The document discusses mergers and acquisitions. It defines mergers as a financial tool where two companies combine with mutual consent to expand operations. It describes different types of mergers like horizontal, vertical, and conglomerate mergers. It provides examples of mergers in different industries. It also defines acquisitions as one company purchasing another. It discusses the benefits and potential failures of mergers as well as largest M&A deals worldwide. It analyzes M&A activity in India by sector and cross-border deals involving Indian companies.

1. BY PARTHA S. PANDA
109MN0121
SANJIB PRAHARAJ
109MN0123
PURNA B. RAI
109MN0486
SIDDHARTH B. PARASHAR
109MN0122

2. MERGERS
Merger is a financial tool used for enhancing
long term profitability by expanding their
operation. It occurs when merging
companies have their mutual consent. It is
also referred as “merger of equals”

3. TYPES OF MERGERS…
 Horizontal merger.
 Conglomerate merger.
 Vertical merger.
 Product extension merger.
 Market extension merger.

4. A B
D
Autos Mobile
E G
FC H
Hood
Production
Engine
Mobile os
system,
Model
Merging
Horizontal
Horizontal

5. A B
D
Autos Mobile
E G
FC H
Hood
Production
Engine
Mobile os
system,
Model
Vertical Vertical

6. A B
D
Autos Mobile
E G
FC H
Hood
Production
Engine
Mobile os
system,
Model
Conglomerate
Conglomerate

7. EXAMPLES OF DIFF. TYPES OF
MERGERS….
Horizontal mergers
 Merger of Bank of Mathura & ICICI.
 Merger of BSES with Orissa power supply.
Vertical merger
 Merger of Time warner corporation with Turner
corporation.
Conglomerate mergers
 Merger of Walt Disney Comp. & American Broad
casting company.
Market extension merger.
 Merger of Eagle Bancshares by the RBC centura .
Product extension Mergers.
 Merger of Mobilink Telecom by Broadcom.

8. Motivation
of mergers
Desired to
unified control
Desire to enjoy
monopoly
power
Government
pressure
Elimination of
competance
Adopton of
modern
technology
Lack of
managerial
talent
Personal
ambition
Patent rights
Economics of
large scale
business

9. BENEFITS OF MERGING…
• Iron out the
internal
difference to
maintain
satisfaction.
• Increase in
production .
• Cost
efficiency.
• Increase in
share value
of a firm.
Share
holders
benefit.
Market
benefit.
Employee’s
benefit.
Company’s
benefit.

10. ACQUISITIONS
 An acquisition is the buying of company by
another. It is also known as take over or buyout.
 It occurs between the bidding and the target
company. It may be either hostile or friendly
takeovers. Reverse takeovers may occur when
target is larger than bidding firm.

11. TYPES OF ACQUISITIONS..
Friendly acquisitions - In this type , the target
company’s board negotiates or accept the offer in a
friendly or welcoming manner.
Hostile acquisitions – Within this type the target
company’s board is not willing to be bought or the
target’s company has no prior knowledge of this offer.

12. STEPS INVOLVED IN ACQUITIONS
Start with an offer…
The target’s response….
Accept the terms of the
offer.
Attempt to negotiate.
Execute a poison bill
Find a white knight.
Closing the deal…

13. HISTORY OF MERGERS &
ACQUISITIONS
 Tracing back to history, merger & acquisition have
evolved in five stages . As seen from past experience
M&A are triggered by economic factors.
1st wave
mergers (1897-
1904)
2nd wave
mergers (1916-
1929)
3rd wave
mergers (1965-
1969)
4th wave
mergers
(1981-1989)
5th wave
mergers
(1992-till now)

15. VALUATION MATTERS…..
 Investors in a company that are aiming to take over one
must determine whether the purchase will be
beneficial to them or not.
 Common methods of assessing a target company are..
Comparative ratios
P/E ratio.
EV/sales ratio.
Replacement cost.
Discounted cash flow

