The document discusses corporate mergers and restructuring in India. It defines what a merger is and describes the different types of mergers: horizontal, vertical, conglomerate, and concentric. It provides examples of each type of merger. The document also discusses the benefits of mergers, potential problems, and reasons for merger failures. It outlines the merger process in India and considers the impact and experiences of mergers.

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Introduction
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With recession taking toll of many Indian businesses and the feeling of
insecurity surging over our businessmen, it is not surprising when we hear
about the immense numbers of corporate restructurings taking place,
especially in the last couple of years. Several companies have been taken
over and several have undergone internal restructuring, whereas certain
companies in the same field of business have found it beneficial to merge
together into one company.
•All our daily newspapers are filled with cases of mergers, acquisitions, spin-
offs, tender offers & other forms of corporate restructuring. In this context,
it would be essential for us to understand what corporate restructuring and
mergers are all about.

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What is Merger ?
MERGERMERGER
The combination of two or more companies to form a
new company.
A merger is a transaction that result in the transfer of ownership and control
of a corporation.
When one company purchases another company of an approximately similar
size. The two companies come together to become one.
Two companies usually agree to merge when they feel that they can do
something together that they can not do one their own.
oExample: Company A+ Company B= Company C.

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Mergers
Merger is all about…..

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TYPES OF MERGER
TYPES OF MERGER:
•Horizontal Merger
•Vertical Merger
•Conglomerate Merger
•Concentric Merger

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Horizontal Mergers
 Horizontal mergers:Horizontal mergers:
 A horizontal merger involves two
firms operating and competing in the
same kind of business activity.
 Textiles firm merges raw materials
firm.
- Example: Exxon - Mobil

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Examples of Horizontal Merger
•Lipton India and Brooke Bond.
•Bank of Mathura with ICICI Bank.
•BSES Ltd with Orissa Power Supply Company.
•Associated Cement Companies Ltd Damodar Cement.

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Vertical Mergers
 Vertical mergers:Vertical mergers:
 Vertical mergers occur between firms in
different stages of production
operation.
- Example: Helene Curtis and Unilever

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Example of Vertical Merger
 Time Warner Incorporated, a major cable operation, and the
Turner Corporation, which produces CNN, TBS, and other
programming.
 Pixar-Disney Merger

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Conglomerate Mergers
 Conglomerate Mergers:Conglomerate Mergers:

Conglomerate mergers involve firms engaged
in unrelated types of business activity.
Two types of conglomerate mergers:
1. Pure conglomerate mergers involve firms with
nothing in common.
2. Mixed conglomerate mergers involve firms that
are looking for product extensions or market
extensions.
 Example: General Electric buying NBC television

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Example for Conglomerate
 Walt Disney Company and the American
Broadcasting Company.

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CONCENTRIC MERGERS
 Concentric MergersConcentric Mergers
 Based on specific management functions whereBased on specific management functions where
as the conglomerate mergers are based onas the conglomerate mergers are based on
general management functions.general management functions.
Example: Citigroup (principally a bank) buying Salomon SmithExample: Citigroup (principally a bank) buying Salomon Smith
Barney (an investment banker/stock brokerage operation.Barney (an investment banker/stock brokerage operation.

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Examples for Concentric Mergers
Concentric Mergers :Concentric Mergers :
 Nextlink is a competitive local exchange
carrier offering services in 57 cities and
building a nationwide IP network.
 Concentric, a national ISP, offers
dedicated and dial-up Internet access,
high-speed DSL and VPN services across
the U.S. and overseas.

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

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BENEFITS OF MERGER
Diversification of product and service offerings.
 Increase in plant capacity
Larger market share .
Utilization of operational expertise and research and
development (R&D) .
Reduction of financial risk.
BENEFITS OF MERGER

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MERGER:WHY & WHY NOT
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i. Increase Market
Share.
ii. Economies of scale
iii. Profit for Research
and development.
iv. Benefits on account of
tax shields like
carried forward
losses or unclaimed
depreciation.
v. Reduction of
competition.
i. Clash of corporate cultures
ii. Increased business
complexity
iii. Employees may be
resistant to change
 WHY IS IMPORTANT  PROBLEM WITH MERGER

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

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Impact of Mergers
ImpactEmployees
Competition
Management
Public
Shareholders

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WHY DO MERGERS FAIL ?
 Lack of human integration
 Mismanagement of cultural issues
 Lack of communication
 Cultural Difference
 Flawed Intention
 No guiding principles
 No ground rules
 No detailed investigating
 Poor stake holder outreach

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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 employees by the management.

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EXPERIENCES IN MERGER
Learn from mistakes of others.
Define your objectives clearly.
Complete strategy to achieve goal.
SWOT analysis for the merged business - a
must.
Conservative attitude necessary at
evaluation deskstrong arguments to
support project.
Pick holes in strategy to get the best
Will merged units be able to work at
efficient / ideal level?
Acquire expertise to interpret changes.

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Conclusion
MERGERS IN CORPORATE CULTURE
 Mergers plays important role in corporate restructuring and
development of country. In India it is also plays same role. But
some times it represent market and financial power. And after
liberalization it increased due to liberal government policies.
 Mergers are a significant form of business strategy today for
Corporates.
 The three main objectives behind any MERGERS Transaction,
for corporates today is :
1. Is to improve Revenues and Profitability
2. Faster growth in scale and quicker access to market
3. Competition in Globalized Market
 The most important factors according to corporate India that
contribute to the success of an Mergers Transaction are :
1. Timing
2. Intrinsic Fit
3. Personnel
4. Advisors on legal, policy and financial strategies

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