The document discusses mergers and acquisitions (M&A) including conceptual frameworks, types of mergers, history of M&A waves, and the financial framework. It describes different types of mergers such as horizontal, vertical, and conglomerate mergers. It provides examples of major mergers in different sectors such as automobiles, banking, media, and telecommunications. It also discusses M&A activity and deals in India from the license era to the present.
Mergers and acquisitions mean slightly different things. A merger occurs when two similar-sized firms agree to combine as a single new company, while an acquisition happens when one firm takes ownership of another. Both are used by multinationals to enter new markets. While mergers aim to create value exceeding the sum of the separate companies, cultural and organizational differences can challenge mergers. Opportunities include synergies and management benefits, but risks include overpaying, labor issues, and conflicting interests between management teams. Whether a deal succeeds ultimately depends on the SWOT analysis of the strengths, weaknesses, opportunities, and threats involved.
This document discusses mergers and acquisitions. It defines mergers as combinations of two or more companies into one new entity, while acquisitions refer to one company purchasing another to gain control of its assets or management. The document outlines different types of mergers like horizontal, vertical, conglomerate, market extension, and product extension mergers. It also discusses takeovers and provides examples of major mergers and acquisitions in India, such as Tata Steel-Corus, Vodafone-Hutchison Essar, Ranbaxy-Daiichi Sankyo, Tata Motors-Jaguar Land Rover, and RIL-RPL merger. Mergers allow companies to increase market share, realize economies of
This document discusses conglomerate mergers, which involve merging companies that operate in different industries. It defines conglomerate mergers and describes two types: pure and mixed. Conglomerate mergers are further divided into financial and managerial categories. Reasons for conglomerate mergers include increasing market share, gaining technological advantages, and diversifying products. Examples provided are the mergers of AOL & Time Warner, L&T and Voltas Ltd, and Walt Disney Pictures and ABC Broadcasting company. The document analyzes the AOL-Time Warner merger in depth and its subsequent failure to realize synergies. Sony's acquisition of Columbia Pictures Entertainment to enter the media industry is also briefly discussed.
M&A - Merger and Acquisition Joseph F Valencia_MBAJoseph Valencia
Mergers and acquisitions (M&A) is a general term that refers to the consolidation of companies or assets. M&A can include a number of different transactions, such as mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions.
The document discusses corporate restructuring through mergers and acquisitions using the case study of Tata and Corus. It defines corporate restructuring and mergers and acquisitions. It explains that mergers and acquisitions are strategies used by companies to expand through acquiring other companies or their assets. The document then discusses other strategies for expansion like tender offers and joint ventures. It also discusses strategies for corporate contraction like spin-offs and divestitures. Finally, it provides details on the Tata-Corus acquisition where Tata acquired Corus, making it a subsidiary.
The document discusses mergers and acquisitions (M&A) including conceptual frameworks, types of mergers, history of M&A waves, and the financial framework. It describes different types of mergers such as horizontal, vertical, and conglomerate mergers. It provides examples of major mergers in different sectors such as automobiles, banking, media, and telecommunications. It also discusses M&A activity and deals in India from the license era to the present.
Mergers and acquisitions mean slightly different things. A merger occurs when two similar-sized firms agree to combine as a single new company, while an acquisition happens when one firm takes ownership of another. Both are used by multinationals to enter new markets. While mergers aim to create value exceeding the sum of the separate companies, cultural and organizational differences can challenge mergers. Opportunities include synergies and management benefits, but risks include overpaying, labor issues, and conflicting interests between management teams. Whether a deal succeeds ultimately depends on the SWOT analysis of the strengths, weaknesses, opportunities, and threats involved.
This document discusses mergers and acquisitions. It defines mergers as combinations of two or more companies into one new entity, while acquisitions refer to one company purchasing another to gain control of its assets or management. The document outlines different types of mergers like horizontal, vertical, conglomerate, market extension, and product extension mergers. It also discusses takeovers and provides examples of major mergers and acquisitions in India, such as Tata Steel-Corus, Vodafone-Hutchison Essar, Ranbaxy-Daiichi Sankyo, Tata Motors-Jaguar Land Rover, and RIL-RPL merger. Mergers allow companies to increase market share, realize economies of
This document discusses conglomerate mergers, which involve merging companies that operate in different industries. It defines conglomerate mergers and describes two types: pure and mixed. Conglomerate mergers are further divided into financial and managerial categories. Reasons for conglomerate mergers include increasing market share, gaining technological advantages, and diversifying products. Examples provided are the mergers of AOL & Time Warner, L&T and Voltas Ltd, and Walt Disney Pictures and ABC Broadcasting company. The document analyzes the AOL-Time Warner merger in depth and its subsequent failure to realize synergies. Sony's acquisition of Columbia Pictures Entertainment to enter the media industry is also briefly discussed.
M&A - Merger and Acquisition Joseph F Valencia_MBAJoseph Valencia
Mergers and acquisitions (M&A) is a general term that refers to the consolidation of companies or assets. M&A can include a number of different transactions, such as mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions.
The document discusses corporate restructuring through mergers and acquisitions using the case study of Tata and Corus. It defines corporate restructuring and mergers and acquisitions. It explains that mergers and acquisitions are strategies used by companies to expand through acquiring other companies or their assets. The document then discusses other strategies for expansion like tender offers and joint ventures. It also discusses strategies for corporate contraction like spin-offs and divestitures. Finally, it provides details on the Tata-Corus acquisition where Tata acquired Corus, making it a subsidiary.
Benefits and advantages of global level mergersjithin koshy
The document discusses two mergers and acquisitions deals:
1) Sun Pharma's acquisition of Ranbaxy in 2014 to create the world's 5th largest specialty generic pharmaceutical company. This deal was aimed at expanding their market share and addressing regulatory issues Ranbaxy was facing.
2) Microsoft's acquisition of Nokia's mobile phone business in 2013 for $7.2 billion to strengthen its presence in the mobile device market. This deal gave Microsoft control over Nokia's hardware assets and patent portfolio.
Acc- Holcim Merger & Acquisition Case Study snigdha sarkar
Holcim acquired a majority stake in ACC, India's largest cement producer, through a series of agreements with other shareholders of Ambuja Cements India Limited (ACIL), ACC's majority shareholder. Key aspects of the acquisition included Holcim Mauritius purchasing shares of ACIL from other shareholders and subscribing to additional shares, increasing Holcim's total stake in ACIL to 67%. Holcim also gained control of ACC through its majority stake in ACIL. The acquisition price for public shareholders of ACC was Rs. 370 per share, justified based on stock price analyses showing average prices of Rs. 282.94 for the previous 26 weeks and Rs. 350.61 for the previous 2 weeks.
Mergers and acquisitions- tata motors and jaguarAvinash Avi
Tata Motors acquired Jaguar and Land Rover from Ford Motor Company in 2008 for $2.3 billion. The acquisition provided Tata Motors with access to the premium luxury vehicle market through iconic brands Jaguar and Land Rover. It also diversified Tata Motor's operations across new global markets and product segments. The acquisition was a strategic move for Tata Motors' long term growth in the automotive sector. It allowed them to leverage Land Rover's capabilities in SUVs and Jaguar's performance luxury vehicles.
The document discusses international mergers and acquisitions (M&A), focusing on trends in India. It notes that M&A activity by companies from developing countries, including India, has increased significantly in recent decades. Indian companies have pursued numerous international acquisitions, with major deals by companies like Tata, Mahindra & Mahindra, and Hindalco. The document also examines factors driving M&A activity, challenges, strategies for success, and the need for convergence in competition policies between countries like India and the EU.
The document discusses various types of corporate restructuring including mergers and acquisitions. It provides examples of different types of mergers such as horizontal, vertical, and conglomerate mergers. It also discusses reasons for mergers and acquisitions including increasing market power, overcoming barriers to entry, and lowering costs. Potential problems with mergers and acquisitions are outlined like integration difficulties, inadequate evaluation of targets, and managers becoming overly focused on acquisitions.
1) Mergers and acquisitions involve the combination of two or more companies. They allow companies to expand their business, gain economies of scale, and eliminate competition.