16. LARGEST M&A DEALS WORLDWIDE
Rank Year Acquirer Target Trans.
value
%
1 2000 American
online inc.
Time warner 167747 21.83
2 2000 Glaxo wellcome
plc.
Smithkline
Beecham Plc.
75961 10.06
3 2004 Royal Dutch
Petroleum co.
Shell
Transport &
Trading Co.
74559 9.87
4 2006 AT&T inc. Bellsouth
Corporation
72671 9.62
5 2001 Comcast
corporation
AT&T
broadband
svcs
72041 9.54

17. WHY THEY CAN FAIL…
 Historical trends shows that roughly two thirds of big
mergers will disappoint on their own terms, which
means they will lose value on the stock market.
 Some common reasons are>>>
 FLAWED INTENTIONS
&
 THE OBSTACLES TO MAKING IT WORK.

18. Integration
Difficulties
Inadequate
evaluation of
target
Larger or
extraordinary
debt
Inability to
achieve synergy
Too much
diversification
Managers overly
focussed in
acquisitions
Problems in
achieving success

19. If the merged companies wants to break up , corporate
finance do the reverse and break up companies
through
Spinoffs
Carve-outs
Tracking stocks

20. M&A IN DIFFERENT SECTORS IN
INDIA…
Banking sector – In this sector , imp. M&A in India in recent
years include the merger b/w IDBI & its own subsidiary .
The deal was worth $ 174.6 million.
Another imp. Merger was that b/w Centurian bank & bank
of punjab worth $ 82.6 million.
Telecom sector – In the Telecom sector , an increase of stakes
by SingTEL from 26.92% to 32.8% in Bharati Telecom was
worth $252 million.
In Foods & FMCG sector, a controlling stake of Shaw Wallace
& co. was aquired by United Breweries Group owned by
Vijay Malya. This deal was worth $ 371.6 million.

21. STATUS OF THOSE SECTORS…
 In 2005 , finance topped the list with 20% of total
value of M&A in India taking place in this sector.
 Telecom accounted for 16%.
 FMCG & Construction materials for 10%.

22. CROSS BORDER M&A :INDIA
YEAR SALES PURCHASES
2000 1219 910
2001 1037 2195
2002 1698 270
2003 949 1362
2004 1760 863
2005 4210 2649
TOTAL 10873 8249

23. CROSS BORDER M&A IN INDIA
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1 2 3 4 5 6 7
YEAR
SALES
PURCHASE

24. INDIA DOMINATING…….
 India has emerged as one of the top countries w.r.t
merger and acquisition deals.
 In 2007 , the first 2 months alone accounted for M&A
deals worth $ 40 billion in India. The estimated
figures for the entire year projected a total of more
than $ 150 billion .
 This is two fold growth from 2006 & a growth of
almost four times from 2005.

25. • Arcelor acquired by Mr. Lakshmi Mittal.
• Mahindra & Mahindra's takeover of 90 percent stake in
Schoneweiss, a family-owned German company.
• Tata's takeover of Corus & Tetley Tea Co.
• Swiss cement major, Holcim, which acquired a 67 per cent
stake in Ambuja Cement India Ltd (ACIL).
• Videocon Group's acquisition of Thomson's colour picture
tube business in China, Poland, Mexico, and Italy for a total of
$290 million
Indian Scenario - Major Deals

26. The Top 10 Acquisitions made by
Indian Companies Worldwide.
ACQUIRER TARGET
COMPANY
COUNTRY
TARGETED
DEAL VALUE
IN $
INDUSTRY
Tata steel Corus groups UK 12000 Steel
Hindalco Novelis Canada 5982 Steel
Videocon Daewoo
Electronics
Korea 729 Electronics
DR.reddy’s
Labs
Betapharm Germany 597 Pharamaceuti
cals
Suzlon Energy Hansen group Belgium 565 Energy
HPCL Kenya
petroleum
Kenya 500 Oil and gas
Ranbaxy labs Terapia SA Romania 324 Pharmaceutic
als
Tata steel Natsteel Singapore 293 Steel
Videocon Thomson SA France 290 Electronics
BSNL Teleglobe Canada 239 Telecom

27. FROM OUR GROUP MEMBERS