merger acqusitions and joint venture in indian context

1. MERGERS, ACQUISITIONS
AND JOINT VENTURESs

2. MEANING
Merger
•A transaction where two firms agree to integrate their
operations on a relatively co-equal basis because they
have resources and capabilities that together may
create a stronger competitive advantage.
•The combining of two or more companies, generally by
offering the stockholders of one company securities in
the acquiring company in exchange for the surrender of
their stock
•Example: Company A+ Company B= Company C.

3. ACQUISITION
• A transaction where one firms buys another firm
with the intent of more effectively using a core
competence by making the acquired firm a
subsidiary within its portfolio of business
• It also known as a takeover or a buyout
• It is the buying of one company by another.
• In acquisition two companies are combine
together to form a new company altogether.
• Example: Company A+ Company B= Company
A.

4. MERGER ACQUISITION
COMPANY
A
COMPANY
A
COMPANY BCOMPANY B
Company A and Company B
together form the new
Company C
Company A buys Company B
Company A

5. MERGER ACQUISITION
DIFFERENCE BETWEEN MERGER AND
ACQUISITION:
i. Merging of two
organization in to one.
ii. It is the mutual decision.
iii. Merger is expensive than
acquisition(higher legal
cost).
iv. Through merger
shareholders can increase
their net worth.
v. It is time consuming and
the company has to
maintain so much legal
issues.
vi. Dilution of ownership
occurs in merger.
i. Buying one organization
by another.
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 not
experience the dilution of
ownership.

6. WHY IS IMPORTANT PROBLEM WITH MERGER
MERGER:WHY & WHY NOT
i. Increase Market
Share.
ii. Economies of scale
iii. Profit for Research
and development.
iv. Benefits on account
of tax shields like
carried forward losses
or unclaimed
depreciation.
v. Reduction of
competition.
i. Clash of corporate
cultures
ii. Increased business
complexity
iii. Employees may be
resistant to change
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7. WHY IS IMPORTANT PROBLEM WITH ACUIQISITION
ACQUISITION:WHY & WHY NOT
i. Increased market
share.
ii. Increased speed to
market
iii. Lower risk
comparing to
develop new
products.
iv. Increased
diversification
v. Avoid excessive
competition
i. Inadequate
valuation of
target.
ii. Inability to
achieve synergy.
iii. Finance by taking
huge debt.
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8. PROCESS OF MERGER & ACQUISITION IN INDIA:
i. Approval of Board of Directors
ii. Information to the stock exchange
iii. Application in the High Court
iv. Shareholders and Creditors meetings
v. 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 of the commission - whichever earlier).

9. MEANING OF JOINT
VENTURE
Joint venture is the co operation of two or more
individuals or business in which each agrees to
share profit, loss and control in a specific
enterprise.

10. FEATURES OF JOINT
VENTURE
• Joint venture is a short duration special purpose partnership.
• Joint venture does not follow the accounting concept 'going concern'.
• The members of joint venture are known as co-ventures.
• Joint venture is a temporary business activity.
• In joint venture, profits and losses are shared in agreed proportion. If there is
no agreement regarding the distribution of profit, they will share profit
equally.
• Joint venture is an agreement for polling of capital and business abilities to
be employed in some profitable venture.

11. ADVANTAGES
• Accessing additional financial resources:
• Sharing the economic risk with co-venturer
• Widening economic scope fast
• Tapping newer methods, technology, and approach you do not have
• Building relationship with vital contacts

12. DISADVANTAGES
• Shared profit – Since you share assets, you also share the profit.
• Diminished control over some important matters - Operational control and
decision making are sometimes compromised in joint ventures.
• Undesired outcome of the quality of the product or project.
• Uncontrolled or unmonitored increase in the operating cost

13. DIFFERENCE BETWEEN MERGER, ACQUISITION &
JOINT VENTURE
• Merger = two companies come together "permanently" for
mutual gains or to reduce competition
• Acquisition = one company buys another company which may
or may not be doing well
• Takeover = same like "acquisition", but generally a company
buys another company which is not doing well or has gone
bankrupt.
• Joint Venture = two companies come together "temporarily" for
mutual gains for a particular project/job. after the project/job is
completed the joint venture is dissolved.