2) The document discusses the purposes, types, advantages, and impact on stakeholders of mergers and acquisitions. Common purposes include market expansion, procurement of supplies, and improving financial strength. Types include horizontal, vertical, and conglomerate mergers. Advantages are increased value and efficiency for shareholders.
3) Mergers can benefit consumers through lower prices and better quality. They can also impact workers through potential job losses or gains and impact the general public through increased economic power of large companies. Every merger must be examined individually to understand its
Mergers and acquisitions allow companies to achieve growth objectives like profits, market dominance and survival. The document discusses the definitions, types, strategies and benefits of mergers and acquisitions. It provides examples of major M&A deals including Tata Steel-Corus ($12.2B), Vodafone-Hutchison Essar ($11.1B) and Hindalco-Novelis ($6B) and discusses challenges like integration difficulties and overly diversified operations that can arise from mergers and acquisitions. The conclusion emphasizes learning from others' mistakes, clearly defining objectives, and acquiring expertise to interpret changes.
Explanation of the differences between mergers and takeovers, Main motives for merger or takeover, Types of M&A, Historical overview of Merger and acquisition, Main problems of M&A
1. The document discusses synergy in mergers and acquisitions, defining it as the combined company being able to generate higher shareholder wealth than the standalone entities.
2. It provides an example of Procter & Gamble's acquisition of Gillette in 2005, creating the world's largest consumer goods company.
3. Estimates indicate the merger generated $5.49 billion in synergistic value by achieving economies of scale, improved margins, and growth rates for the combined company beyond what the firms could achieve independently.
This document is a project report on mergers and acquisitions submitted by Mr. Sunil Shendage. It includes an acknowledgement, objective, table of contents, preface, and various sections analyzing mergers and acquisitions such as the acquisition process, forms of corporate downsizing, the legal procedure, mergers in the IT sector, risk in mergers and acquisitions, and a case study on TATA Tea and Tetley. The report discusses the meaning of mergers and acquisitions, types of mergers like vertical, horizontal, circular and conglomerate combinations, and common objectives for business combinations such as growth, synergy, managerial efficiency, market entry, and diversification.
Mergers and acquisitions involve the combination of two or more companies. A merger combines two approximately equal-sized companies, while an acquisition sees one larger company purchase a smaller one. There are several types of mergers, including horizontal (between competitors), vertical (between companies in a supply chain), and conglomerate (between unrelated industries). Reasons for mergers and acquisitions include gaining synergies between companies, removing unprofitable business lines, focusing on core competencies, generating cash, withstanding competition, and facilitating further growth.
International mergers and acquisitionsKanku Baruah
The document discusses mergers and acquisitions (M&A) from several perspectives. It describes M&A as a strategy for companies to achieve growth through purchasing other companies. Different types of mergers are outlined based on the nature of the merging companies, including horizontal, vertical, conglomerate, product-extension, and market-extension mergers. The acquisition process and types of takeovers (hostile vs friendly) are also summarized. Specific examples provided include the ArcelorMittal merger forming the world's largest steel producer, and Procter & Gamble's acquisition of Gillette to become the largest consumer goods company.
The document provides an overview of mergers and acquisitions in India, including:
1) It describes different types of mergers such as horizontal, vertical, congeneric, and conglomerate mergers. It also describes different types of acquisitions such as friendly, hostile, leveraged buyouts, and bailout takeovers.
2) It explains the legal and regulatory process for M&As in India, including the letter of intent, due diligence, transition agreements, representations and warranties in the agreement, and confidentiality agreements.
3) Key steps in the M&A process include negotiating a letter of intent, conducting due diligence, drafting the merger agreement to address issues found in due dilig
The document provides an overview of mergers and acquisitions through a presentation covering various topics:
1. It defines a merger as a combination of two companies where one is absorbed by the other, while an acquisition means one larger company takes over the shares and assets of a smaller company.
2. The merger and acquisition process involves preliminary assessment, a proposal, exit planning, structured marketing, and integration of the companies.
3. Different types of mergers and acquisitions are described such as horizontal, vertical, co-generic, and conglomerate mergers as well as friendly, reverse, hostile, and back-flip acquisitions.
4. Benefits, problems, impacts on stakeholders, and
This document provides an overview of mergers and acquisitions. It defines mergers and acquisitions, describes the different types of mergers including horizontal, vertical, conglomerate and concentric mergers. It also outlines the key steps in the M&A process including company analysis, valuation, due diligence, approval and closing. Common valuation methods and financing options are also summarized. The document concludes with examples of major M&A deals in India.
The document discusses the Indian pharmaceutical industry and opportunities for growth through collaboration. It notes that India's introduction of product patents in 2005 opened the industry to foreign investment while domestic companies are becoming global players through acquisitions. Opportunities exist for partnerships between multinational and domestic firms for research, manufacturing, and developing India's large untapped market. However, challenges remain around increasing access to medicines for India's population which requires public-private partnerships and encouraging research. The report provides insights from industry leaders on how to realize opportunities through unprecedented collaboration between industry and government.
This document provides an overview of mergers and acquisitions (M&A). It discusses key topics such as the definition of mergers and acquisitions, the regulations governing M&A in India, common motives for M&A including economies of scale and market share, methods for valuing businesses for M&A deals, potential risks of M&A like integration issues, and examples of major M&A deals by Indian companies globally and in various industries. The document aims to give the reader a broad understanding of the M&A landscape in India.
The Performance of Every Dividend Aristocrat During The Great RecessionSure Dividend
This presentation investigates the performance of every Dividend Aristocrat during the Great Recession by looking at both earnings trends and stock price performance.
You can view the full list of Dividend Aristocrats below (sorted by sector):
Consumer Staples
Archer-Daniels-Midland (ADM)
Brown-Forman (BF-B)
Colgate-Palmolive (CL)
Clorox (CLX)
Coca-Cola (KO)
Hormel Foods (HRL)
Kimberly-Clark (KMB)
McCormick & Company (MKC)
PepsiCo (PEP)
Procter & Gamble (PG)
Sysco Corporation (SYY)
Wal-Mart (WMT)
Walgreens Boots Alliance (WBA)
Industrials
A.O. Smith (AOS)
Cintas (CTAS)
Dover (DOV)
Emerson Electric (EMR)
Illinois Tool Works (ITW)
3M (MMM)
Pentair (PNR)
Roper Technologies (ROP)
Stanley Black & Decker (SWK)
W.W. Grainger (GWW)
General Dynamics (GD)
Health Care
Abbott Laboratories (ABT)
AbbVie (ABBV)
Becton, Dickinson & Company (BDX)
Cardinal Health (CAH)
Johnson & Johnson (JNJ)
Medtronic (MDT)
Consumer Discretionary
Genuine Parts Company (GPC)
Leggett & Platt (LEG)
Lowe’s (LOW)
McDonald’s (MCD)
Target (TGT)
V.F. Corporation (VFC)
Financials
Aflac (AFL)
Cincinnati Financial (CINF)
Franklin Resources (BEN)
S&P Global (SPGI)
T. Rowe Price Group (TROW)
Materials
Air Products and Chemicals (APD)
Ecolab (ECL)
PPG Industries (PPG)
Praxair (PX)
Sherwin-Williams (SHW)
Nucor (NUE)
Energy
Chevron (CVX)
Exxon Mobil (XOM)
Information Technology
Automatic Data Processing (ADP)
Real Estate
Federal Realty Investment Trust (FRT)
Telecommunication Services
AT&T (T)
Utilities
Consolidated Edison (ED)
Mergers allow companies to increase in value by combining resources, achieve better financial planning through diversification of operations, and realize economies of scale by utilizing combined production and distribution networks. Mergers also enable growth through external expansion and expertise in new areas, as well as stabilization through diversifying business scopes and consistently earning profits despite economic fluctuations. However, mergers can negatively impact the national economy, eliminate healthy competition from smaller competitors, and lead to monopolies through excessive concentration of economic power which is undesirable for customers.
