INTERNATIONAL TRADE AND BUSINESS LAWS
MERGERS & ACQUSITIONS

Presented by Jayakar Bathula
LL.M-ITBL.
Mail- b.jayakar@nalsa...
CHAPTERIZATION
MODULE-I
1.1. INTRODUCTION
1.2. MEANING OF MERGERS & ACQUISITIONS AND AMOLGAMATIONS
1.3. PHYLOSOPHY OF MERG...
MODULE-III
3.1. MERGER LAWS IN EUROPEAN UNION
3.1.1. MERGER CONTROL IN EUROPEAN UNION
3.2. MERGER LAWS IN UNITED KINGDOM
3...
MODULE-V
5.1. INDIA INTERNATIONAL MERGERS
5.2. INDIAN CONTRIBUTION TO INTERNATIONAL MERGERS
5.3. INDIA LOOK FORWARD
5.4. I...
“MERGER”-Meaning

Merger is defined as combination of two or more companies in to a single
company where one survives and ...
“MERGER”

They end up the word “MERGER” may be taken as an abbreviation which
means:M-Mixing of
E-Entities
R-Recourses for...
“ACQUISITION”

ACQUISITION: Acquisition in general sense is acquiring the ownership in the
property, acquisition is the pu...
“AMOLGAMATION”
AMOLGAMATION: Halabury’s laws of England describe amalgamation as a
blending of two or more existing undert...
“PHILOSOPHICAL APPROACH”

Value is always going to have a relationship to price,
Not just for the acquisition by the numbe...
Cont…

i) Assess and evaluate the industry dynamics.
ii) Refine strategy in light of industry drivers.
iii) Identifying th...
PROS &CONS

PROS:Net work economics
Research and Development
Other economics of Scale
Avoid Duplication
Regulation of Mono...
DISADVANTAGES OF MERGERS &ACQUISITIONS

Legal expenses
Short term opportunity cost
Cost of take over
Potential Devaluation...
CROSS BORDER MERGERS: THE ROLE OF GATT AND GATS
Massmart-South Africa:Botswana, Ghana, Malawi, Mauritius (closed January 2...
ON THE GROUNDS
GATT Article-III-Non Discrimination:-A rule that internal measures must not
give less favorable treatment t...
CROSS BORDER MERGERS: THE ROLE OF WTO-PREMERGER OFFICE
(International Merger Control Regime)

McDonnell Douglas acquisitio...
MINIMUM STANDARDS UNDER: WTO-PREMERGER OFFICE

AUSTRIA:
At least AS3.5 billion (approximately $270 million) and the annual...
DISADVANTAGES OF WTO MERGER CONTROL REGIME

It is that such transactions would have to be notified to and reviewed by the
...
MERGER LAWS IN EUROPEAN UNION
European Union merger law is a part of the European Union Law, part
of competition law and i...
ECMR-Cont…

Art. 2 of the ECMR says Firms who are engaged must be able to show that their
action nevertheless results in “...
MERGER CONTROL IN EU

Community dimension should not fall within the jurisdiction of the European
Commission.
Which undert...
MERGER LAWS IN UK:OFFICE OF FAIR TRADING

Fair Trading Act-1973 (FTA).
The Enterprise Act-2002 (EA).
Under section 22(3)(c...
GREATER TRANSPARENCY

In various ways, both directly and indirectly, the EA increased the transparency
and openness of mer...
MERGER LAWS IN U.S.A:

In 1890 the Antitrust law enacted to control the concentration of economic and
Industrial power.
Pu...
Cont…
Sherman Act-1890 broadly states that every contract, combination, or
conspiracy that restrains trade or commerce amo...
FEDERAL LAWS IN U.S.A

Section 13(d) of the Exchange Act, requiring the disclosure of an acquisition of
a class of voting ...
STATE LAWS IN U.S.A

General corporate law,
Anti-takeover laws,
Control share acquisition statutes,
Business combination o...
MERGER & ACQUSITION LAWS IN INDIA
The Companies Act-1956,Sec-390 to 394 are merger provisions govern a
merger of two or mo...
COMPANIES ACT-2013

The acceptance of a scheme or Merger or Amalgamation by the Shareholders in
Sec-391(2) of the 1956-Act...
Cont…
Sub clause 5 of Sec-230 of the New Act States companies to send a notice of
meeting to approve a merger or amalgamat...
SEBI REGULATIONS:

The Securities and Exchange Board of India (the “SEBI”) is the nodal authority
regulating entities that...
SEBI Cont…

Acquirer to make disclosure of its aggregate shareholding in the target company
if the acquirer acquires share...
THE ROLE OF FICCI…

