This document discusses mergers and acquisitions in India. It defines mergers as occurring when two or more companies combine into one surviving entity, while acquisitions involve one company gaining control of another through purchasing a majority of its shares. The document outlines various types of mergers, including horizontal, vertical, market extension, product extension, and conglomerate mergers. It also lists motives for mergers such as operating synergies, growth, and tax benefits, and provides examples of major mergers and acquisitions that have occurred in India.

1. Maharaja Agrasen College
Name – Deepak kumar
Course - Bcom (H)
Year – 3rd year
Rollno. – 16/937
Section - c
Subject - International Business

2. Indian Mergers and Acquisitions

3. Indian Mergers and Acquisitions
Merger - Merger is said to occur when two or more companies
combine into one company. Merger is defined as a ‘transaction involving
two or more companies in the exchange of securities and only one
company survives’.
When the shareholders of more than one company, usually two, decide to
pool resources of the companies under a common entity it is called
‘merger’. If as a result of a merger, a new company comes into existence
it is called as ‘amalgamation’.
As a result of a merger, one company survives and others lose their
independent entity, it is called ‘absorption’. The merger of Global Trust
Bank Limited (GTB) with Oriental Bank of Commerce (OBC) is an example
of absorption. After the merger, the identity of GTB is lost. But the OBC
retains its identity

4. Acquisition- Acquisition is an act of acquiring effective
control by a company over the assets (purchase of assets either by lump
sum consideration or by item-wise consideration) or management
(purchase of stocks/shares or gaining control over Board) of another
company without combining their businesses physically.
Generally a company acquires effective control over the target company
by acquiring majority shares of that company takeover is considered as a
form of acquisition.
Takeover is a business strategy of acquiring control over the
management of target company either directly or indirectly for example
are Flipkart and Myntra, Vodafone and Idea etc.

5. Motives of Mergers and Acquisitions
Companies make mergers and acquisitions for a long list of reasons. Most
of these reasons are good, in that the motivation for the transaction is to
maximize shareholder value , such motives are as following:
I. Operating Synergies
II. Financial Synergies
III. Managerial Synergies
IV. Growth of Company
V. Increase Competitive Advantages
VI. Power of Monopoly
VII. Risk Diversification
VIII. Expanding into foreign markets
IX. Tax Benefits

6. Types of Mergers and Acquisitions
1. Horizontal merger - When two or more companies dealing in similar lines
of activity combine together then horizontal M&A takes place. The merger
of Tata Oils Mills Company Ltd. (TOMCO) with Hindustan Lever Ltd. (HLL)
is a horizontal merger.
2. Vertical merger - A vertical M&A is one in which the company expands
backwards by M&A with a company supplying raw materials or expands
forward in the direction of the ultimate consumer. The vertical M&A will
bring the companies of same industry together who are involved in
different stages of production, process or operation for example, Oracle
acquired Sun Microsystems.
3. Market-extension merger - Market-extension merger involve two
companies that sell the same products in different markets.
4. Product-extension merger - Product-extension merger involve two
companies selling different but related products in the same market.
5. Conglomerate merger - Conglomerate M&A involves the integration of
companies entirely involved in a different set of activities, products or
services. The merger of Mehta Steel Industries Limited with Vardhaman
Spinning Mills Limited is a conglomerate M&A
6. Reverse merger - Reverse M&A is the merger of a large (financially
sound/ profit-making) company with a small (financially weak/ loss-
making) company for example , ICICI a parent company merged into ICICI
Bank.

7. Advantages of Mergers and Acquisitions
• Helps the company to expand into foreign markets.
• Reducing their risk without starting spending on new development.
• Provides tax advantage of the company
• Enhances the financial position of the company

8. o Cultural and language difference in case of cross border mergers.
o Difficult to manage because of forming very large merged entity.
o may mean duplication and over capability within the company that
may need retrenchments.
o Increase in costs might result if the right management of modification.
Disadvantages of Mergers and Acquisitions

9. Critical Evaluation of Mergers
and Acquisition in India
We see Indian companies going for cross border acquisitions.. Indian
business arena is no longer to domestic and inbound mergers and
Acquisitions. The Indian companies are acquiring companies all over the
globe in America, Europe, Australia, or even Africa..
Approvals
• From the Boards of Directors
• Audit Committee
• Stock Exchange
Approvals
• From National Company Law Tribunal
• After seeing the reports of the various
regulatory authorities
Legal
system
• Security and Exchange Board of India
• The company Act 2013

10. Various examples of Mergers and Acquisitions in India
 Tata Tea and Tetley
 Tata steel and Corus group
 Hindalco and Novelis
 Tata Motors and Jaquar Land Rover
 Ranbaxy and Sun Pharma
 Bennett Coleman & Co. Ltd and Virgin
 Oil and Natural Gas Group and Imperial Energy
 Suzlon Energy Ltd. And Re Power System
 Mahindra & Mahindra Ltd. And Schonweiss & Co. Ltd
 Lupin and Gavis