Ranbaxy has a choice between continuing as a manufacturer of generic drugs or developing proprietary medicines. It could potentially do both by continuing low-cost generic production while beginning to develop patented drugs in India, which has a suitable but improving infrastructure for innovation. Ranbaxy should focus on both developing and developed markets through mergers and strategic partnerships that give it access to foreign markets and resources, especially in geographically and culturally close countries like Russia and China.
This document discusses various options for corporate restructuring. It identifies mergers, acquisitions, joint ventures, tender offers, and asset acquisitions as common restructuring options. Corporate restructuring involves activities related to expanding or contracting a firm's operations or changing its assets or ownership structure. Common forms of restructuring include mergers, acquisitions, divestitures, and demergers. The document further categorizes restructuring options into expansion, sell-offs, changes in corporate control, and changes in ownership structure.
The document discusses various aspects of corporate restructuring in India such as mergers, amalgamations, demergers, slump sales, and financial restructuring. It provides an overview of the key regulations governing takeovers in India from the Securities and Exchange Board of India. Examples of different corporate restructuring techniques including mergers and demergers are presented along with considerations around valuation, share exchange ratios, stamp duty implications and more. Two case studies demonstrating the use of group restructuring to increase promoter shareholding are also summarized.
Benefits and advantages of global level mergersjithin koshy
The document discusses two mergers and acquisitions deals:
1) Sun Pharma's acquisition of Ranbaxy in 2014 to create the world's 5th largest specialty generic pharmaceutical company. This deal was aimed at expanding their market share and addressing regulatory issues Ranbaxy was facing.
2) Microsoft's acquisition of Nokia's mobile phone business in 2013 for $7.2 billion to strengthen its presence in the mobile device market. This deal gave Microsoft control over Nokia's hardware assets and patent portfolio.
Acc- Holcim Merger & Acquisition Case Study snigdha sarkar
Holcim acquired a majority stake in ACC, India's largest cement producer, through a series of agreements with other shareholders of Ambuja Cements India Limited (ACIL), ACC's majority shareholder. Key aspects of the acquisition included Holcim Mauritius purchasing shares of ACIL from other shareholders and subscribing to additional shares, increasing Holcim's total stake in ACIL to 67%. Holcim also gained control of ACC through its majority stake in ACIL. The acquisition price for public shareholders of ACC was Rs. 370 per share, justified based on stock price analyses showing average prices of Rs. 282.94 for the previous 26 weeks and Rs. 350.61 for the previous 2 weeks.
Mergers and acquisitions- tata motors and jaguarAvinash Avi
Tata Motors acquired Jaguar and Land Rover from Ford Motor Company in 2008 for $2.3 billion. The acquisition provided Tata Motors with access to the premium luxury vehicle market through iconic brands Jaguar and Land Rover. It also diversified Tata Motor's operations across new global markets and product segments. The acquisition was a strategic move for Tata Motors' long term growth in the automotive sector. It allowed them to leverage Land Rover's capabilities in SUVs and Jaguar's performance luxury vehicles.
The document discusses international mergers and acquisitions (M&A), focusing on trends in India. It notes that M&A activity by companies from developing countries, including India, has increased significantly in recent decades. Indian companies have pursued numerous international acquisitions, with major deals by companies like Tata, Mahindra & Mahindra, and Hindalco. The document also examines factors driving M&A activity, challenges, strategies for success, and the need for convergence in competition policies between countries like India and the EU.
The document discusses various types of corporate restructuring including mergers and acquisitions. It provides examples of different types of mergers such as horizontal, vertical, and conglomerate mergers. It also discusses reasons for mergers and acquisitions including increasing market power, overcoming barriers to entry, and lowering costs. Potential problems with mergers and acquisitions are outlined like integration difficulties, inadequate evaluation of targets, and managers becoming overly focused on acquisitions.
1) Mergers and acquisitions involve the combination of two or more companies. They allow companies to expand their business, gain economies of scale, and eliminate competition.
2) The document discusses the purposes, types, advantages, and impact on stakeholders of mergers and acquisitions. Common purposes include market expansion, procurement of supplies, and improving financial strength. Types include horizontal, vertical, and conglomerate mergers. Advantages are increased value and efficiency for shareholders.
3) Mergers can benefit consumers through lower prices and better quality. They can also impact workers through potential job losses or gains and impact the general public through increased economic power of large companies. Every merger must be examined individually to understand its
Mergers and acquisitions allow companies to achieve growth objectives like profits, market dominance and survival. The document discusses the definitions, types, strategies and benefits of mergers and acquisitions. It provides examples of major M&A deals including Tata Steel-Corus ($12.2B), Vodafone-Hutchison Essar ($11.1B) and Hindalco-Novelis ($6B) and discusses challenges like integration difficulties and overly diversified operations that can arise from mergers and acquisitions. The conclusion emphasizes learning from others' mistakes, clearly defining objectives, and acquiring expertise to interpret changes.
Explanation of the differences between mergers and takeovers, Main motives for merger or takeover, Types of M&A, Historical overview of Merger and acquisition, Main problems of M&A
1. The document discusses synergy in mergers and acquisitions, defining it as the combined company being able to generate higher shareholder wealth than the standalone entities.
2. It provides an example of Procter & Gamble's acquisition of Gillette in 2005, creating the world's largest consumer goods company.
3. Estimates indicate the merger generated $5.49 billion in synergistic value by achieving economies of scale, improved margins, and growth rates for the combined company beyond what the firms could achieve independently.
This document is a project report on mergers and acquisitions submitted by Mr. Sunil Shendage. It includes an acknowledgement, objective, table of contents, preface, and various sections analyzing mergers and acquisitions such as the acquisition process, forms of corporate downsizing, the legal procedure, mergers in the IT sector, risk in mergers and acquisitions, and a case study on TATA Tea and Tetley. The report discusses the meaning of mergers and acquisitions, types of mergers like vertical, horizontal, circular and conglomerate combinations, and common objectives for business combinations such as growth, synergy, managerial efficiency, market entry, and diversification.
Mergers and acquisitions involve the combination of two or more companies. A merger combines two approximately equal-sized companies, while an acquisition sees one larger company purchase a smaller one. There are several types of mergers, including horizontal (between competitors), vertical (between companies in a supply chain), and conglomerate (between unrelated industries). Reasons for mergers and acquisitions include gaining synergies between companies, removing unprofitable business lines, focusing on core competencies, generating cash, withstanding competition, and facilitating further growth.
International mergers and acquisitionsKanku Baruah
The document discusses mergers and acquisitions (M&A) from several perspectives. It describes M&A as a strategy for companies to achieve growth through purchasing other companies. Different types of mergers are outlined based on the nature of the merging companies, including horizontal, vertical, conglomerate, product-extension, and market-extension mergers. The acquisition process and types of takeovers (hostile vs friendly) are also summarized. Specific examples provided include the ArcelorMittal merger forming the world's largest steel producer, and Procter & Gamble's acquisition of Gillette to become the largest consumer goods company.
The document provides an overview of mergers and acquisitions in India, including:
1) It describes different types of mergers such as horizontal, vertical, congeneric, and conglomerate mergers. It also describes different types of acquisitions such as friendly, hostile, leveraged buyouts, and bailout takeovers.
2) It explains the legal and regulatory process for M&As in India, including the letter of intent, due diligence, transition agreements, representations and warranties in the agreement, and confidentiality agreements.
3) Key steps in the M&A process include negotiating a letter of intent, conducting due diligence, drafting the merger agreement to address issues found in due dilig
The document provides an overview of mergers and acquisitions through a presentation covering various topics:
1. It defines a merger as a combination of two companies where one is absorbed by the other, while an acquisition means one larger company takes over the shares and assets of a smaller company.
2. The merger and acquisition process involves preliminary assessment, a proposal, exit planning, structured marketing, and integration of the companies.
3. Different types of mergers and acquisitions are described such as horizontal, vertical, co-generic, and conglomerate mergers as well as friendly, reverse, hostile, and back-flip acquisitions.
4. Benefits, problems, impacts on stakeholders, and
This document provides an overview of mergers and acquisitions. It defines mergers and acquisitions, describes the different types of mergers including horizontal, vertical, conglomerate and concentric mergers. It also outlines the key steps in the M&A process including company analysis, valuation, due diligence, approval and closing. Common valuation methods and financing options are also summarized. The document concludes with examples of major M&A deals in India.