The Competition act-2002 amended as Regulating of Mergers and Acquisitions
Sec-5 Deals with Combinatio...
MERGERS & ACQUTIONS IN INTERNATIONAL IT- B.P.O SECTOR

The growth, pushing IT-BPO providers toward focused M&A strategies ...
Cont…

In the year 2005 two Indian listed companies, Tata Consultancy Limited (TCS)
and Tata InfoTech Limited (TIL) 14 ini...
MERGERS &ACQUISITIONS IN INTERNATIONAL BANKING

Banking Mergers based on the five principles criteria:
(a) Reputation of t...
Cont…

The European Directives are based on standards developed by the Basel
Committee on Banking Supervision (an Internat...
INTERNATIONAL BANK ACQUISITIONS

BANK
Merrill Lynch.
Bear Streans
Country wide Financial
Alliance & Leicester
Catholic Bui...
MERGERS & ACQUISITIONS IN
INTERNATIONAL TELICOMMUNICATIONS

Bell Atlantic/NYNEX:The original seven Baby Bells that began o...
Cont…

GTE was one of the world's largest telecommunications company with $25
billion Revenue in1997, 35 billion Customers...
Cont..

The MFJ-Long Distance Discount Service (LDDS) merged with Advanced
Telecommunications Corp In December 1992.
In 19...
MEGERS AND ACQUISITIONS IN AVIATION SECTOR

AIR FRANCE AND KLM:
Air France is French based Airline with significant Intern...
Cont…

The combination allowed KLM customers to have access to more than 90 new
destinations while Air France customers wi...
MERGER OF UNITED AIRLINES WITH U.S AIRWAYS
The two airlines operates separate websites and reservation systems. passengers...
Cont…

AIR BERLIN:2006 - Acquired dba
2007 - Acquired LTU
2009 - Acquired LGW
2009 - Acquired Belair
2011 - Acquired flyNi...
AVIATION MERGERS IN INDIA

The Jet-Sahara Mega Merger-on On 20th April , 2007.
The Air Deccan-Kingfisher Merger-May, 2007 ...
MERGERS AND ACQUISITIONS IN SPACE ACTIVITIES

In the 1960s, American manufacturers went through a first wave of mergers in...
Cont…

In May 2000 Matra Marconi Space and the space divisions of Dasa were
combined in a joint venture under the name Ast...
Cont…
Alcatel Alenia Space Alcatel :67%, Finmeccanica 33%, Head quartered in
France this entity’s activities focus on the…...
Any clarifications Please…….?

By

Jayakar Bathula
LL.M-ITBL
Mail- b.jayakar@nalsar.ac.in
Thank you….
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International Mergers and Acquisitions in Emerging Sectors

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Thanking you
By Jayakar Bathula, LL.M-2nd Year, NALSAR University of Law-HYDERABAD.

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International Mergers and Acquisitions in Emerging Sectors

