Top Mergers & Acquisitions in Indian Subcontinent By: Rahul Sharma (94) Parth Belani (73)
Mahindra and Mahindra & SsangYongOn Feb 2011,Mahindra acquired a 70% controlling stake in SsangYong, the South Korean auto maker for US $ 463 million. (Anand Mahindra, MD) Automobile,Defense,Energy,Agribusiness,Retail,Real Estate,Financial Services,Farm Equipments etc • Commercial Vehicles (Alfa,Maxximo,Tourister Buses,Genio,Gio etc) • Personal Vehicles (Bolero,Scorpio,Thar,Xylo,Verito,Quanto,REVA etc) (Lee Yoo-il,CEO) • Korando,Actyon,Rexton II,Kyron,Musso,Korando,Chairman W,Chairman H,Transtar
Some Key AspectsStrong R & D workforce of Ssangyong.Strong Dealer Network of Ssangyong i.e 98 countries around the Globe.Ssangyong has an edge over premium segment vehicles.A way to enter Chinese Auto Market owing to huge potential.
GVK & Hancock Coal Infrastructure major GVK Power, part of the GVK Group, on 16/Sep/2011,acquired Australias Hancock Coal for $1.26 billion, in one of the largest overseas acquisitions by an Indian infrastructure entity. (GVK Reddy,MD GVK Group) Energy,Airports,Transportation,Hospitality,Life Sciences, Resources etc. • Energy (CCPP, Coal Based Thermal Power Plants, Hydro ) (Georgina Hope Rinehart,Chairman Hancock) Hancock Prospecting Pty Ltd (HPPL) is a diversified Australian energy and resources company, with a strong record of pioneering the economic development of regional Australia. • Founded by Lang Hancock over 50 years ago.
Some Key Aspects Deal included acquiring majority holding in coal resources and railway line and port infrastructure projects of Hancock Coal. Long term coal supply contracts for the purchase of up to 20 million tonnes every year. Capacity to support 7500MW of power generation w.r.t GVK. The Hancock coal project consists of 7.9 billion tonnes reserves. First phase of production to start in 2014 and has been envisaged to produce 30MT of high quality coal.
iGATE & PatniOn 12 May,2011 iGate acquired 82.5 % stake in Patni Computers. (Phaneesh Murthy, CEO) American multinational corporation which provides information technology, consulting and business process outsourcing (BPO) services. • Headquarted at Fremont, California USA. • Apart from India, its presence is in United States of America, Australia, Belgium, Canada, France, Mexico, Malaysia, United Kingdom, Germany, Japan, Switzerland, South Africa, Sweden (Jai S Pathak,Chairman) Services include application development, application maintenance and support, packaged software implementation, infrastructure management services, product engineering services, business process outsourcing, and quality assurance services.
Some Key Aspects• Acquisition was made with a debt of $770 million and a convertible preferential stock issue amounting to $330 million.• To acquire Patni,iGate bought the entire 45.6 per cent shareholdings of the promoters — Patni brothers Narendra, Gajendra and Ashok, and 17.4 per cent held by private equity firm General Atlantic at a price of Rs 503.50 per share.• Combined company will be a key player across several verticals including banking & financial services, insurance, manufacturing, retail, and media & entertainment.
JSPL & CIC Energy On Sep 5th,2012-Jindal BVI Limited (JBVI), a subsidiary of steel major Jindal Steel and Power Limited (JSPL) has acquired Canadian listed coal Company CIC Energy Corp. (CIC) for about US$115 million (over Rs 600 crore) by way of a merger of JBVI and CIC Naveen Jindal ,MD -It is a part of over US $ 17 billion diversified O. P. Jindal Group and presence in Australia, Asia, Africa etc. -Steel, Mining, Power Generation and Infrastructure Warren Newfield - CEO and Chairman • Coal Based Energy Company listed on Toronto & Botswana Stock Exchange.CIC Energy Corp. is engaged in the advancement of the Mmamabula Energy Complex at the Mmamabula Coal Field in Botswana, Africa
Some Key Aspects Pursuant to the merger of JBVI and CIC, JBVI will make cash payment of C$ 2 per share to the current CIC shareholders aggregating to C$ 116 Mn (approx) Deal will provide JSPL access to CIC’s high quality thermal coal in Greater Mmamabula coalfields in SE Botswana which is estimated to be in excess of 6 billion tonnes (approx). It will provide JSPL the opportunity to tap the highly lucrative and power deficient South African Development Community (SADC) countries and given the huge resource, will also provide an opportunity to set up a Coal to Hydrocarbons project.