The document discusses the Indian pharmaceutical industry and opportunities for growth through collaboration. It notes that India's introduction of product patents in 2005 opened the industry to foreign investment while domestic companies are becoming global players through acquisitions. Opportunities exist for partnerships between multinational and domestic firms for research, manufacturing, and developing India's large untapped market. However, challenges remain around increasing access to medicines for India's population which requires public-private partnerships and encouraging research. The report provides insights from industry leaders on how to realize opportunities through unprecedented collaboration between industry and government.
This document provides an overview of mergers and acquisitions (M&A). It discusses key topics such as the definition of mergers and acquisitions, the regulations governing M&A in India, common motives for M&A including economies of scale and market share, methods for valuing businesses for M&A deals, potential risks of M&A like integration issues, and examples of major M&A deals by Indian companies globally and in various industries. The document aims to give the reader a broad understanding of the M&A landscape in India.
The Performance of Every Dividend Aristocrat During The Great RecessionSure Dividend
This presentation investigates the performance of every Dividend Aristocrat during the Great Recession by looking at both earnings trends and stock price performance.
You can view the full list of Dividend Aristocrats below (sorted by sector):
Consumer Staples
Archer-Daniels-Midland (ADM)
Brown-Forman (BF-B)
Colgate-Palmolive (CL)
Clorox (CLX)
Coca-Cola (KO)
Hormel Foods (HRL)
Kimberly-Clark (KMB)
McCormick & Company (MKC)
PepsiCo (PEP)
Procter & Gamble (PG)
Sysco Corporation (SYY)
Wal-Mart (WMT)
Walgreens Boots Alliance (WBA)
Industrials
A.O. Smith (AOS)
Cintas (CTAS)
Dover (DOV)
Emerson Electric (EMR)
Illinois Tool Works (ITW)
3M (MMM)
Pentair (PNR)
Roper Technologies (ROP)
Stanley Black & Decker (SWK)
W.W. Grainger (GWW)
General Dynamics (GD)
Health Care
Abbott Laboratories (ABT)
AbbVie (ABBV)
Becton, Dickinson & Company (BDX)
Cardinal Health (CAH)
Johnson & Johnson (JNJ)
Medtronic (MDT)
Consumer Discretionary
Genuine Parts Company (GPC)
Leggett & Platt (LEG)
Lowe’s (LOW)
McDonald’s (MCD)
Target (TGT)
V.F. Corporation (VFC)
Financials
Aflac (AFL)
Cincinnati Financial (CINF)
Franklin Resources (BEN)
S&P Global (SPGI)
T. Rowe Price Group (TROW)
Materials
Air Products and Chemicals (APD)
Ecolab (ECL)
PPG Industries (PPG)
Praxair (PX)
Sherwin-Williams (SHW)
Nucor (NUE)
Energy
Chevron (CVX)
Exxon Mobil (XOM)
Information Technology
Automatic Data Processing (ADP)
Real Estate
Federal Realty Investment Trust (FRT)
Telecommunication Services
AT&T (T)
Utilities
Consolidated Edison (ED)
Mergers allow companies to increase in value by combining resources, achieve better financial planning through diversification of operations, and realize economies of scale by utilizing combined production and distribution networks. Mergers also enable growth through external expansion and expertise in new areas, as well as stabilization through diversifying business scopes and consistently earning profits despite economic fluctuations. However, mergers can negatively impact the national economy, eliminate healthy competition from smaller competitors, and lead to monopolies through excessive concentration of economic power which is undesirable for customers.
Ranbaxy has a choice between continuing as a manufacturer of generic drugs or developing proprietary medicines. It could potentially do both by continuing low-cost generic production while beginning to develop patented drugs in India, which has a suitable but improving infrastructure for innovation. Ranbaxy should focus on both developing and developed markets through mergers and strategic partnerships that give it access to foreign markets and resources, especially in geographically and culturally close countries like Russia and China.
This document discusses various options for corporate restructuring. It identifies mergers, acquisitions, joint ventures, tender offers, and asset acquisitions as common restructuring options. Corporate restructuring involves activities related to expanding or contracting a firm's operations or changing its assets or ownership structure. Common forms of restructuring include mergers, acquisitions, divestitures, and demergers. The document further categorizes restructuring options into expansion, sell-offs, changes in corporate control, and changes in ownership structure.
The document discusses various aspects of corporate restructuring in India such as mergers, amalgamations, demergers, slump sales, and financial restructuring. It provides an overview of the key regulations governing takeovers in India from the Securities and Exchange Board of India. Examples of different corporate restructuring techniques including mergers and demergers are presented along with considerations around valuation, share exchange ratios, stamp duty implications and more. Two case studies demonstrating the use of group restructuring to increase promoter shareholding are also summarized.
The document discusses mergers and acquisitions (M&A). It describes different types of M&A including mergers, acquisitions, amalgamations, spin-offs, and de-mergers. It also discusses the key differences between mergers and acquisitions. Mergers involve combining two companies into a single new company, while acquisitions involve one company purchasing another to make it a subsidiary. The document outlines various valuation methods used in M&A like asset valuation, income valuation, and market valuation. It also lists potential motives and benefits of M&A like economies of scale, market expansion, and absorption of similar businesses. However, it notes mergers and acquisitions can also face challenges like clashes of corporate culture
The document discusses sources of value creation through mergers and acquisitions. It defines value and value creation, and outlines four models for creating value through M&A: Ansoff's product market matrix model, BCG matrix model, grand matrix model, and industry/product life cycle. The models identify strategies like market penetration, product development, backward integration, and diversification that can be applied at different stages to generate synergies, economies of scale, access to new markets and technology, and limit competition. A case study is presented of two companies merging to access new regions, diversify products, and realize cost savings, ultimately increasing shareholder wealth.
The document discusses corporate restructuring. It defines corporate restructuring as reorganizing a company to make it more efficient and profitable through activities like selling parts of the company, staff reductions, and adapting to new markets. Some common reasons for restructuring include changes in fiscal policies, liberalization, globalization, new technology, cost reduction, enhancing shareholder value, and adapting to environmental changes. The overall goal of corporate restructuring is to introduce changes to improve a company's structure and performance and return it to profitability.
Corporate restructuring study material-final (2)Haridas Karath
This document provides an overview of various types of corporate restructuring transactions under Indian law. It begins by discussing mergers and amalgamations, noting the technical differences between the two but their common use. It then covers the different types of mergers (horizontal, vertical, congeneric, and conglomerate), as well as cash mergers and triangular mergers. Next, it discusses acquisitions, including friendly takeovers, hostile takeovers, and leveraged buyouts. It also mentions bailout takeovers. Finally, it briefly outlines strategic alliances, joint ventures, and demergers as other forms of corporate restructuring.
This presentation discusses mergers and acquisitions. There are several types of mergers, including horizontal mergers between companies in the same industry, vertical mergers between suppliers and customers, and conglomerate mergers between unrelated businesses. Mergers can occur through absorption, where one company acquires another, or through consolidation, where both companies dissolve to form a new entity. Acquisitions occur when one company takes control of another. Motives for mergers and acquisitions include growth, market power, diversification, economies of scale, and access to new resources or markets. The process of analyzing a potential merger or acquisition involves planning, searching for targets, financial evaluation, determining the acquisition method, negotiation, and post-merger integration.
The document discusses sources of value creation through mergers and acquisitions (M&A). It outlines four main models: Ansoff's Product Market Matrix, BCG Matrix, Grand Matrix, and Industry/Product Life Cycle. These models identify strategies like market penetration, integration, diversification and divestment that can generate value at different stages of a product or industry's development. Case studies demonstrate how merging two companies can provide benefits like increased revenues and markets through synergies, cost savings, and access to new technologies. Overall, the document argues that M&A can be an important part of long-term value creation for companies when the right strategic rationale is applied.
Section 230 to 233 of Companies Act, 2013
Procedure for Scheme of Compromise, Amalgamation and Arrangement.