  1. 1. INTERNATIONAL TRADE AND BUSINESS LAWS MERGERS & ACQUSITIONS Presented by Jayakar Bathula LL.M-ITBL. Mail- b.jayakar@nalsar.ac.in NALSAR University of Law-HYD
  2. 2. CHAPTERIZATION MODULE-I 1.1. INTRODUCTION 1.2. MEANING OF MERGERS & ACQUISITIONS AND AMOLGAMATIONS 1.3. PHYLOSOPHY OF MERGERS 1.4. EVOLUTIONS OF INTERNATIONAL TRADE UNIONS 1.5. PROS AND CONS OF MEGERS MODULE-II 2.1. CROSS BORDER MERGERS: THE ROLE OF GATT AND GATS 2.2. CROSS BORDER MERGERS: THE ROLE OF WTO 2.3. COSTS OF OVER LAPING MERGER CONTROL JURISDICTION 2.4. FUNDAMENTAL OBJECTIVES OF- WTO: PREMERGER CONTROLL REGIME 2.5. DISADVANTAGES OF-WTO: PREMERGER CONTROLL REGIM
  3. 3. MODULE-III 3.1. MERGER LAWS IN EUROPEAN UNION 3.1.1. MERGER CONTROL IN EUROPEAN UNION 3.2. MERGER LAWS IN UNITED KINGDOM 3.2.1. GREATER TRANSPERENCY 3.3. MERGER LAWS IN U.S.A 3.3.1. FEDERAL LAWS AND STATE LAWS 3.4. MERGERS& ACQUISITIONS LAWS IN INDI 3.4.1. ROLE OF FICCI IN MERGERS AND ACQUISITIONS MODULE-IV 4.1. MERGERS AND ACQUISITIONS IN INTERNATIONAL B.P.O-SECTOR 4.2. MERGERS AND ACQUISITION IN INTERNATIONAL BANKING SECTOR 4.3. M &A IN INTERNATIONAL TELECOMMUNICATIONS 4.4. MERGERS AND ACQUISITIONS IN AVIATION SECTOR 4.5. MERGERS AND ACQUISITIONS IN SPACE ACTIVITIES
  4. 4. MODULE-V 5.1. INDIA INTERNATIONAL MERGERS 5.2. INDIAN CONTRIBUTION TO INTERNATIONAL MERGERS 5.3. INDIA LOOK FORWARD 5.4. INDIA A GLOBAL APPROACH 5.5. CONCLUSION ..... ….
  5. 5. “MERGER”-Meaning Merger is defined as combination of two or more companies in to a single company where one survives and the other lose their corporate existence. The survivor acquirers the assets as well as liabilities of the merged company or companies. According to Oxford dictionary the expression merger means combining of two commercial companies in to one and merging of two or more business concerns in to one-respectively. Merger is just one type of Acquisition. One company can acquires other company any other several ways including purchasing some or all of the company’s assets or buying up its outstanding share stock.
  6. 6. “MERGER” They end up the word “MERGER” may be taken as an abbreviation which means:M-Mixing of E-Entities R-Recourses for G- Growth E-Enrichment and R-Renovation.
  7. 7. “ACQUISITION” ACQUISITION: Acquisition in general sense is acquiring the ownership in the property, acquisition is the purchase by one company of controlling interests in the share capital of another existing company, it means even after takeover there is great changes in management of both the firms retain there is separate legal identity. THE FIVE RULES OF SUCCESSFUL ACQUISITION: i, Contribute to the business : Technology, Services, ii) Common core of unity: Market iii) Temperamental fit: People in the acquiring company, respect the product, the market and the customers of the company they acquire. iv) Within a year or so the acquiring company must be able to provide top management for the company it acquires. v) With in the first year of the acquisition, it is important that a large number of people in management group of the both companies receive substantial promotion across the line that is from one of the former companies to the other.
  8. 8. “AMOLGAMATION” AMOLGAMATION: Halabury’s laws of England describe amalgamation as a blending of two or more existing undertakings in to one undertaking, the shareholders in the company which is to carry on the blended undertaking. ExHindustan Computers Ltd, Hindustan Instruments Ltd, Indian Software Company Ltd and Indian Reprographics Ltd in to an entirely new company called HCL Ltd.
  9. 9. “PHILOSOPHICAL APPROACH” Value is always going to have a relationship to price, Not just for the acquisition by the numbers, Something important the current management, Bring resources, Capital, Regulatory expertise, Marketing power, Investments, Creating enterprise value, Proprietary process for creating and capturing of market value, Enter in to the new market,
  10. 10. Cont… i) Assess and evaluate the industry dynamics. ii) Refine strategy in light of industry drivers. iii) Identifying the characteristics of concentration risk. iv) To evaluate potential opportunities. v) Market utilizing company information . vi) Strategic planning process growth plan. vii) Identify dashboard of business metrics to measure performance. vii) Initiate focused return on invested capital planning. ix) Management evolution the right managers in the right roles. x) Advise on critical areas of diligence to perform in advance . xi) Monitor and advise company performance on a quarterly board level.
  11. 11. PROS &CONS PROS:Net work economics Research and Development Other economics of Scale Avoid Duplication Regulation of Monopoly Ex- T-Mobile merged with Orange in the UK. CONS:Higher price Less choice Job losses Diseconomies of Scale Ex-Tesco and Sainsbury’s –Super markets in U.S.A.
  12. 12. DISADVANTAGES OF MERGERS &ACQUISITIONS Legal expenses Short term opportunity cost Cost of take over Potential Devaluation of Equity Intangible costs SHARE HOLDER DRAW BACKS: Increase in cost to consumers Decreased corporate performance and or services Potentially lowered industry innovation Suppression of competing businesses Decline in equity pricing and investment value