14. TOP 11 M&A DEALS…

15. • January 30, 2007
• Largest Indian take-
over
• After the deal TATA’S
became the 5th largest
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.
1. Tata Steel-Corus: $12.2 billion

16. 2. VODAFONE-HUTCHISON
ESSAR: $11.1 BILLION
• TELECOM sector
• 11th February 2007
• 2nd largest
takeover deal
• 67 % stake holding
in hutch
Image: The then CEO of Vodafone
Arun Sarin visits Hutchison
Telecommunications head office in
Mumbai.

17. 3. HINDALCO-NOVELIS: $6
BILLION
• June 2008
• Aluminium and
copper sector
• Hindalco Acquired
Novelis
 Hindalco entered
the Fortune-500
listing of world's
largest companies
by sales revenues
Image: Kumar Mangalam Birla
(center), chairman of Aditya Birla
Group.

18. 4. RANBAXY-DAIICHI SANKYO: $4.5
B
• Pharmaceuticals sector
• June 2008
• Acquisition deal
• largest-ever deal in the
Indian pharma industry
• Daiichi Sankyo
acquired the majority
stake of more than 50
% in Ranbaxy for Rs
15,000 crore
• 15th biggest drugmaker
Image: Malvinder Singh (left), ex-
CEO of Ranbaxy, and Takashi
Shoda, president and CEO of
Daiichi Sankyo.

19. 5. ONGC-IMPERIAL
ENERGY:$2.8BILLION
• January 2009
• Acquisition deal
• Imperial energy is a
biggest chinese co.
• ONGC paid 880 per
share to the
shareholders of
imperial energy
• ONGC wanted to tap
the siberian market
Image: Imperial Oil
CEO Bruce March.

20. 6. NTT DOCOMO-TATA TELE: $2.7
B
• November 2008
• Telecom sector
• Acquisition deal
• Japanese telecom
giant NTT DoCoMo
acquired 26 per cent
equity stake in Tata
Teleservices for about
Rs 13,070 cr.
Image: A man walks past a signboard
of Japan's biggest mobile phone
operator NTT Docomo Inc. in Tokyo.

21. 7. HDFC BANK-CENTURION
BANK OF PUNJAB: $2.4 BILLION
• February, 2008
• Banking sector
• Acquisition deal
• CBoP shareholders
got one share of
HDFC Bank for every
29 shares held by
them.
• 9,510 crore
Image: Rana Talwar (rear) Centurion
Bank of Punjab chairman, Deepak
Parekh, HDFC Bank chairman.

22. • March 2008 (just a
year after acquiring
Corus)
• Automobile sector
• Acquisition deal
• Gave tuff
competition to M&M
after signing the deal
with ford
Image: A Union flag flies behind a
Jaguar car emblem outside a
dealership in Manchester, England.
8. Tata Motors-Jaguar Land Rover: $2.3 billion

23. 9. STERLITE-ASARCO: $1.8
BILLION
• May 2008
• Acquisition deal
• Sector copper
Image: Vedanta Group chairman
Anil Agarwal.

24. 10. SUZLON-REPOWER: $1.7
BILLION
• May 2007
• Acquisition deal
• Energy sector
• Suzlon is now the
largest wind
turbine maker in
Asia
• 5th largest in the
world.
Image: Tulsi Tanti, chairman &
M.D of Suzlon Energy Ltd.

25. 11. RIL-RPL MERGER: $1.68
BILLION
• March 2009
• Merger deal
• amalgamation of
its subsidiary
Reliance Petroleum
with the parent
company Reliance
industries ltd.
• Rs 8,500 crore
• RIL-RPL merger
swap ratio was at
16:1
Image: Reliance Industries'
chairman Mukesh Ambani.