Also it covers the newly introduced Sec. 233 of Companies Act, 2013 for FAST TRACK MERGER
Due Diligence for Merger & Acquisition, Corporate Restructuring and TakeoverPavan Kumar Vijay
This document provides an overview of due diligence for mergers and acquisitions. It discusses why due diligence is important, the objectives of due diligence, common types of due diligence including financial, legal, tax and operational due diligence. It also outlines the due diligence process, key focus areas, common issues in India and case studies. The goal of due diligence is to evaluate all material aspects of a target company to identify risks and determine an appropriate purchase price, while aiming to make deals rather than kill them.
The document summarizes the evolution of the Indian pharmaceutical industry over several phases from 1970 to the present. It began with foreign company domination and a lack of organized Indian companies. From 1970-1980 the government instituted controls over drug prices and local companies began to grow. From 1980-1990 the industry expanded domestically and internationally. From 1990-2000 research became a greater focus. Currently India has over 3000 pharmaceutical companies and aims to be a global leader in drug manufacturing due to lower costs. The industry has seen steady growth between 13-14% in recent years.
Corporate restructuring involves merging, acquiring, divesting or reorganizing assets and liabilities within a company or between different companies in order to improve efficiency and performance. Sections 391-394 of the Companies Act, 1956 provide the most liberal provisions for carrying out restructuring through schemes of arrangement, which allow companies to achieve complex restructuring objectives with approval of the High Court. Common types of restructuring include mergers, demergers, and reduction of capital. Companies must comply with listing agreements, stock exchange norms, and other applicable laws when undertaking corporate restructuring.
This presentation enumerates the practical aspects of merger, demerger and reduction of capital and the strategies involved therein. It also highlights certain key issues involved in corporate restructuring.
The document discusses mergers and provides details about the merger between HDFC Bank and Centurion Bank of Punjab in 2009. It was one of the largest mergers in the banking sector in India. The merger added 394 branches and 19% more assets to HDFC Bank. It increased HDFC Bank's network making it the largest private bank in India. The merger provided synergies around products, management expertise, and geographic expansion. However, HDFC Bank had to write-off Rs. 70 crores to harmonize accounting policies between the two banks.
1) basic concepts of corporate restructuring (1)Vikeyiel Rhetso
Corporate restructuring involves changes to a company's capital structure, operations, or ownership outside the ordinary course of business. Reasons for restructuring include sales enhancement, improved management, tax benefits, and leverage gains. There are two main types of restructuring - operational restructuring like workforce reductions, and financial restructuring like leveraged buyouts. Mergers, acquisitions, divestitures and spin-offs are common forms of corporate restructuring.
A merger occurs when one company purchases another company of a similar size, transferring ownership and control to form a single new company. Companies usually merge when they feel they can accomplish more together than separately. There are three main types of mergers: horizontal, vertical, and conglomerate. Mergers can take place through purchasing assets, purchasing common shares, exchanging shares for assets, or exchanging shares for shares. Reasons for mergers include increasing market share, achieving economies of scale, diversifying risk, and pursuing future goals or expansion of business.
Corporate restructuring refers to changes in ownership, business mix, assets, and alliances to enhance shareholder value. It may involve ownership, business, or assets restructuring through mergers, acquisitions, divestitures, strategic alliances, joint ventures, employee stock ownership plans, or leverage buyouts. The main motives for restructuring include limiting competition, achieving economies of scale, and gaining access to new markets. Valuation methods like discounted cash flow are used to evaluate restructuring transactions.
Mergers and acquisitions involve the combination of two or more companies. Mergers see the merging companies fully integrate to form an entirely new company, while acquisitions see one company purchase another but maintain separate operations. Mergers and acquisitions allow companies to achieve synergies, diversify, grow, and eliminate competition. Common types of mergers include horizontal, vertical, market extension, product extension, and conglomerate mergers. India has seen several large M&A deals over the years across various industries.
The Indian pharmaceutical industry faces competitive forces including the threat of new entrants, bargaining power of customers and suppliers, and competitive rivalry among existing firms. The document discusses Porter's five forces framework and outlines strategies for Indian pharmaceutical companies to boost competitiveness such as increasing R&D expenditures, rationalizing drug price controls, improving industry-academic relationships, and exploiting opportunities in generic drugs and traditional medicines. It also analyzes strengths, weaknesses, opportunities and threats for the industry.
The document discusses the Indian pharmaceutical industry and analyzes the efficiency of firms using data envelopment analysis (DEA). It notes that the industry is undergoing a shift from a process patent to product patent regime, which will impact generic drug production. DEA is used to measure the relative efficiency of 44 listed pharmaceutical companies over 10 years, examining factors like costs, revenues, and growth. The results from the CCR, BCC, and AR DEA models are analyzed to determine if internal efficiencies correlate with firm growth in this dynamic industry environment.
The Indian pharmaceutical industry is the second largest by volume globally and is a major contributor to India's economy. While Indian pharmaceutical companies initially made their mark through reverse engineering generic drugs, they are now investing more in research and development to develop new drug molecules. However, challenges remain as stricter patent laws have reduced the market for generic drugs and small companies are struggling to meet higher regulatory standards.
Implications for indian_pharmaceuticalsAkshay Bawa
Global pharmaceutical companies are facing a major "patent cliff" between 2010-2015 as drugs worth $100 billion lose patent protection. This provides opportunities for Indian generic drug firms to gain market share. Indian companies have evolved into globally competitive generic producers through regulatory changes and low-cost manufacturing advantages. However, to succeed long-term, firms will need to focus on niche areas, new drug delivery systems, and backward integration in production. Other Indian industries like contract research and manufacturing are also well positioned to benefit from the patent cliff through outsourcing from major pharmaceutical companies.
The document discusses marketing strategies used by pharmaceutical companies. It notes that companies are shifting from acute therapies to focusing more on chronic therapies that require long-term treatment. This allows companies to build more stable customer bases. The document also outlines some of the challenges companies face, such as increased competition, high costs of research and development, and complex decision-making processes involving doctors, patients, and other stakeholders. It discusses two common business models - the "super core model" involving a small number of highly successful chronic drugs, and the "core model" involving marketing a larger number of acute drugs.
The document discusses marketing strategies used by pharmaceutical companies. It notes that companies are shifting from acute therapies to focusing more on chronic therapies. This represents a long-term strategy change as chronic therapies require doctors to prescribe the same drugs for longer periods. The document also outlines some of the challenges pharmaceutical companies face in marketing to different customers in the supply chain from doctors to patients. It discusses strategies around patents, research and development, and pursuing either a "super core" model focused on a small number of chronic drugs or a "core" model marketing more acute drugs.
Pharmaceutical Contract Manufacturing Opportunities Published In Chemical W...jeffry6666
Thought Note on Emerging Opportunities in Pharmaceutical Contract Manufacturing in India. Published in Chemical weekly magazine and IndiaChem 08 International Conference and Exhibition
Merck Paper Securities and Protfolio AnalysisJason Sandoy
Merck & Co. is a large pharmaceutical company that produces many drugs across different medical fields. The report recommends buying Merck stock based on its large drug pipeline, cost savings initiatives, and undervaluation relative to estimates. Merck allocates billions to research and development each year to develop new drugs and maintain a diverse portfolio to drive future growth. While some ratios show Merck lagging competitors, its growth rates exceed industry averages, and initiatives to reduce costs are expected to increase returns. Overall the report finds Merck positioned for continued growth and profitability.
The document discusses mergers and acquisitions (M&A) in the pharmaceutical industry. It outlines problems faced by Indian pharmaceutical companies like pricing controls and fragmented markets. It also discusses trends in M&A activity, with multinational companies acquiring Indian firms for access to generic drugs and manufacturing. Reasons for M&A include expanding into new markets, cutting costs, and gaining access to biologics with longer commercial lifespans. The document also lists other inorganic growth strategies used in the industry like strategic alliances, outsourcing, and co-marketing agreements.
pwc cii-pharma_summit_enhancing value through partnershipsbrandsynapse
India Pharma Inc. explores how alliances and partnerships are enhancing value in the pharmaceutical industry. The global context of rising healthcare costs, impending patent cliffs, and declining R&D productivity is driving companies to collaborate. In India, the growing domestic market and low-cost manufacturing are attracting foreign investment through mergers, acquisitions, and partnerships focused on product sourcing, drug discovery, and marketing. Successful partnerships depend on factors like quality, management control, cultural differences, and thorough due diligence. Collaboration across the pharmaceutical industry and with other sectors will be important for sustainable growth.