  13. 13. CROSS BORDER MERGERS: THE ROLE OF GATT AND GATS Massmart-South Africa:Botswana, Ghana, Malawi, Mauritius (closed January 2012), Mozambique, Namibia, Nigeria, Tanzania, Uganda and Zambia. Wall mart-USA :18 January 2011 Announcement of acquire 51% share of Massmart for R148(Rand) cash . The Competition Commission initially recommended that the merger be approved unconditionally. Recommendation was challenged at the Competition Tribunal by various labour unions.( Congress of South African Trade Unions, South African Commercial, Catering and Allied Workers Union) The unions appealed against this ruling before the Competition Appeal Court . The tribunal eventually approved the merger on 31 May 2011, subject to certain conditions.
  14. 14. ON THE GROUNDS GATT Article-III-Non Discrimination:-A rule that internal measures must not give less favorable treatment to “like” foreign products, will achieve this antiprotection goal if “like [foreign] products” is defined to mean competitive foreign products. TRIMs Article-2 -Quantitative Restrictions:-Desiring to promote the expansion and progressive liberalization of world trade and to facilitate investment across international frontiers so as to increase the economic growth of all trading partners, particularly developing country Members, while ensuring free competition. These provisions deal within goods while GATT Article I-National Treatment, XVII refers the area of trade and services in the strategic regional mergers. Section 12A of the South African Competition Act no of-1998-Public interest. And the Merger has been justified by the Sub Section 3 of South African Competition Act-1998.
  15. 15. CROSS BORDER MERGERS: THE ROLE OF WTO-PREMERGER OFFICE (International Merger Control Regime) McDonnell Douglas acquisition by Boeing which created significant political conflict-1998. Globalization and Overlapping Merger Control Jurisdiction. The controversy between the United States and the European Union. The potential public and private benefits of establishing an International Merger Control Regime. Many countries:Latin America. Eastern Europe. U.K. European Commission. Southeast Asia. The People's Republic of China.
  16. 16. MINIMUM STANDARDS UNDER: WTO-PREMERGER OFFICE AUSTRIA: At least AS3.5 billion (approximately $270 million) and the annual sales, two of the undertakings concerned at least AS5 million (Appro-$385,000). BELGIUM: At least EUR 15 million or and at least two of the firms have EUR40 million in annual sales. IRELAND:IR10 million (approximately $12 million) or at least two parties each have sales of IR20 million (approximately $24 million). CANADA, MEXICO, SOUTH KOREA,
  17. 17. DISADVANTAGES OF WTO MERGER CONTROL REGIME It is that such transactions would have to be notified to and reviewed by the respective national regulators. The consummation of the transaction would be further delayed because the parties would have to respect the applicable waiting periods. The merger control regime proposed here would be voluntary. It would be the unilateral decision of the parties to notify their transaction to the WTO Premerger Office. Potential shortcoming of this proposal concerns the difficulty in defining the standard used by the WTO Premerger Office in reviewing transactions. SUBSTANTIAL STANDARDS:I, Regime prohibit the creation or strengthening of a dominant position. II, Regimes which prohibit the substantial competition. III, Regime consider both the effect on competition and other policy (1999); concerns.
  18. 18. MERGER LAWS IN EUROPEAN UNION European Union merger law is a part of the European Union Law, part of competition law and it is designed to ensure that firms do not acquire such a degree of market power on the free market. Mergers and acquisitions are regulated by competition laws, European Union has been enacted under Merger Regulation 139/2004, known as the "ECMR" . Annual turnover of the combined business exceeds a worldwide turnover of over EUR 5000 million and Community-wide turnover of over EUR 250 million must notify and be examined by the European Commission. Art. 3(1), Regulation 139/2004, European Community Merger Regulation states …….. “To avoid the establishment of market structures which may create or strengthen a dominant position. Ex-GenCorp Ltd v. Commission .
  19. 19. ECMR-Cont… Art. 2 of the ECMR says Firms who are engaged must be able to show that their action nevertheless results in “technical and economic progress”. Articles 3(2), 6(2), 13(3), 20(1) and 20(1a) of Regulation (EC) No 802/2004 require notifications, reasoned submissions, comments on the Commission's objections, commitments offered by the undertakings concerned and the form to be submitted to the Commissioning the format and with the number of copies specified by the Commission in the Official Journal of the European Union. Article 23(4) of Regulation (EC) No 802/2004 requires that documents or any additional copies of documents submitted to the Commission electronically should be submitted in the format specified by the Commission in the Official Journal of the European Union.
