INTERNATIONAL BUSINESS MANAGEMENT, BBA SEMESTER VI, ZAID ALAM, ENROLLMENT NO- 02215101717

1. INTERNATIONAL BUSINESS
MANAGEMENT (BBA 306)
BBA SEMESTER VI
SESSION (2017-2020)
ASSIGNMENT
E.NO- 02215101717
SUBMITTED TO – MS. MONIKA
SHARMA
SUBMITTED BY - ZAID ALAM
MERGERS AND ACQUISITIONS

2. INDEX
 INTRODUCTION TO M&A
 M&AREGULATION
 MOTIVES BEHIND M&A
 BUSINESS VALUATION FOR M&A
 FOLLOW-UP
 FINANCING M&A
 RISKS IN M&A
 KINDS OF M&A
 M&A BY INDIAN COMPANIES

3. MERGERS AND ACQUISITIONS

4. INTRODUCTION TO MERGERS
The merger is 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.
There is a situation when one company splits into two, generating a
second company separately listed on a stock exchange. That is
called demerger or spin–off or spin-out.
EXAMPLE
• Kingfisher and Air Deccan in2010
• Hdfc and Centurion Bank of Punjab in 2008
• Mittal Steel and Arcelor in2006

5. INTRODUCTION TO ACQUISITION
An acquisition is the purchase of one company by another company.
An acquisition may be friendly or hostile. Acquisition usually refersto
a purchase of a smaller firm by a larger one.
Sometimes, however, a smaller firm will acquire management control
of a larger or longer established company and keep its name for the
combined entity. This is known as a reverse takeover
EXAMPLES
• Tata Steel Takeover Of Anglo Dutch SteelmakerCorus Group In
2006
• Patni Computers And I-gate In 2010
• Ongc Acquired London Based Firm Imperial EnergyIn 2009

6. M&A REGULATION
• The Indian M&A environment is a strongly regulated by the following
major pieces of legislation/bodies:
 The Companies Act, 1956
 The Takeovers Code, 1997
 The Monopolies and Restrictive Trade Practices Act,
1969
 The Foreign Exchange Management Act,1999
 The Foreign Investment Promotion Board (FIPB)
 The Reserve Bank of India
 The Income TaxAct, 1961

7. MOTIVES BEHINDS M&A
 Diversification
 Economies of scale
 Increase market share prices
 Reduce tax obligation
 Cross selling
 Acquisition of customers
 Eliminating competition
 Access to new technology
 Economies of internal operation.
 Efficient utilization of resources.

8. BUSINESS VALUATION FORM&A
 Asset valuation
 Historical earnings valuation
 Future maintainable earnings valuation
 Relative valuation (comparable company comparable
transactions)
 Discounted cash flow (DCF) valuation

9. REASONS FOR RISKS IN M&A
 Integration poorly planned and managed
 Underestimated cultural & human risks
 Loss of key success enablers (e.g. staff)
 Inaccurate financial due diligence
 Neglecting current business
 Legal (non participating competitor) or regulatory intervention
 market shifts during the merger process (such as changes in market
conditions of demand, financing, etc.)
 Death or departure of key personnel from the targetentities.
 Failure, or inability to offer sufficient compensation to the vendors

10. TYPES OF MERGERS
 Horizontal Merger: when two companies on the same level merge, so two
that have the same market that they are trading to and the same product type.
For example: Bank of Rajasthan and Bank of Mathura with ICICI bank. Merger of
Lipton India with brook bond forming brook bond Lipton India ltd.
 Vertical Merger: A merger between two companies producing different
goods or services for one specific finished product. For example vertical
product portfolio of Reliance industries from oil and gas production, refining,
drilling, , transporting and extracting petrochemicals.
 Conglomerate Merger : A conglomerate is a combination of two or more
corporations engaged in entirely different businesses together into one corporate
structure, usually involving a parent company and several (or many)
subsidiaries. A conglomerate is a multi- industry company. for example: expected
merger of Telecom giant Bharti with retail giant Wal-Mart.

11. GLOBAL M&A BY INDIAN COMPANIES
 Bharti Airtel : It has completed its $9 billion acquisition of African operations
from Kuwait's Zain in a deal that makes the Indian firm the world's fifth biggest
cell phone company by subscribers. Undoubtedly the father of all acquisition
deals in India and is the biggest acquisition in the history of India.
 Tata acquired Corus: Tata Steel took over the Anglo-Dutch firm Corus Group in
2006 to create the fifth largest steel company of the world. The deal was worth
$7.6 billion (Rs. 36,650 crore) at that time.
 Hindalco acquired Novalis: Aditya Birla Group’s Hindalco Industries
Limited, India’s largest non-ferrous metals company, acquired the Canada based
firm Novalis in an all-cash transaction for $6 billion.
 Tata acquired Jaguar and Land Rover: Tata shook the automobile market once
again in 2008 when it snapped Britain’s most famous automobile
manufacturers, Jaguar and Land Rover, in a $2.3 billion deal with Ford, their
American owners. The deal showed India’s growing global ambition in owning the
best brands.
 Essel Packaging acquired Propack: Subhash Chandra’s Essel Packaging Ltd
(EPL) acquired the Swiss tube packaging major Propack, and joined hands to
become the world’s largest in laminated tubes. This deal was made way back in
2000 and an Indian MNC became the World No.1 because of it.

12.  Ranbaxy acquired 3 European drug-makers: In 2006, Ranbaxy Laboratories Ltd.
(RLL) created quite a stir when it announced the acquisition of 3 drug-makers in
Europe, all within a week’s time. Allen S.p.A, a division of GlaxoSmithKline (GSK)
in Italy, Romania’s largest independent generic drug producer Terapia and drug
maker Ethimed NV in Belgium, three of these firms were acquired by the Indian
firm.
 Times Group Acquired Virgin Radio: Bennett Coleman & Co Ltd, India’s largest
media group and the holding company of the Times of India group, bought Virgin
Radio in the UK in a £53.2 million (Rs 445cr approx) deal with SMG Plc. in 2008.
 Mahindra & Mahindra acquired Schoneweiss: Mahindra & Mahindra acquired
90% stakes of Schoneweiss, a leading company in the forging sector in Germany.
The deal took place in 2007, and consolidated Mahindra’s position in the global
market.
 Sterlite acquired Asarco: Sterlite Industries, a part of the Vedanta Group signed
an agreement regarding the acquisition of european copper mining company
Asarco for $ 2.6 billion in 2008. The deal surpassed Tata’s $2.3 billion deal of
acquiring Land Rover and Jaguar. After the finalization of the deal Sterlite would
become third largest copper mining company in the world.

13. Thank you