. This entails the creation of a new corporation.
# Acquisition: Taking possession of another business. Also called a takeover or buyout. It may be share
purchase (the buyer buys the shares of the target company from the shareholders of the target
company. The buyer will take on the company with all its assets and liabilities. ) or asset purchase
(buyer buys the assets of the target company from the target company)
In simple terms, A merger involves the mutual decision of two companies to combine and become one
entity; it can be seen as a decision made by two "equals", whereas an acquisition or takeover on the
other hand, is characterized the purchase of a smaller company by a much larger one. This combination
of "unequals" can produce the same benefits as a merger, but it does not necessarily have to be a
mutual decision. A typical merger, in other words, involves two relatively equal companies, which
combine to become one legal entity with the goal of producing a company that is worth more than the
sum of its parts. In a merger of two corporations, the shareholders usually have their shares in the old
company exchanged for an equal number of shares in the merged entity. In an acquisition, the acquiring
firm usually offers a cash price per share to the target firm’s shareholders or the acquiring firm's share's
to the shareholders of the target firm according to a specified conversion ratio. Either way, the
purchasing company essentially finances the purchase of the target company, buying it outright for its
shareholders
# Joint Venture: Two or more businesses joining together under a contractual agreement to conduct a
specific business enterprise with both parties sharing profits and losses. The venture is for one specific
project only, rather than for a continuing business relationship as in a strategic alliance.
# Strategic Alliance: A partnership with another business in which you combine efforts in a business
effort involving anything from getting a better price for goods by buying in bulk together to seeking
business together with each of you providing part of the product. The basic idea behind alliances is to
minimize risk while maximizing your leverage.
# Partnership: A business in which two or more individuals who carry on a continuing business for profit
as co-owners. Legally, a partnership is regarded as a group of individuals rather than as a single entity,
although each of the partners file their share of the profits on their individual tax returns.
Many mergers are in truth acquisitions. One business actually buys another and incorporates it into its
own business model. Because of this misuse of the term merger, many statistics on mergers are
presented for the combined mergers and acquisitions (M&A) that are occurring. This gives a broader and
more accurate view of the merger market .
Types of Mergers:

From the perception of business organizations, there is a whole host of different mergers. However, from
an economist point of view i.e. based on the relationship between the two merging companies, mergers
are classified into following:

# Horizontal merger- Two companies that are in direct competition and share the same product lines
and markets i.e. it results in the consolidation of firms that are direct rivals. E.g. Exxon and Mobil, Ford
and Volvo, Volkswagen and Rolls Royce and Lamborghini
# Vertical merger- A customer and company or a supplier and company i.e. merger of firms that have
actual or potential buyer-seller relationship eg. Ford- Bendix, Time Warner-TBS.
# Conglomerate merger- generally a merger between companies which do not have any common
business areas or no common relationship of any kind. Consolidated firma may sell related products or
share marketing and distribution channels or production processes. Such kind of merger may be broadly
classified into following:
# Product-extension merger - Conglomerate mergers which involves companies selling different but
related products in the same market or sell non-competing products and use same marketing channels
of production process. E.g. Phillip Morris-Kraft, Pepsico- Pizza Hut, Proctor and Gamble and Clorox
# Market-extension merger - Conglomerate mergers wherein companies that sell the same products in
different markets/ geographic markets. E.g. Morrison supermarkets and Safeway, Time Warner-TCI.
# Pure Conglomerate merger- two companies which merge have no obvious relationship of any kind.
E.g. BankCorp of America- Hughes Electronics.
On a general analysis, it can be concluded that Horizontal mergers eliminate sellers and hence reshape
the market structure i.e. they have direct impact on seller concentration whereas vertical and
conglomerate mergers do not affect market structures e.g. the seller concentration directly. They do not
have anticompetitive consequences.
The circumstances and reasons for every merger are different and these circumstances impact the way
the deal is dealt, approached, managed and executed. .However, the success of mergers depends on
how well the deal makers can integrate two companies while maintaining day-to-day operations. Each
deal has its own flips which are influenced by various extraneous factors such as human capital
component and the leadership. Much of it depends on the company’s leadership and the ability to retain
people who are key to company’s on going success. It is important, that both the parties should be clear
in their mind as to the motive of such acquisition i.e. there should be census- ad- idiom. Profits,
intellectual property, costumer base are peripheral or central to the acquiring company, the motive will
determine the risk profile of such M&A. Generally before the onset of any deal, due diligence is
conducted so as to gauze the risks involved, the quantum of assets and liabilities that are acquired etc.
Legal Procedures for Merger, Amalgamations and Take-overs
The basis law related to mergers is codified in the Indian Companies Act, 1956 which works in tandem
with various regulatory policies. The general law relating to mergers, amalgamations and reconstruction
is embodied in sections 391 to 396 of the Companies Act, 1956 which jointly deal with the compromise
and arrangement with creditors and members of a company needed for a merger. Section 391 gives the
Tribunal the power to sanction a compromise or arrangement between a company and its creditors/
members subject to certain conditions. Section 392 gives the power to the Tribunal to enforce and/ or
supervise such compromises or arrangements with creditors and members. Section 393 provides for the
availability of the information required by the creditors and members of the concerned company when
acceding to such an arrangement. Section 394 makes provisions for facilitating reconstruction and
amalgamation of companies, by making an appropriate application to the Tribunal. Section 395 gives
power and duty to acquire the shares of shareholders dissenting from the scheme or contract approved
by the majority.
And Section 396 deals with the power of the central government to provide for an amalgamation of
companies in the national interest. In any scheme of amalgamation, both the amalgamating company or
companies and the amalgamated company should comply with the requirements specified in sections
391 to 394 and submit details of all the formalities for consideration of the Tribunal. It is not enough if
one of the companies alone fulfils the necessary formalities. Sections 394, 394A of the Companies Act
deal with the procedures and the requirements to be followed in order to effect amalgamations of
companies coupled with the provisions relating to the powers of the Tribunal and the central
government in the matter of bringing about amalgamations of companies.