Impact of mergers and acquisition of pharmaceutical industry in indian scenarioNitin Patel
Mergers and acquisitions in the pharmaceutical industry allow companies to broaden their product portfolios, acquire new technologies and markets, and increase efficiency. The document discusses several major deals, including Pfizer-Wyeth, Ranbaxy-Daiichi Sankyo, and Piramal-Abbott. While M&As can increase competitiveness, market share and R&D, they may also lead to job losses and decreased productivity as companies consolidate operations. Overall, the impacts of pharmaceutical industry M&As are mixed, with benefits around scale and risks around reduced competition and innovation.
The document discusses opportunities and challenges facing India's pharmaceutical industry. It notes that as drug patents expire, Indian generic drug producers are well-positioned to expand globally. It also discusses how India is becoming an attractive location for multinational drug companies to outsource research, development, and manufacturing activities due to its scientific expertise and lower costs. Further, India's large population represents a major potential domestic market, though expanding access to medicines is challenging. The industry now has opportunities for both foreign and domestic firms to partner and leverage each other's strengths for mutual benefit.
The growth of India's domestic pharma industry is expected to slow to 12-13% in 2011 due to weak macroeconomic factors and increased competition from unlisted players and MNC pharma companies. This will lead analysts to cut domestic growth estimates by 3-7% and earnings estimates by 2-9% for some major companies in fiscal year 2012. While most companies will face challenges, Glenmark, IPCA, Sun Pharma and Lupin are expected to outperform industry growth rates.
Project on Production and Packaging in Pharmaceutical Industry Emcure By Nikh...Nikhil Dhawan
The pharmaceutical industry in India is the third largest in volume worldwide. It has grown at a compound annual growth rate of 13-17% between 2012-2016 and is projected to reach $55 billion by 2020. The industry has grown due to low production costs and a 1970 patent law that enabled generic drug production. While Indian companies pioneered generics, they now face challenges developing new drugs due to a lack of R&D investment and qualified researchers. The biotechnology industry in India has also grown significantly but remains smaller than the pharmaceutical industry, focusing on vaccines and contract manufacturing. The government supports the industries through funding and incentives.
The document provides an analysis of the Indian pharmaceutical industry. Some key points:
- The industry has grown 14% annually since 2007 to over Rs. 1 lac crores in 2011-12.
- Porter's 5 Forces model is applied to analyze the industry. Barriers to entry are high for patented drugs but low-moderate for generic drugs. Threat of substitutes is low-moderate. Bargaining power of suppliers is low. Bargaining power of consumers is moderate. Intensity of rivalry is high due to fragmentation.
- The industry faces impacts from regulations like the Drug Price Control Order and the impending Goods and Services Tax. Trends include effects of patent law amendments and plans to increase public-private
The opportunities for the Indian pharmaceutical industry are immense but increasing competition, increasing regulatory pressures and stringent price control means that companies need to constantly improve their costs and service levels. Supply chain efficiencies will play a crucial role going forward and will become the key differentiator for companies. Companies will therefore need to adopt an approach that encompasses strategic, tactical and operational interventions to remain competitive and create value for their customers
Oppi Ey Report Unlocking The Potential Of The Pharma Distribution Channelhealthcaremanas
The document discusses unlocking the potential of the pharmaceutical distribution channel in India. A survey was conducted of pharmaceutical companies, distributors, and retailers. Key findings include: sales are being lost due to ineffectiveness of the post-CFA supply chain in making products available to consumers; and excess inventory levels and month-end inventory skews exist due to inefficiencies in the supply chain. The implications for the industry are that distribution needs to be strategically leveraged for growth rather than seen as an operational function alone. Potential solutions and their benefits are outlined.
Active Pharma Ingredients (API) - Global Market Estimated to Reach US$ 21.9 b...Ajjay Kumar Gupta
Active Pharma Ingredients (API) - Global Market Estimated to Reach US$ 21.9 billion by 2023: Investment Opportunity for Startups and Entrepreneurs, Medications, Drugs and Pharmaceuticals, Cephalexin Monohydrate, Ampicilin Trihydrate, Ibuprofen Manufacturing Plant, Detailed Project Report, Profile, Business Plan, Industry Trends, Market Research, Survey, Manufacturing Process, Machinery, Raw Materials, Feasibility Study, Investment Opportunities, Cost and Revenue, Plant Economics, Production Schedule, Working Capital Requirement, Plant Layout, Process Flow Sheet, Cost of Project, Projected Balance Sheets, Profitability Ratios, Break Even Analysis
Production of active pharmaceutical ingredients is a highly sophisticated and technically demanding process. The global active pharmaceutical ingredient market is surging due to the increased demand for pharmaceutical drugs, which in turn is driven by aging population, increasing prevalence of chronic diseases such as cancer, diabetes, cardiovascular, neurological and infectious diseases among others. The global Active Pharmaceutical Ingredient market for was valued at US$ 12.9 bn in 2014 and is estimated to reach US$ 21.9 billion by 2023 at a CAGR of 6.3% from 2015 to 2023.
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Emerging markets like China, India, and Brazil are driving growth in the pharmaceutical industry. This is affecting contract manufacturing organizations (CMOs) in three key ways:
1) CMOs face increased competition from large pharmaceutical companies investing in local production in these countries.
2) Demand is shifting to smaller niche products, requiring CMOs to develop new skills and business models.
3) A lack of qualified talent in emerging markets makes it difficult for CMOs to take advantage of new opportunities or produce more complex products. CMOs must invest in training and recruiting to develop the skills needed.
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Mergers, Acquisition and corporate restructuring- Case Analysis
1. MERGERS, ACQUISITIONS AND
CORPORATE RESTRUCTURING
TERM PROJECT – Daiichi & Ranbaxy
2/11/2008
Merger
The report intends to analyze the Daiichi – Ranbaxy
deal in detail to fan out the benefits, synergies,
issues and bottlenecks arising out of the merger.
2. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
MERGERS, ACQUISITIONS AND CORPORATE
RESTRUCTURING
TERM PROJECT
COMPLIED BY:
MANISH BALLAL
NIIRAJ KOTHAWADE
RAJEEV TIWARI
SAIRAM IYER
SANDEEP VADNERE
1
Page
3. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
A NEWSPAPER SNIPPET
“June 11, 2008 – Daiichi Sankyo Company, Limited (TSE: 4568.JP) (“Daiichi Sankyo”), one of the largest
pharmaceutical companies in Japan, and Ranbaxy Laboratories Limited (NSE/BSE: Ranbaxy/500359) (“Ranbaxy”),
among the top 10 generic companies in the world and India’s largest pharmaceutical company, today announced that
a binding Share Purchase and Share Subscription Agreement (the “SPSSA”) was entered into between Daiichi
Sankyo, Ranbaxy and the Singh family, the largest and controlling shareholders of Ranbaxy (the “Sellers”), pursuant
to which Daiichi Sankyo will acquire the entire shareholding of the Sellers in Ranbaxy and further seek to acquire the
majority of the voting capital of Ranbaxy at a price of Rs737 per share with the total transaction value expected to be
between US$3.4 to US$4.6 billion (currency exchange rate: US$1=Rs43). On the post closing basis, the transaction
would value Ranbaxy at US$8.5 billion.”
1
Page
5. INDIAN PHARMA INDUSTRY
CURRENT SCENARIO
India currently holds US$ 7.5 Billion of the $550 Billion global
pharmaceutical industry; its share is increasing at 10% a year.
As compared 7% annual growth for the overall world markets,
this figure speaks of a very promising scenario.
Domestic pharmaceutical companies will increasingly be
looking for consolidation across the value chain by
forming partnerships or mergers with companies of
complementary strengths. As drug discovery becomes
more expensive, and the costs of administration and
regulatory compliance continuously rise, these
partnerships will become more central to
Pharma companies' business proposition.