  20. 20. MERGER CONTROL IN EU Community dimension should not fall within the jurisdiction of the European Commission. Which undertakings do not meet the EU Merger Regulation criteria the Commission has exclusive jurisdiction over "concentrations" with a "Community dimension. An undertaking can acquire control over another undertaking when it holds 50 per cent or less of the other's voting shares. Joint ventures which are not in full function are subject to Articles 101 and 102 of the Treaty on The Functioning of the European Union (TFEU) (formerly Articles 81 and 82 of the EC) and possibly also to national merger control laws. Under Article 9, a merger which has been notified to the Commission under the EU Merger Regulation can be referred back to a national competition authority, at its request, where either: The merger threatens to affect competition significantly within a market in the Member State and the market concerned presents all the characteristics of a distinct market.
  21. 21. MERGER LAWS IN UK:OFFICE OF FAIR TRADING Fair Trading Act-1973 (FTA). The Enterprise Act-2002 (EA). Under section 22(3)(c) of the EA-Act, the OFT can refer a completed relevant merger to review in Stack Exchange. Section 73 of the Act the EA-Act, OFT finds that it is under a duty to refer a merger to the Competition Commission. Section 58 of the Act The public interest considerations that the Secretary of State may take into account are set out. In October 2008 the Secretary of State added by Order the maintenance of the stability of the UK financial system. The Secretary of State is also able to intervene in special public interest cases where the standard jurisdictional thresholds relating to share of supply and turnover is not satisfied.
  22. 22. GREATER TRANSPARENCY In various ways, both directly and indirectly, the EA increased the transparency and openness of merger reviews. The merger entities required the Office of Free Trade (OFT) permission to publish decisions and settings. The merger parties has realistic responsible to appeal and a valuable source of authority for businesses contemplating future transactions. In addition, the new law required both the OFT and the CC to publish detailed statements of guidance on their procedures and substantive rules.
  23. 23. MERGER LAWS IN U.S.A: In 1890 the Antitrust law enacted to control the concentration of economic and Industrial power. Purpose of the antitrust legislation: i)The core values of freedom, ii) Individual choice, iii) distributive justice, iv) And pluralism, Consequently small businesses and entrepreneurs were favored and protected against the “encroaching economic leverage” of larger competitors. Antitrust enforcement agencies in the U.S. are less likely to view mergers and acquisitions more anticompetitive than their counterparts in other parts of the world.
  24. 24. Cont… Sherman Act-1890 broadly states that every contract, combination, or conspiracy that restrains trade or commerce among the states, or with foreign nations, is illegal and that every person who monopolizes, or attempts to monopolize is guilty of a felony. Section 7 of the Clayton Act-1950 is the primary legislation in the U.S. governing mergers and acquisitions. The Clayton Act applies to both mergers with immediate anticompetitive effects and those that have a future probability of substantially reducing competition. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”), the primary administrative agencies of Mergers and Acquisitions in U.S. Much of the merger enforcement activity in the U.S. is composed of premerger approvals and notification requirements. In 1976 the U.S congress Improved the Antitrust Act to subject mergers, having an effect in the U.S. the purpose of this Act is to reduce the costs associated with having to reverse a merger or to seek remedies after a merger is completed.
  25. 25. FEDERAL LAWS IN U.S.A Section 13(d) of the Exchange Act, requiring the disclosure of an acquisition of a class of voting equity in a public company is 5%. Regulations 14A and 14C of the Exchange Act, governing solicitations of shareholders in proxy contests and consent solicitations for the control of a public company's board of directors. Sections 14(d) and (e) of the Exchange Act, governing tender and exchange offers. Rule 13e-3 of the Exchange Act, regulating public to private transactions in which existing shareholders or affiliates of a company squeeze out its public shareholders. Antitrust Improvements Act of 1976, as amended Acquisitions of US companies must also comply with the anti-trust filing and waiting period requirements .
  26. 26. STATE LAWS IN U.S.A General corporate law, Anti-takeover laws, Control share acquisition statutes, Business combination or moratorium statutes, Fair price statutes, Constituency statutes, Endorsements of defensive action, The bidder. The bidder's affiliates, officers or directors. Rule 13h-1, Exchange Act-2011 States any person can acquires exchange-listed securities that equal or exceed 2 million shares the acquisition of shares is part of a tender offer or merger. Cash tender offers are subject to certain requirements,(sections 14(d) and (e), Exchange Act).