After the application is filed, the Tribunal would pass orders with regard to the fixation of the dates of
the hearing, and the provision of a copy of the application to the Registrar of Companies and the
Regional Director of the Company Law Board in accordance with section 394A and to the Official
Liquidator for the report confirming that the affairs of the company have not been conducted in a
manner prejudicial to the interest of the shareholders or the public. Before sanctioning the scheme of
amalgamation, the Tribunal has also to give notice of every application made to it under section 391 to
394 to the central government and the Tribunal should take into consideration the representations, if
any, made to it by the government before passing any order granting or rejecting the scheme of
amalgamation. Thus the central government is provided with an opportunity to have a say in the matter
of amalgamations of companies before the scheme of amalgamation is approved or rejected by the
Tribunal.
The powers and functions of the central government in this regard are exercised by the Company Law
Board through its Regional Directors. While hearing the petitions of the companies in connection with
the scheme of amalgamation, the Tribunal would give the petitioner company an opportunity to meet all
the objections which may be raised by shareholders, creditors, the government and others. It is,
therefore, necessary for the company to keep itself ready to face the various arguments and challenges.
Thus by the order of the Tribunal, the properties or liabilities of the amalgamating company get
transferred to the amalgamated company. Under section 394, the Tribunal has been specifically
empowered to make specific provisions in its order sanctioning an amalgamation for the transfer to the
amalgamated company of the whole or any parts of the properties, liabilities, etc. of the amalgamated
company. The rights and liabilities of the employees of the amalgamating company would stand
transferred to the amalgamated company only in those cases where the Tribunal specifically directs so
in its order.
The assets and liabilities of the amalgamating company automatically gets vested in the amalgamated
company by virtue of the order of the Tribunal granting a scheme of amalgamation. The Tribunal also
make provisions for the means of payment to the shareholders of the transferor companies, continuation
by or against the transferee company of any legal proceedings pending by or against any transferor
company, the dissolution (without winding up) of any transferor company, the provision to be made for
any person who dissents from the compromise or arrangement, and any other incidental consequential
and supplementary matters to secure the amalgamation process if it is necessary. The order of the
Tribunal granting sanction to the scheme of amalgamation must be submitted by every company to
which the order applies (i.e., the amalgamating company and the amalgamated company) to the
Registrar of Companies for registration within thirty days.
Motives behind M & A
These motives are considered to add shareholder value:
# Economies of Scale: This generally refers to a method in which the average cost per unit is decreased
through increased production, since fixed costs are shared over an increased number of goods. In a
layman’s language, more the products, more is the bargaining power. This is possible only when the
companies merge/ combine/ acquired, as the same can often obliterate duplicate departments or
operation, thereby lowering the cost of the company relative to theoretically the same revenue stream,
thus increasing profit. It also provides varied pool of resources of both the combining companies along
with a larger share in the market, wherein the resources can be exercised.

# Increased revenue /Increased Market Share: This motive assumes that the company will be absorbing
the major competitor and thus increase its power (by capturing increased market share) to set prices.

# Cross selling: For example, a bank buying a stock broker could then sell its banking products to the
stock brokers customers, while the broker can sign up the bank’ customers for brokerage account. Or, a
manufacturer can acquire and sell complimentary products.

# Corporate Synergy: Better use of complimentary resources. It may take the form of revenue
enhancement (to generate more revenue than its two predecessor standalone companies would be able
to generate) and cost savings (to reduce or eliminate expenses associated with running a business).