The Bio Pharmaceutical market is seeing a consistent
growth trend since 2004, which saw record vaccine sales
of US$ 386.3 Million.
CUSTOMER SEGMENTS
The present sales organization in many pharma companies is
oriented towards three customer segments:
(1) Physicians
(2) Hospitals, wholesalers and pharmacies,
6. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
(3) Endcustomers, i.e. patients
PORTER’s FIVE FORCES MODEL FOR INDIAN PHARMA INDUSTRY
1
Page
7. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
INDUSTRY COMPETITION
Pharma industry is one of the most Another major factor that adds to the
competitive industries in the country industry rivalry is the fact that the entry
with as many as 10,000 different barriers to pharma industry are very
players fighting for the same pie. The low. The fixed cost requirement is low
rivalry in the industry can be gauged but the need for working capital is
high.
from the fact that the top player in the
country has only 6% market share, and
The fixed asset turnover, which is one
the top five players together have about
of the gauges of fixed cost
18% market share.
requirements, tells us that in bigger
Thus, the concentration ratio for this companies this ratio is in the range of
industry is very low. High growth 3.5 to 4 times. For smaller companies,
it would be even higher.
prospects make it attractive for new
players to enter in the industry.
times average in India). Though volume
growth has been consistent over a
Many smaller players that are focused
period of time, value growth has not
on a particular region, have a better
followed in tandem.
hang of the distribution channel,
making it easier to succeed, albeit in a The product differentiation is one key
limited way. factor, which gives competitive
advantage to the firms in any industry.
An important fact is that pharma is a
In pharma industry product
stable market and its growth rate
differentiation was not possible since
generally tracks the economic growth
India had followed process patents till
of the country with some multiple (1.2
2004, with laws favouring imitators.
2
Page
8. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
BARGAINING POWER OF BUYERS
However, on Jan 1st 2005, keeping in
tune with WTO requirements, the
industry switched to a product-patent
regime.
The unique feature of pharma industry In pharma industry, the buyers are
is that the end user of the product is scattered and they as such does not
different from the influencer (read wield much power in the pricing of the
doctor). The consumer has no choice products. However, government with its
but to buy what doctor says. However, policies, plays an important role in
when we look at the buyer's power, we regulating pricing through the NPPA
look at the influence they have on the (National Pharmaceutical Pricing
prices of the product. Authority).
BARGAINING POWER OF SUPPLIERS
The pharma industry depends upon However, what can happen is that the
several organic chemicals. The chemical supplier can go for forward integration
industry is again very competitive and to become a pharma company.
fragmented. The chemicals used in the Companies like Orchid Chemicals and
pharma industry are largely a Sashun Chemicals were basically
commodity. chemical companies, who turned
themselves into pharmaceutical
The suppliers have very low bargaining
companies.
power and the companies in the
BARRIERS TO ENTRY
pharma industry can switch from their
suppliers without incurring a very high
Pharma industry is one of the most
cost.
easily accessible industries for an
entrepreneur in India. The capital
1
Page
9. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
requirement for the industry is very
low, creating a regional distribution This model gives a fair idea about the
network is easy, since the point of sales industry in which a company operates
is restricted in this industry in India. and the various external forces that
influence it.
However, creating brand awareness and
franchisee amongst doctors is the key Going forward, we foresee increasing
for long-term survival. Also, quality competition in the industry but the
regulations by the government may put form of competition will be different. It
some hindrance for establishing new will be between large players (with
manufacturing operations. economies of scale) and it may be
possible that some kind of oligopoly or
cartels come into play.
This is owing to the fact that the
This is one of the great advantages of
industry will move towards
the pharma industry. Whatever
consolidation. The larger players in the
happens, demand for pharma products
industry will survive with their
continues and the industry thrives. One
proprietary products and strong
of the key reasons for high
franchisee.
competitiveness in the industry is that
as an on going concern, pharma The barriers to entry will increase going
industry seems to have an infinite forward. The change in the patent
future. regime, will see new proprietary
products coming up, making imitation
However, in recent times, the advances
difficult. The players with huge capacity
made in the field of biotechnology, can
will be able to influence substantial
prove to be a threat to the synthetic
power on the fringe players by their
pharma industry.
aggressive pricing which will create
hindrance for the smaller players.
CONCLUSION
1
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10. SWOT ANALYSIS
Strengths New innovative therapeutic products
Globalization
Cost effective technology
Drug delivery system management
Knowledge based, low- cost
manpower in science & technology Increased incomes
High standards of purity Production of generic drugs
Non-infringing processes of Active
Contract manufacturing
Pharmaceutical Ingredients (APIs)
Future growth driver Threats
Small number of discoveries
Weaknesses
Competition from MNCs
Low Indian share in world Transformation of process patent to
pharmaceutical market (about 2%) product patent (TRIPS)
Lack of strategic planni g
n Outdated Sales and marketing
methods
Fragmented capacities
Non-tariff barriers imposed by
Low R&D investments
developed countries
Absence of association between
institutes and industry
Low healthcare expenditure KEY DRIVERS OF DEMAND: PUSH-PULL
MARKETING STRATEGIES
Production of duplicate drugs
The push aspect would be targeted
Opportunities towards the doctors and other medical
practitioners, who are the drivers of
Incredible export potential
demand in this sector. Drugs
Increasing health consciousness
11. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
prescribed to patients are normally Advertising and consumer awareness
adhered to by them campaigns are gaining importance and
we are increasingly witnessing
The pull aspect would mean demand
elaborate campaigns like say Cipla's
from the consumers’side.
Asthma TV commercials. Informing
Traditionally, pharma companies have consumers about diseases in general
targeted their marketing towards the and then introducing their drug in the
push side, targeting doctors mainly. presentation is the new way to embed
However, the last few years have drug names into the consumer's mind.
ushered a new era.
quot;OTC drugs are close to FMCG goods in
a lot of ways,quot; says Asha Kapoor,
The consumer is king, invest in the pull Executive Director, Sudler & Hennessey.
and reduce the push. This is emerging But now it's the prescription drugs, take
as the preferred marketing strategy of the GSK print media campaign for its
pharma companies like Cipla, Dr Hepatitis A and B campaign, which was
Reddy's, Sun Pharma for their supported by road shows and was
prescription drugs, a route that over- launched in the hepatitis season.
the-counter (OTC ) drugs took long
back. quot;Vaccines are taken when people are
well, as opposed to antibiotics, where
Earlier, most companies used to the choice factor is much less present,quot;
approach doctors with their a GSK spokesperson said. Hence it's
prescription drugs, offering carrots like possible to urge consumers to exercise
junkets for a particular number of a conscious choice. To keep to the
prescriptions. Now they've realized the rules, vaccine names are not displayed.
long-term benefits in building brands
and creating informed, loyal The rules are limiting but now that
consumers. companies have tasted blood they will
find ways and means of keeping the
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12. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
consumer aware of their brands. At the industry has fallen to a record low. For
end, that may be good for consumer the top 20 pharma companies,
too. productivity has fallen from an average
of 1.5 new products annually during
According to AdEx India, Print most of the 1990s, to just under one
product per company, since 2000.
advertising of OTC sector grew by 9%
during Jan-Sept '07 and 'Cipla I-Pill'
With such poor productivity levels, it is
was the most advertised new brand in
not surprising that mergers and
Print
acquisitions have again risen to the
forefront of many executives’ minds as
an immediate route to strengthening
RECENT TRENDS
R&D pipelines and increasing
shareholder value.
Today, there is a global trend towards
consolidation which going forward, will
Apart from the patented pharmaceutical
only gather steam, as pressure to
and biotech companies scouting for
synergize within the pharmaceutical
acquisition in newer geographies to
industry is increasing. The lack of
launch their patented molecules, widen
innovative research and development
product basket and strengthen R&D
(R&D), expiring patents, generic
pipelines, the global generics market
competition and high profile product
has also undergone an unprecedented
recalls are driving the mergers and
consolidation wave in the past two
acquisition (M&A) activity in the global
years. Of the recent noted transactions
pharmaceutical and biotech sector.
are Sun Pharma’s (India) acquisition of
Taro (Israel), DRL’s (India) acquisition of
The most pressing need for many
betapharm (Germany) and Barr’s long
pharma companies in the world is to
contested acquisition of Pliva (Croatia)
create a pool of new products to secure
future growth. According to Scrip, in
The spate of mergers and acquisitions
recent years, productivity in the pharma
by Indian companies has ushered an
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13. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
era of the “Indian Pharmaceutical MNC”. especially via the inorganic route.
