2. Coverage
• Introduction and
Strategies
• Mergers and
Amalgamations
• Takeovers
• Funding of Mergers and
Takeovers
• Valuation of shares,
business and brands
• Demergers and Reverse
Mergers
• Post merger
reorganisation
• Financial restructuring
• Case studies
• Legal documentation - 70
marks
• Revival and restructuring
of sick companies
• Securitisation and debt
recovery
• Winding up
• Cross-border insolvency
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3. CR
• To give a new structure to, rebuild or
rearrange
• Rearranging the business for increased
efficiency and profitability
• Essentials - efficient and competitive business
operations by increasing the market share,
brand power and synergies
• Can be organic or inorganic
3
4. Historical Background
• India – highly regulated upto 1991
• Industrial policy 1991
• Licensing reduced and liberalisation begins
• MRTP amended
• M & A became very prominent
• Taking advantage of opportunities and
meeting the challenges of competition
4
6. Global Scenario
• Consumer has many choices
• Technological advancements high
• Heavy focus on quality, range, cost and
reliability of products and services
• Turbulence – strategy
• Achieve and sustain superior performance
• UK most important investor in US
• Cross-country investments acceptable
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7. National Scenario
• Tata – Corus
• Arcelor – Mittal
• Betapharm – Dr. Reddy
• Hindalco – Novelis
• Internationally presence is felt
• Costs lower, innovate speedily and increase
international presence
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8. Need of CR
• Arrange business activities – predetermined
objectives
– Redirection of firms activities
– Deploy surplus cash from one business to finance
profitable growth in another
– Exploit inter-dependence among present or
prospective businesses
– Risk reduction
– Development of core competencies
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9. Scope of CR
• Enhances economy
• Improves efficiency – profitability
• Focus on its competitive
advantage, operational synergy, efficient
allocation of managerial capabilities
• Consolidation
• Revival and rehab of sick unit
• Acquiring constant supply of RM
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10. Regulatory Framework
• 1. The Companies Act, 1956
• 2. Companies (Court) Rules, 1959
• 3. Income Tax Act, 1961
• 4. Listing Agreement
• 5. The Indian Stamp Act 1899
• 6. SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations 2011
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11. Important aspects of CR
• Legal and procedural aspects
• Taxation Aspects
• Stamp duty aspects
• Economic aspects
• Valuation aspects
• Accounting aspects
• Due diligence aspects
• Competition aspects etc.
• Human and Cultural aspects
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12. Kinds of CR
• Financial
• Technological
• Market
• Organisational
• Common tools –
Amalgamation, merger, demerger, slump
sale, acquisition, JV, disinvestment, Strategic
alliances and franchises
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13. Cross Border Acquisitions
• UK in US
• Daimler Benz-Chrysler; BP – Amoco etc.
• Motivation:
– Growth orientation
– Access to inputs
– Exploit unique advantages
– Defensive
– Response to client needs
– Opportunism
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14. Strategies – Chapter II
• Strategos – military
• General Manager
• Plan or course of action – vital importance
• Approach – flexible – achieve desired results
• Long-term or medium term
• Tactic
• Solving routine or non-routine
• Henry Mintzberg – 5Ps –
Plan, ploy, pattern, position, perspective
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17. Strategic Planning
• Business environment – uncertain
• Different growth strategies for different
organisations
• Objectives
• Management tool – assess and adjust direction to
environment
• Constant change
• Requires sustained commitment, complexity and
ability to harness strategic opposites
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18. Formulation and Execution of CR
Strategies
• Environmental Assessment – Internal and
external
• Vision and mission
• Objectives and procedures
• Strategic setting
• SWOT for internal
• Many stages – analysis for all types of
competitive forces and factors, planning,
budgeting, review and correction; risk
management 18
19. • Importance
– Why planning with strategy
– Planning required for survival
– Provides purpose and direction
– Thought out
– Great execution
– Communicate
– Benefits – better decisions, increased
energy, capacity, improved customer
satisfaction, competitive advantage, better
solutions, market recognition, enhances chances of
success
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20. • Features
– Participation of responsible persons at different
levels
– Key ingredient of effective management
– Prepares the firm for facing and shaping future
– Based on quality data
– Draws from intuition and logic
– Avoid haphazard response
– Optimum leveraging of firm’s resources
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21. ….. Strategic planning and
long-range planning
Strategic
• Dynamic environment
• Objective is fixed method
may be varied
• Vision and mission based
and formed by
discussion, formal
techniques or otherwise
and from individual
inspiration
Long-range
• Assumed fixed environment
• Objective fixed and method
to achieve is planned
• Formulation is based on
fixed methods
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22. …..Strategic Management
• Strategy is a plan or course of action which is
of vital, pervasive or continuing importance to
the organisation as a whole.
• Management is defined as the conducting or
supervising of something (as a business)
especially the executive function of planning,
organising, directing, controlling and
supervising any industrial or business project
or activity with, responsibility for results
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23. ….
• (i) matching business requirements with
internal capabilities,
• (ii) having strategically balanced portfolio,
• (iii)achieving and sustaining competitiveness,
and
• (iv)developing long-term internal and core
competencies
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24. Competitive Advantage and
core competencies
• Competitive advantage – ownership of valuable
resources
• Abandon – no competitive advantage
• Core competency – resource based perspective
on corporate strategy
• Bundle of specific knowledge, skills, technologies,
capabilities and organisation which enables it to
create value in a market that other competitors
cannot do in the short term
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25. Identifying core competency
• Potential access to a wide variety of markets
• Significant contribution to perceived customer
benefits of end product
• Difficult for competitors to imitate
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26. Method of Implementation of
Strategies
• Optimum business portfolio
• Decide whether to retain, divest or diversify
• Amalgamation – 2 Cos forming new
• Merger – 2 Cos fusing into existing one
• Acquisition – one acquiring most of the shares
of the other
• Takeover – complete acquisition
• Disinvestment – PSU
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27. • SA – agreement to co-operate in order to
achieve certain objectives
• Demerger
• JV
• Slump sale – company sells whole or
substantially the whole of the undertaking for
a predetermined lump sum
• Franchising
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