Mergers and acquisitions allow companies to combine operations through either merging or one company acquiring another. A merger combines two companies as equals, while an acquisition sees one company purchase another to make it a subsidiary. Mergers are more complex than acquisitions as they require cooperation between merging companies. Acquisitions can be friendly or hostile transactions. Cultural clashes, debt from purchases, and failure to achieve synergies can cause mergers and acquisitions to fail if not properly planned and managed.

1. Mergers and
acquisitions

2. MEMBERS
KHALID JASNAIK
FAIZ KAZI
RAMEEZ KADRI
SAIMA KHAN
MEHNAAZ ANSARI
FAIZAN KHAN

3. MEANING
Merger
•A transaction where two firms agree to integrate their
operations on a relatively co-equal basis because they have
resources and capabilities that together may create a
stronger competitive advantage.
•The 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
•Example: Company A+ Company B= Company C.

4. ACQUISITION
 A transaction where one firms buys another firm with
the intent of more effectively using a core competence
by making the acquired firm a subsidiary within its
portfolio of business
 It also known as a takeover or a buyout
 It is the buying of one company by another.
 In acquisition two companies are combine together to
form a new company altogether.
 Example: Company A+ Company B= Company A.

5. DIFFERENCE BETWEEN MERGER AND
ACQUISITION:
MERGER ACQUISITION
i. Merging of two organization in i. Buying one organization by
to one. another.
ii. It is the mutual decision. ii. It can be friendly takeover or
iii. Merger is expensive than hostile takeover.
acquisition(higher legal cost).
iii. Acquisition is less expensive
iv. Through merger shareholders than merger.
can increase their net worth.
iv. Buyers cannot raise their
v. It is time consuming and the
enough capital.
company has to maintain so
much legal issues. v. It is faster and easier
transaction.
vi. Dilution of ownership occurs
in merger. vi. The acquirer does not
experience the dilution of
ownership.

6. MERGER:WHY & WHY NOT
WHY IS IMPORTANT PROBLEM WITH MERGER
i. Increase Market Share.
ii. Economies of scale i. Clash of corporate cultures
ii. Increased business complexity
iii. Profit for Research and iii. Employees may be resistant to
development. change
iv. Benefits on account of
tax shields like carried
forward losses or
unclaimed depreciation.
v. Reduction of
competition.
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7. ACQUISITION:WHY & WHY NOT
WHY IS IMPORTANT PROBLEM WITH ACUIQISITION
i. Increased market
share.
ii. Increased speed to i. Inadequate
market valuation of target.
iii. Lower risk comparing ii. Inability to achieve
to develop new synergy.
products.
iii. Finance by taking
iv. Increased
diversification huge debt.
v. Avoid excessive
competition
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8. REASONS /ADVANTAGES 8
 Size and Synergy
 Increased revenue/Increased Market Share
 Economies of Scale
 Helps to face competition
 Revival of sick units
 Faster growth rate
 Taxes Advantages
 Finance related advantages

9. 9
 Horizontal Merger
 Conglomeration merger
 Vertical Merger
 Product-Extension Merger
 Market-Extension Merger

10. TOP 5
M&A DEALS…

11. 1. Tata Steel-Corus: $12.2 billion
 January 30, 2007
 Largest Indian take-over
 After the deal TATA’S
became the 5th largest
STEEL co.
 100 % stake in CORUS
paying Rs 428/- per share
Image: B Mutharaman, Tata Steel MD; Ratan
Tata, Tata chairman; J Leng, Corus chair;
and P Varin, Corus CEO.

12. 2. Vodafone-Hutchison Essar:
$11.1 billion
TELECOM sector
11th February 2007
2nd largest
takeover deal
67 % stake holding
in hutch
Image: The then CEO of Vodafone
Arun Sarin visits Hutchison
Telecommunications head office in
Mumbai.

13. 3. Ranbaxy-Daiichi Sankyo: $4.5 b
 Pharmaceuticals sector
 June 2008
 Acquisition deal
 largest-ever deal in the
Indian pharma industry
 Daiichi Sankyo acquired
the majority stake of
more than 50 % in
Ranbaxy for Rs 15,000
crore
Image: Malvinder Singh (left), ex-CEO  15th biggest drugmaker
of Ranbaxy, and Takashi Shoda,
president and CEO of Daiichi Sankyo.

14. 4. Tata Motors-Jaguar Land
Rover: $2.3 billion
 March 2008 (just a
year after acquiring
Corus)
 Automobile sector
 Acquisition deal
 Gave tuff competition to
M&M after signing the
deal with ford
Image: A Union flag flies behind a
Jaguar car emblem outside a
dealership in Manchester, England.

15. 5. RIL-RPL merger: $1.68 billion
 March 2009
 Merger deal
 amalgamation of its
subsidiary Reliance
Petroleum with the
parent company
Reliance industries
ltd.
 Rs 8,500 crore
 RIL-RPL merger
Image: Reliance Industries'
chairman Mukesh Ambani. swap ratio was at
16:1

16. Why India?
Dynamic government policies
Corporate investments in industry
Economic stability
“Ready to experiment” attitude of
Indian industrialists

17. Deals in India for first financial
quarter 2010
Value in USD Share in per
Sector No. of Deals
million cent
Telecom 3 22732.26 67.19
Pharmaceutical 4 3958.29 11.02
BFSI 6 2651.54 7.84
Metal and Mining 4 1483.15 4.38
Energy 4 1320 3.90
Other sectors 39 1919.00 5.67

18. PROCESS OF MERGER & ACQUISITION IN INDIA:
The process of merger and acquisition has the following steps:
ii.Approval of Board of Directors
iii.Information to the stock exchange
iv.Application in the High Court
v.Shareholders and Creditors meetings
vi.Sanction by the High Court
vii.Filing of the court order
viii.Transfer of assets or liabilities
ix.Payment by cash and securities
Maximum Waiting period:210 days from the filing of notice(or the order of
the commission - whichever earlier).

19. Impact of Mergers and Acquisitions

21. Why Mergers and Acquisitions Fail?
Cultural Difference
Flawed Intention
No guiding principles
No ground rules
No detailed investigating
Poor stake holder outreach

22. How to Prevent the Failure
 Continuous communication – employees,
stakeholders, customers, suppliers and
government leaders.
 Transparency in managers operations
 Capacity to meet new culture higher
management professionals must be ready to
greet a new or modified culture.
 Talent management by the management

23. MERGER & ACQUISITION(2009-10) :
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