After traversing the learning curve Companies such as Ranbaxy,
through partnerships and alliances with Wockhardt, Cadila, Matrix, and Jubilant
international pharmaceutical firms, have made one or more European
Indian pharmaceutical companies have acquisitions, while others such as
now moved up a step in the value chain Torrent are also scouting for potential
targets.
and are looking at inorganic route to
grow through acquisitions. Many top-
and mid-tier Indian companies have
gone on a global “shopping spree” to
Besides gaining a faster entry into the
build up critical mass in International
target market, one of the basic
markets. Also, given the easy access to
strategies behind the acquisitions
global finance the Indian companies are
remains that of leveraging India’s low
finding it easier to fund their
cost advantage by shifting the
acquisitions.
manufacturing base to India. At the
Over the last two years, several Indian
same time, the acquired companies
companies have targeted the developed
also serve as an effective frontend for
markets in their pursuit of growth,
Indian companies in these markets.
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15. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
leadership of its current CEO &
Managing Director Malvinder Singh.
The main benefit for Daiichi Sankyo
from the merger is Ranbaxy’s low-cost
manufacturing infrastructure and
supply chain strengths. Ranbaxy gains
access to Daiichi Sankyo’s research and
development expertise to advance its
branded drugs business. Daiichi
Sankyo’s strength in proprietary
medicine complements Ranbaxy’s
leadership in the generics segment and
both companies acquire a broader
product base, therapeutic focus areas
and well distributed risks. Ranbaxy can
also function as a low-cost
manufacturing base for Daiichi Sankyo.
THE DEAL
Ranbaxy, for itself, gains smoother
access to and a strong foothold in the
Daiichi Sankyo Co. Ltd. signed an
Japanese drug market. The immediate
agreement to acquire 34.8% of Ranbaxy
benefit for Ranbaxy is that the deal
Laboratories Ltd. from its promoters for
frees up its debt and imparts more
$2.4 billion at $17 per share. Daiichi
flexibility into its growth plans. Most
Sankyo expects to increase its stake in
importantly, Ranbaxy’s addition is said
Ranbaxy through various means such
to elevate Daiichi Sankyo’s position
as preferential allotment, public offer
from #22 to #15 by market
and preferential issue of warrants to
capitalization in the global
acquire a majority in Ranbaxy, i.e. at
pharmaceutical market.
least 50.1%. After the acquisition,
Ranbaxy will operate as Daiichi
SYNERGIES
Sankyo’s subsidiary but will be
managed independently under the
The key areas where Daiichi Sankyo and
Ranbaxy are synergetic include their
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16. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
respective presence in the developed the gaps that exist in greater detail.
and emerging markets. While Ranbaxy’s Ranbaxy has a greater share of the
strengths in the 21 emerging generic entire set of patents filed by both
drug markets can allow Daiichi Sankyo companies in the period 1998-2007.
to tap the potential of the generics While Daiichi Sankyo’s patenting
business, Ranbaxy’s branded drug activity has been rather mixed,
development initiatives for the Ranbaxy, on the other hand, has
developed markets will be significantly witnessed a steady uptrend in its
boosted through the relationship. To a patenting activity until 2005. In fact,
large extent, Daiichi Sankyo will be able during 2007, the company’s patenting
to reduce its reliance on only branded activity plunged by almost 60% as
drugs and margin risks in mature against 2006.
markets and benefit from Ranbaxy’s
POST ACQUISITION STRATEGIC
strengths in generics to introduce
OBJECTIVES
generic versions of patent expired
drugs, particularly in the Japanese
In light of the above analyses, Daiichi
market.
Sankyo’s focus is to develop new drugs
to fill the gaps and take advantage of
Both Daiichi Sankyo and Ranbaxy
Ranbaxy’s strong areas. To overcome
possess significant competitive
its current challenges in cost structure
advantages, and have profound
and supply chain, Daiichi Sankyo’s
strength in striking lucrative alliances
primary aim is to establish a
with other pharmaceutical companies.
management framework that will
Despite these strengths, the companies
expedite synergies. Having done that,
have a set of pain points that can pose
the company seeks to reduce its
a hindrance to the merger being
exposure to branded drugs in a way
successful or the desired synergies
that it can cover the impact of margin
being realized.
pressures on the business, especially in
With R&D perhaps playing the most Japan. In a global pharmaceutical
important role in the success of these industry making a shift towards
two players, it is imperative to explore generics and emerging market
the intellectual property portfolio and opportunities, Daiichi Sankyo’s
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17. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
acquisition of Ranbaxy signals a move Daichii, there might be certain
on the lines of its global counterparts conflict of interest while taking
Novartis and local competitors Astellas strategic long term decisions.
Pharma, Eesei and Takeda
POST MERGER ANALYSIS
Pharmaceutical. Post acquisition
challenges include managing the
In summary, Daiichi Sankyo’s move
different working and business cultures
to acquire Ranbaxy will enable the
of the two organizations, undertaking
company to gain the best of both
minimal and essential integration and
worlds without investing heavily into
retaining the management
the generic business. The patent
independence of Ranbaxy without
perspective of the merger clearly
hampering synergies. Ranbaxy and
indicates the intentions of both
Daiichi Sankyo will also need to
companies in filling the respective
consolidate their intellectual capital and
void spaces of the other and emerge
acquire an edge over their foreign
as a global leader in the
counterparts.
pharmaceutical industry.
Furthermore, Daiichi Sankyo’s
INTEGRATION ISSUES
portfolio will be broadened to
Ranbaxy and Daichii have a include steroids and other
completely different employee technologies such as sieving
culture. This will pose some methods, and a host of therapeutic
cultural integration issues. segments such as anti-asthmatics,
Though Ranbaxy is an extremely anti-retrovirals, and impotency and
well managed and process anti-malarial drugs, to name a few.
oriented company, it will face Above all, Daiichi Sankyo will now
problems in matching up with have access to Ranbaxy's entire
Daichii’s relentless focus on range of 153 therapeutic drugs
quality. across 17 diverse therapeutic
Considerable Geographical indications.
Barriers
Additional NDAs from the US FDA on
Though there is a strategic
anti-histaminics and anti-diabetics
alignment between Ranbaxy and
is an added advantage.
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18. MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING
Through the deal, Ranbaxy has company now. While Daiichi Sankyo has
become part of a Japanese corporate stressed that it going ahead with the
framework, which is extremely reputed deal, it raises some concerns over the
in the corporate world. As a generics impending benefits and has in fact
player, Ranbaxy is very well placed in already affected Ranbaxy’s share
both India and abroad although its performance in September 2008. Post
share performance belies its true the deal, Ranbaxy’s debt will be
potential. Ranbaxy is also an emerging significantly reduced and will impart
branded drug manufacturer possessing more flexibility to pursue growth
tremendous clout in terms of strategic opportunities. The acquisition
alliances with some of the biggest corroborates the strong possibility for
players in the industry. Given Ranbaxy’s similar moves in the future, particularly
intention to become the largest from Japanese players who have begun
generics company in Japan, the displaying confidence in Indian patent
acquisition provides the company with laws and respect for intellectual
a strong platform to consolidate its property rights.
Japanese generics business. From one
of India's leading drug manufacturers,
Ranbaxy can leverage the vast research
and development resources of Daiichi
Sankyo to become a strong force to
contend with in the global
pharmaceutical sector. A smooth entry
into the Japanese market and access to
widespread technologies including,
plant, horticulture, veterinary treatment
and cosmetic products are some things
Ranbaxy can look forward as main
benefits from the deal.
However, the recent ban on the US
imports of more than 30 Ranbaxy
drugs is a major pain point for the
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