  27. 27. MERGER & ACQUSITION LAWS IN INDIA The Companies Act-1956,Sec-390 to 394 are merger provisions govern a merger of two or more companies under Indian law. Since a merger essentially involves an arrangement between the merging companies and their respective shareholders, each of the companies proposing to merge with the other(s) must make an application to the Company Court having jurisdiction over such company for calling meetings of its respective shareholders and/or creditors. The majority in number representing 3/4th in value of the creditors/shareholders present and voting at such meeting agrees to the merger, then the merger, if sanctioned by the Court. The order of the Court approving a merger does not take effect until a certified copy of the same is filed by the company with the Registrar of Companies. Section 394 (4) (b) makes it clear A ‘transferor company’ would mean any corporate, whether or not a company registered under the Companies Act implying that a foreign company could also be a transferor, and a ‘transferee company’ would only mean an Indian company.
  28. 28. COMPANIES ACT-2013 The acceptance of a scheme or Merger or Amalgamation by the Shareholders in Sec-391(2) of the 1956-Act, is still precondition in the interest of the Nation Under the 1956 Act the Courts were endowed with the power to sanction a scheme of Merger or Amalgamation….. According to New Act-2013, Powers has given to the High Courts would be invested with the National Company Law Tribunal (NCLT), it helps in shortening of time to obtain Sanctions. Under the 1956 Act the Shareholders or Creditors to present in person or in proxy for approving the Scheme of Merger…. According to New Act-2013, goes a step further provides a mode of voting, Sub Clause (4) of Sec-230 states adoption of a scheme under Chapter XV by postal.
  29. 29. Cont… Sub clause 5 of Sec-230 of the New Act States companies to send a notice of meeting to approve a merger or amalgamation to varies Government Authorities such as… Central Government, The Income Tax Deportment, Registrar of Companies, SEBI, RBI, Respective Stock Exchange, Official Liquidator, The Competition Commission…. With in the Period of 30Days. Sec-234 of 2013 Act is the license to Merge in to Foreign Companies. Foreign Company may Merge in to Indian Company, Indian Company may merge in to Foreign Company. Sec-233 of the 2013 Act State that Small Companies may not go to strickt procedure, and may be completed on the members approval.
  30. 30. SEBI REGULATIONS: The Securities and Exchange Board of India (the “SEBI”) is the nodal authority regulating entities that are listed on stock exchanges in India. Substantial Acquisition of Shares and Takeovers Regulations, 1997 has been repealed by the Securities and Exchange Board of India, on October 23, 2011. Regulation 13 of the Takeover Code provides for the timing of making a public announce-ment for different modes of acquisition of shares of a target company. Under Regulation 13(2) of the Takeover Code, an acquirer is required to make a public announcement on the date of first such acquisition giving the details of the proposed subsequent acquisition. Regulation 23 says an open offer can-not be withdrawn once the public announce-ment is made. Regulation 23(1) (c) of the Takeover Code an acquirer shall not be permitted to withdraw an open offer made pursuant to preferential issue of shares even if the proposed acquisition through a prefer-ential issue is unsuccessful.
  31. 31. SEBI Cont… Acquirer to make disclosure of its aggregate shareholding in the target company if the acquirer acquires shares or voting rights which taken together with shares or voting rights, if any, held by him and by persons acting in concert (“PAC”) with him in such target company, aggregate to five per cent or more of the shares of such target company. Regulation 29(2)18 provides that an acquirer, who together with Person Acting Concert, holds shares or voting rights entitling them to five per cent or more of the shares or voting rights in a target company must disclose the number of shares or voting rights held and change in shareholding or voting rights, even if such change results in shareholding falling below five per cent. Section 211(3C) of the Companies Act, 1956 has to be compulsorily filed with the stock exchange and auditors’ certificate. Issue of Capital and Disclosure Requirement Regulations-the acquisition of an Indian listed company involves the issue of new equity shares or securities under the provisions of Chapter VII.
  32. 32. THE ROLE OF FICCI… The Competition act-2002 amended as Regulating of Mergers and Acquisitions Sec-5 Deals with Combination of two or more Entities. Sec-5a Deals with the Control of acquisition. An Indian company with turnover of Rs. 3000 crores cannot acquire another Indian company without prior notification and approval of the Competition Commission. Under Section -6, A foreign company with turnover outside India of more than USD 1.5 billion (or in excess of Rs. 4500 crores) may acquire a company in India with sales just short of Rs. 1500 crores without any notification to (or approval of) the Competition Commission being required. the draft Regulation 5(2) (vii) dealing with “renewed tender offer”, 5(2)(iii) dealing with international combinations, and 5(2)(xii) dealing with an acquisition by the Central Government or a State Government.