FORTIS & Quality Healthcare• On 11 Oct,2010 Fortis Global Healthcare Holdings Pte Ltd acquired healthcare businesses of Hong Kong-based Quality Healthcare Asia Ltd (QHA), excluding QHA’s elderly healthcare business, for HK$1.52 Bn ($193 Mn). Malvinder Mohan Singh, Chairman • Fortis Healthcare Limited is a leading, integrated healthcare delivery provider in the Pan Asia- Pacific region. The healthcare verticals of the company span diagnostics, primary care, day care specialty and hospitals, with an asset base in 10 countries like Australia, Canada, Dubai, Hong Kong, India, Mauritius, New Zealand, Singapore, Sri Lanka and Vietnam Paul Li,CEO Quality HealthCare Medical Services Limited was founded in 1998 • Life Style Enhancement,Dental Medicine,Eye Care,Skin Care,Physiotherapy,Dietetics etc
Some Key Aspects Fortis to increase it healthcare business Pan Asia region. Fortis to create an integrated healthcare business with high quality medical professionals and infrastructure. Fortis Global Healthcare acquired five subsidiaries of QHA - Quality HeatlhCare, Quality HealthCare Medical Holdings, Quality HealthCare Medical Services, Quality HealthCare Services andPortex.
The Sarkari Company that Acquired an MNC GSPC GGCL• Gujarat State Petroleum • Gujarat Gas Company Ltd Corporation • One of India’s leading natural• Oil and gas exploration gas distribution companies• Indias only State • Established in 1980, and Government-owned oil and headquartered in Ahmedabad gas company • Operates primarily in Gujarat• Incorporated in 1979, • The BG Group acquired a headquartered in Ahmedabad majority stake in the company in 1997.
• BG’s 65.12% stake for Rs 2460 crore GSPC• India’s largest City Gas E&P Distribution (CGD) company GSPL• Greater than Indraprastha Gas Transmission and Mahavitaran Gas put together GGCL• 8 mmscmd gas to over 7 lakh Distribution customers
Cash surplus child, Debt-burdened father Suzlon RePower• World’s 5th Largest wind • Germany based energy equipment • Founded in 2001 manufacturer • Controlling stake acquired in• Established in 1995 2007 at US $ 1.6 billion• Headquartered in Pune • Remaining 5% stake acquired• Installed capacity of 17 GW in in October 2011 32 countries• 8 MW installed capacity in India
• The strategy was – – To increase international presence – Suzlon to work in developing countries – Repower to concentrate in developed countries• What went wrong Losses because of – Rising interest cost (high debt) – Rising depreciation costs
Vedanta Resources Cairn India• Founded : 1976, in Bombay • Founded: 2007• Global mines and metals • Based in Gurgaon company • Business: Oil and gas E&P• Listed on London stock • Was part of Cairn Energy Plc. exchange• Main products: copper, zinc aluminum, lead, iron ore
The deal• Vedanta Resources Plc. initially acquired 58.5% of Cairn India for a total consideration of $8.67 billion in August 2010• Later Vedanta acquired an additional 18.5% on the open market including a 10.4% stake from for $1.5 billion.• Why? – To consolidate already strong presence in India – To diversify in the field of Oil and Gas• The ONGC controversy
Mar12 Mar11 Mar10 Mar09 Dec07 EBIT* 12.69 -26.48 -18.5 -9.66 -49.51 PAT* 43.96 -212.67 -68.95 54.24 -78.82 EPS 0.23 -1.12 -0.3 0.23 -0.4* Billion Rupees• Q1 this year – 40% increase in the net profit to Rs 3825.7 crores – Income rose 20% to Rs 4440 crores – Net forex gain of Rs 866 Crores
ADAG’s Backward IntegrationR-Power RNRL• Founded: 2007 • Founded: 2000• Business: Develop, • Business: sourcing, supply construct and operate and transportation of gas, power projects coal and liquid fuels
The Deal• In July 2010• 100% stake at Rs 50000 crores• To accelerate R-Power’s plans to set up a 10,000-Mw gas-based power plants.• Diversify from a pure thermal power generation company to quickly venture into other value chains of energy business.• To make R-Power a domestic power company with one of the largest coal reserves. It has about four billion tonnes of coal reserves in Indonesia and India• Share swap ratio of 4:1 and the controvercy
• JV In February 2011 • BP’s 30% stake in JV for an initial payment of $7.2 billion • 21 out of 23 blocks in KG-D6 and NEC-25• RIL to access BP’s • BP to get easy entry in the expertise in E & P of oil Indian market and gas from deep below • With minimum risk seabed because of partnership• Technology to arrest the with RIL sharp fall in production• Fuming Oil ministry and DGH• The deal to partially offset RIL’s expected $10 billion investment in US shale gas
The deal• JV In February 2011• BP’s 30% stake in JV for an initial payment of $7.2 billion• 21 out of 23 blocks in KG-D6 and NEC-25
BenefitsTo RIL To BP• RIL to access BP’s expertise • BP to get easy entry in the in E & P of oil and gas from Indian market deep below seabed • With minimum risk because• Technology to arrest the of partnership with RIL sharp fall in production• Fuming Oil ministry and DGH• The deal to partially offset RIL’s expected $10 billion investment in US shale gas But all is not well today