# Taxes : A profitable can buy a loss maker to use the target’s tax right off i.e. wherein a sick company
is bought by giants.
# Geographical or other diversification: this is designed to smooth the earning results of a company,
which over the long term smoothens the stock price of the company giving conservative investors more
confidence in investing in the company. However, this does not always deliver value to shareholders.
# Resource transfer: Resources are unevenly distributed across firms and interaction of target and
acquiring firm resources can create value through either overcoming information asymmetry or by
combining scarce resources. Eg: Laying of employees, reducing taxes etc.
# Improved market reach and industry visibility - Companies buy companies to reach new markets and
grow revenues and earnings. A merge may expand two companies' marketing and distribution, giving
them new sales opportunities. A merger can also improve a company's standing in the investment
community: bigger firms often have an easier time raising capital than smaller ones.
Advantages of M&A’s:
The general advantage behind mergers and acquisition is that it provides a productive platform for the
companies to grow, though much of it depends on the way the deal is implemented. It is a way to
increase market penetration in a particular area with the help of an established base. As per Mr D.S Brar
(former C.E.O of Ranbaxy pharmaceuticals), few reasons for M&A’s are:
# Accessing new markets
# maintaining growth momentum
# acquiring visibility and international brands
# buying cutting edge technology rather than importing it
# taking on global competition
# improving operating margins and efficiencies
# developing new product mixes
Conclusion
In real terms, the rationale behind mergers and acquisitions is that the two companies are more
valuable, profitable than individual companies and that the shareholder value is also over and above
that of the sum of the two companies. Despite negative studies and resistance from the economists,
M&A’s continue to be an important tool behind growth of a company. Reason being, the expansion is not
limited by internal resources, no drain on working capital - can use exchange of stocks, is attractive as
tax benefit and above all can consolidate industry - increase firm's market power.
With the FDI policies becoming more liberalized, Mergers, Acquisitions and alliance talks are heating up
in India and are growing with an ever increasing cadence. They are no more limited to one particular
type of business. The list of past and anticipated mergers covers every size and variety of business --
mergers are on the increase over the whole marketplace, providing platforms for the small companies
being acquired by bigger ones.
The basic reason behind mergers and acquisitions is that organizations merge and form a single entity
to achieve economies of scale, widen their reach, acquire strategic skills, and gain competitive
advantage. In simple terminology, mergers are considered as an important tool by companies for
purpose of expanding their operation and increasing their profits, which in façade depends on the kind of
companies being merged. Indian markets have witnessed burgeoning trend in mergers which may be
due to business consolidation by large industrial houses, consolidation of business by multinationals
operating in India, increasing competition against imports and acquisition activities. Therefore, it is ripe
time for business houses and corporates to watch the Indian market, and grab the opportunity.

Mergers and acquisitions bring a number of changes within the organization. The
size of the organizations change, its stocks, shares and assets also change,
even the ownership may also change due to the mergers and acquisitions. The
mergers and acquisitions play a major role on the activities of the organizations.
However, the impact of mergers and acquisitions varies from entity to entity; it
depends upon the group of people who are being discussed here. The impact of
mergers and acquisitions also depend on the structure of the deal.

Possible Impact of Mergers and Acquisitions

Have a look at the impact of Mergers and Acquisitions on different segments of

business.

• Impacts on Employees

Mergers and acquisitions may have great economic impact on the

employees of the organization. In fact, mergers and acquisitions could be
pretty difficult for the employees as there could always be the possibility of
layoffs after any merger or acquisition. If the merged company is pretty
sufficient in terms of business capabilities, it doesn't need the same amount
of employees that it previously had to do the same amount of business. As
a result, layoffs are quite inevitable. Besides, those who are working, would
also see some changes in the corporate culture. Due to the changes in the
 operating environment and business procedures, employees may also
suffer from emotional and physical problems.
• mpact on Management

The percentage of job loss may be higher in the management level than the
general employees. The reason behind this is the corporate culture clash.
Due to change in corporate culture of the organization, many managerial
level professionals, on behalf of their superiors, need to implement the
corporate policies that they might not agree with. It involves high level of
stress.

• Impact on Shareholders

Impact of mergers and acquisitions also include some economic impact on

the shareholders. If it is a purchase, the shareholders of the acquired
company get highly benefited from the acquisition as the acquiring company
pays a hefty amount for the acquisition. On the other hand, the
shareholders of the acquiring company suffer some losses after the
acquisition due to the acquisition premium and augmented debt load.

• Impact on Competition

Mergers and acquisitions have different impact as far as market

competitions are concerned. Different industry has different level of
competitions after the mergers and acquisitions. For example, the
competition in the financial services industry is relatively constant. On the
other hand, change of powers can also be observed among the market
players.