  33. 33. MERGERS & ACQUTIONS IN INTERNATIONAL IT- B.P.O SECTOR The growth, pushing IT-BPO providers toward focused M&A strategies to build and sustain growth momentum. To fill gaps in service portfolios , geographic presence, to meet client demands and compete with the global major entities Mergers & Acquisitions are more Important in the Sector. Wipro's acquisition of Opus CMC,(“string of pearl” ) Genpact's acquisition of Triumph Engineering, Cognizant's acquisition of ING's Core Logic’s captives, Tech Mahindra's acquisition of Hutch BPO, TCS' and Wipro's acquisition of Citigroup's captives, M&A strategies can help Indian players tap into $2 billion to $4 billion in revenues each year, the almost $100 billion seen in 2010, The IT-BPO sector played major role in India during 2011-$1.4 billion, in 2012$3.4 billion,
  34. 34. Cont… In the year 2005 two Indian listed companies, Tata Consultancy Limited (TCS) and Tata InfoTech Limited (TIL) 14 initiated a process of amalgamation of TIL into TCS with a view to expand customer base and a deeper penetration to gain more efficient operations for both companies. (TCS) announced on Tuesday that it had acquired French information technology (IT) services firm Alti SA for €75 million (around Rs.530 crore). In 2012, the IT and IT-enabled services sector saw cross-border merger and acquisition transactions worth $1.4 billion (around Rs. 7,630 crore) in Europe and North America. Infosys Ltds acquisition of Lodestone, MphasiS Ltd’s acquisition of Digital Risk Llc, The scheme of amalgamation of TIL with TCS pursuant to section 391-394 of the Companies Act-1956.
  35. 35. MERGERS &ACQUISITIONS IN INTERNATIONAL BANKING Banking Mergers based on the five principles criteria: (a) Reputation of the acquirer; (b) The reputation and experience of any person who will direct the business of the credit institution as a result of the acquisition. (c) The financial soundness of the acquirer, in particular in relation to the type of business pursued in the credit institution (Directive 2002/87/EC -on the supplementary supervision). (d) The credit institution will be able to meet and continue to comply with the prudential conditions (2006/49/EC -on capital adequacy). (e) Reasonable grounds for fearing money laundering or terrorist financing in connection with the acquisition (2000/46/EC -on electronic money institutions).
  36. 36. Cont… The European Directives are based on standards developed by the Basel Committee on Banking Supervision (an International standard-setter for banking regulation,- Section -2). Article 39 indicates that the Commission may “submit proposals to the Council, either at the request of a Member State or on its own initiative, for the negotiation of agreements with one or more third countries . Article 143 of the Credit Institutions Directive provides specific rules on the consolidated supervision if the parent head office is in a third country. European Banking Committee and European Financial Conglomerates Committee have jointly controls the Banking Mergers. The Basel Committee has as task to “enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. The Basel II capital framework has been implemented by the European Community in Title V of the Credit Institutions Directive. In 1975, the Basel Committee drafted the ‘Basel Concordat’,
  37. 37. INTERNATIONAL BANK ACQUISITIONS BANK Merrill Lynch. Bear Streans Country wide Financial Alliance & Leicester Catholic Building Society…etc ACQUIRED BY Bank of America JPMorgan Chase Bank of America Grupo Santander Chelsea Building Society…etc
  38. 38. MERGERS & ACQUISITIONS IN INTERNATIONAL TELICOMMUNICATIONS Bell Atlantic/NYNEX:The original seven Baby Bells that began operations in 1984. Operations were internally "merged" under a single NYNEX brand on Jan. 1, 1994. This combination began operations in July 1995 under the name Bell Atlantic NYNEX Mobile. The Bell Atlantic and NYNEX merged on April 1, 1996 with the value of $23 billions. And other two baby Bells SBC Communications and Pacific Telesis. The "new" Bell Atlantic opened for business on Aug. 15, 1997.
  39. 39. Cont… GTE was one of the world's largest telecommunications company with $25 billion Revenue in1997, 35 billion Customers access in USA, Canada, Dominican Republic, Venezuela. The Bell Atlantic - GTE transaction valued at more than $52 billion at the time of the announcement was designed to join Bell Atlantic's sophisticated network serving its densely-packed, data-intensive customer base in 13 states. Virginias with GTE's national footprint, advanced data communications capabilities and long-distance expertise. Merged in to “Verizon's Formation: The Bell Atlantic GTE” Approved by Federal Communications Commission (FCC), and clearance from the U.S. Department of Justice (DOJ) and various International agencies on July 27, 1998.
  40. 40. Cont.. The MFJ-Long Distance Discount Service (LDDS) merged with Advanced Telecommunications Corp In December 1992. In 1993, LDDS merged with Metromedia and Resurgens Communications. In 1994, LDDS acquired IDB Communications Group. In 1995, the company acquired WilTel Network Services, and name changed LDDS to World Com. In 1996, WorldCom completed a merger with MFS Communications. In May 1999, MCI WorldCom and SkyTel Communications, a nationwide wireless messaging company merger ed.
