Mergers & Aqcusition

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Mergers & Aqcusition

  1. 1.  Left Parties and Opposition together Prevented Congress to Pass Banking ,Insurance and Pension fund reforms in Parliament.  As a result companies like AIG, Citi Group, Merrill lynch, Lehman Brothers, Bear Sterns, Bank of America, Wachovia, RBS and many others were restrained to acquire stakes in Indian banks and Insurance Companies.
  2. 2. • If foreign banks had been allowed to take over 74 per cent interest in Indian banks, our banks would have collapsed. • If pension funds had been privatized, crores of employees would have been ruined. • Similarly, if the insurance cap had gone up to 49 per cent, the collapse of American Insurance Group (AIG) would have made Tata-AIG far more vulnerable.
  3. 3. Leads to Over Valuation Bullish Stock Market
  4. 4. 5th largest steel producer in the world
  5. 5. •A premium of 68.7% on Corus’s share price of 360.5 pence •The deal size implies a multiple of 7-9 times that of EBITDA •Tata Steel’s share price declined by 11.35%.
  6. 6. The deal involved transaction of $5,982 million
  7. 7.  In the year 1994, Quaker Oats purchased Snapple Beverage Co. for a total cost of $1.7 billion
  8. 8. DIFFERENCE IN WORKING CULTURE For a loss of $1.4 billion.
  9. 9. WORTH $37 billion
  10. 10. deal worth only 21.5% $7.4 billion total acquisition value!
  11. 11. 100 million tonne steel  L. N. Mittal became……..
  12. 12.  net income in billion dollars $0.05 $0.55 $1.05 $1.55 $2.05 $2.55 $3.05 Year 2006 Year 2007 Net Income Net Income $2.9 billion $2.3 billion
  13. 13.  Earnings per Share $0.05 $0.55 $1.05 $1.55 $2.05 $2.55 Year 2006 Year 2007 EPS EPS
  14. 14.  P/E Ratio 5.0 5.2 5.4 5.6 5.8 6.0 6.2 6.4 6.6 6.8 Year 2006 Year 2007 P/E Ratio P/E Ratio
  15. 15.  Vodafone paid a smashing $190 billion for Germany’s Mannesmann.  Biggest operator in the whole of Europe.
  16. 16.  World’s fourth largest company overnight.  Combined entity was valued at $365billion.
  17. 17.  On July 24, 2008 $203.6 billion, a fall of 53%! Vodafone has become the biggest loss making company ever in the history of mankind! The loss: $86 billion!
  18. 18.  $140 billion merger
  19. 19.  The companies had a combined value of $247 billion at the time of the deal.  Today, the combined entity is worth a mind numbingly low $58 billion.
  20. 20.  At the time of the merger of Alcatel and Lucent, the entity had a share price of $15.4 (March 31, 2006).  July 24, 2008, the price is $6.09  Patricia Russo, CEO Alcatel-Lucent, has a history of destroying shareholder wealth.
  21. 21.  CEO Meg Whitman, who ensured eBay bought Skype.  Also ensured eBay’s price fell from close to $40 Sep 9, 2005 $25 Jul 24, 2008
  22. 22. MURDERS & AQCUSITION
  23. 23.  Studies reveal that approximately 40% to 80% of mergers and acquisitions prove to be disappointing. The reason is that their value on the stock market deteriorates afterwards.
  24. 24.  According to J. Thunuguntla, Head (Equity) at NexGen Capital,  “Around 70-80% M&As still erode shareholders wealth .

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