  41. 41. MEGERS AND ACQUISITIONS IN AVIATION SECTOR AIR FRANCE AND KLM: Air France is French based Airline with significant International operations, main activities…. Passenger airline transport, Cargo transport , Maintenance services. Air France operates a hub-and-spoke network. KLM is a Dutch-based full-service carrier operating worldwide, main activities…. Passenger airline transport, Cargo transport, maintenance services , And the operation of charter and low-cost/low-fare scheduled services. On 18 December 2003, Air France and KLM notified a framework agreement according to which Air France has merge control of KLM.
  42. 42. Cont… The combination allowed KLM customers to have access to more than 90 new destinations while Air France customers will be offered 40 new routes. The Air France/KLM deal - the first real merger in the European airline industry. 2004 - Merged with KLM Royal Dutch Airlines changing the company name to Air France KLM although the two airlines still operate as separate airlines.
  43. 43. MERGER OF UNITED AIRLINES WITH U.S AIRWAYS The two airlines operates separate websites and reservation systems. passengers are able to earn and redeem miles when traveling on either carrier, as well as reciprocal American Admirals Club and US Airways Club benefits. Together, the two airlines are expected to offer nearly 6,700 daily flights to more than 330 destinations with about 950 planes and employ more than 100,000 workers. The merger has the supported by most major labor groups, including the Assn. of Professional Flight Attendants, which represents 16,000 attendants at American Airlines and faced an uncertain future after AMR Corp. In 2011. BENEFITS: Hub-to-Hub Nonstop Markets. Washington, D.C. and Baltimore Nonstop Markets. East Coast Connect Markets. International Routes. Corporate and Government Business. Airline Service Concentration.
  44. 44. Cont… AIR BERLIN:2006 - Acquired dba 2007 - Acquired LTU 2009 - Acquired LGW 2009 - Acquired Belair 2011 - Acquired flyNiki DELTA AIR LINES:1924 - Started as Huff Daland Dusters 1972 - Purchased Northeast Airlines 1987 - Merged with Western Airlines 2008-2010 - Merged with Northwest Airlines kept Delta name
  45. 45. AVIATION MERGERS IN INDIA The Jet-Sahara Mega Merger-on On 20th April , 2007. The Air Deccan-Kingfisher Merger-May, 2007 . The Air India-Indian Air Merger-in April, 2007.
  46. 46. MERGERS AND ACQUISITIONS IN SPACE ACTIVITIES In the 1960s, American manufacturers went through a first wave of mergers in Aviation activities. Martin joined forces in 1961 with the nonaerospace materials firm American Marietta to form Martin Marietta Corp. North American Aviation merged with automobile-parts supplier Rockwell Standard and established Rockwell International Corporation in 1967. General Dynamics General Aviation Aircraft maker Cessna, acquired by Textron Inc- missile business . In late 1996 Boeing acquired Rockwell International’s space and defense units, in 1997 it merged with McDonnell Douglas to establish the world’s largest aerospace company. In October 2000 Boeing acquired three units from Hughes Electronics-Space and Communications Company, Hughes Electron Dynamics, and Spectrolab. In France, Sud Aviation, Nord Aviation, and SEREB merged in 1970 as Aerospatiale to form the country’s strongest aerospace firm.
  47. 47. Cont… In May 2000 Matra Marconi Space and the space divisions of Dasa were combined in a joint venture under the name Astrium, 50 percent of which was owned by Aerospatiale Matra and BAE Systems and 50 percent by Dasa. Astrium was the first Trinational space company, with facilities in France, Germany, and Great Britain. In1960s when six European countries – Belgium, France, Germany, Italy, the Netherlands and the UK – formed the European Launcher Development Organization (ELDO) to develop and build a heavy launcher called ‘Europa’. In 1962, those same countries, plus Denmark, Spain, Sweden and Switzerland, formed the European Space Research Organisation (ESRO) to undertake mainly scientific satellite programmes. ESA was founded in 1975 through the merger of the European Space Research Organization (ESRO) and the European Launcher Development Organization (ELDO). On April 29, 2004, Alcatel and Finmeccanica SpA cleared the last hurdle in the merger of their satellite manufacturing and services units.
  48. 48. Cont… Alcatel Alenia Space Alcatel :67%, Finmeccanica 33%, Head quartered in France this entity’s activities focus on the…. Design, Development and manufacturing of space systems, Satellites, Equipments, Payloads, Associated ground systems. Telespazio Finmeccanica: 67%, Alcatel: 33%, This entity with head quartered in Italy, concentrates on… operations and services for satellite solutions control and exploitation of space systems , networking, multimedia and earth observation. From July 1, 2005 Alcatel Alenia Space and Tele Spazio are fully operational and ready for business.
  49. 49. Any clarifications Please…….? By Jayakar Bathula LL.M-ITBL Mail- b.jayakar@nalsar.ac.in
  50. 50. Thank you….

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