PROJECT REPORT

(Submitted for the Degree of B.Com Honours in Accounting & Finance

under the University of Calcutta)

TITLE OF THE PROJECT

“MERGER & ACQUISITION”

SUBMITTED BY

Name of the Candidate: SAHIL MOGRA

CU Registration Number: 017-1111-1456-19
Name of the College: THE BHAWANIPUIR EDUCATION
SOCIETY COLLEGE
College UID: 0101190367
CU Roll Number: 191017-21-1341

SUPERVISED BY
Name of the Supervisor: SUBHASISH DASGUPTA
Name of the College: THE BHAWANIPUIR EDUCATION
SOCIETY COLLEGE

MONTH & YEAR OF SUBMISSION:

Date: June, 2022

Annexure-IA
1
 SUPERVISOR'S CERTIFICATE

This is to certify that MR. SAHIL MOGRA a student of B.Com.

Honours in Accounting & Finance of THE BHAWANIPUR
EDUCATION SOCIETY COLLEGE, under the University of
Calcutta has worked under my supervision and guidance for
his/her Project Work and prepared a Project Report with the title
“MERGER & ACQUISITION” which he/she is submitting, is
his/her genuine and original work to the best of my knowledge.

Place: Kolkata Signature:

Date: Name: SUBHASISH DASGUPTA
Designation: PROFESSOR
Name of the College: The Bhawanipur
Education Society College

Annexure-IB
2
 STUDENT'S DECLARATION

I hereby declare that the Project Work with the title “MERGER
& ACQUISITION” submitted by me for the partial fulfillment of
the degree of B.Com. Honours in Accounting & Finance under
the University of Calcutta is my original work and has not been
submitted earlier to any other University /Institution for the
fulfillment of the requirement for any course of study.
I also declare that no chapter of this manuscript in whole or in
part has been incorporated in this report from any earlier work
done by others or by me. However, extracts of any literature
which has been used for this report has been duly acknowledged
providing details of such literature in the references.

Place: Kolkata Signature:

Date: Name: SUBHASISH DASGUPTA
CU Registration Number: 017-1111-1456-19
College UID: 0101190367
CU Roll Number: 191017-21-1341
Name of the College: The Bhawanipur
Education Society College

ACKNOWLEDGEMENT
3
First of all thanks to God, for giving me and my friends the
strength and will to complete this task just in time. Even though
we faced a lot of difficulties while trying to complete this task,
the group still managed to complete it and we are glad about it.

A special thanks to CA Ashish Kedia for being such a good

guidance to us while we were doing this task. He had given us an
appropriate example and knowledge in order to make us
understand more about this topic. He spends his time to explain
the execution of this idea in all the way.

We also want to thank other groups who were willing to share

their information about this topic. They gave us a lot of new
ideas about the task.

Also a great thanks to my family and friends who tried their best
to give their support either by giving me a lot of encouragement
to keep up with this task or by supporting us financially and pay
all the cost required to complete this task.

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 CONTENTS
S. NO. TITLE PAGE NO.
1. COVER PAGE 1
2. SUPERVISOR’S CERTIFICATE 2
3. STUDENT’S DECLARATION 3
4. ACKNOWLEDGEMENT 4
5. CHAPTER 1: INTRODUCTION
TO MERGER & ACQUISITION
1.1: Background 07 – 07
1.2: Introduction
08 – 08
1.3: objectives
1.4: Benefits 09 – 12
1.5: Limitation 13 – 14
1.6: Procedure 15 – 15
1.7: Valuation 16 – 17
1.8: Participants 18 – 18
1.9: Factors responsible for success 19 – 19
1.10: Factors responsible for failure 20 – 21
1.11: Literature Review 22 – 22
1.12: Research Methodology
23 – 24
25 – 26
6. CHAPTER 2: CONCEPTUAL FRAMEWORK &
STUDY OF MAJOR MERGER & ACQUISITION
2.1: Overview 27 – 27
2.2: national scenatio
2.2.1: Tata motors & ford motors 28 – 30
2.2.2: Tech mahindra & mahindra satyam 31 – 33
2.2.3: Vodafone & Idea 34 – 35
2.3: International scenatio 36 – 37

7. CHAPTER 3: DATA FINDING & ANALYSIS 38 - 44

8. CHAPTER 4: CONCLUSION & 45 - 46

RECOMMENDATION
9. CHAPTER 5: BIBLIOGRAPHY 47 - 48

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 CHAPTER: 1

INTRODUCTION TO MERGERS &

ACQUISITION

1.1: Background
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The concept of merger and acquisition in India was not popular until the
year 1988. During that period a very small percentage of businesses in
the country used to come together, mostly into a friendly acquisition
with a negotiated deal. The key factor contributing to fewer companies
involved in the merger is the regulatory and prohibitory provisions of
MRTP Act, 1969. According to this Act, a company or a firm has to
follow a pressurized and burdensome procedure to get approval for
merger and acquisitions.

The year 1988 witnessed one of the oldest business acquisitions or

company mergers in India. It is the well-known ineffective unfriendly
takeover bid by Swaraj Paul to overpower DCM Ltd. and Escorts Ltd.
Further to that many other Non-Residents Indians had put in their efforts
to take control over various companies through their stock exchange
portfolio.

Volume is tremendously increasing with an estimated deal of worth

more than $ 100 billion in the year 2007. This is known to be two times
more than that of 2006 and four times more than that of the deal in
2006. Further to that, the percentage is continuously increasing with
high end success in business operations.

As for mow the scenario has completely changed with increasing

competition and globalization of business. It is believed that at present
India has now emerged as one of the top countries entering into merger
and acquisitions.

1.2: INTRODUCTION TO MERGERS &

ACQUISITIONS

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In a general sense, mergers and acquisitions are very similar corporate
actions - they combine two previously separate firms into a single legal
entity. Significant operational advantages can be obtained when two firms
are combined and, in fact, the goal of most mergers and acquisitions is to
improve company performance and shareholder value over the long-term.

A merger involves the mutual decision of two companies to combine and

become one entity; it can be seen as a decision made by two "equals". The
combined business, through structural and operational advantages secured
by the merger, can cut costs and increase profits, boosting shareholder
values for both groups of shareholders. A typical merger, in other words,
involves two relatively equal companies, which combine to become one
legal entity with the goal of producing a company that is worth more than
the sum of its parts. In a merger of two corporations, the shareholders
usually have their shares in the old company exchanged for an equal
number of shares in the merged entity.

A takeover, or acquisition, on the other hand, is characterized as the

purchase of a smaller company by a much larger one. This combination of
"unequal" can produce the same benefits as a merger, but it does not
necessarily have to be a mutual decision. A larger company can initiate a
hostile takeover of a smaller firm, which essentially amounts to buying the
company in the face of resistance from the smaller company's
management. Unlike in a merger, in an acquisition, the acquiring firm
usually offers a cash price per share to the target firm's shareholders or the
acquiring firm's share's to the shareholders of the target firm according to
a specified conversion ratio. Either way, the purchasing
Company essentially finances the purchase of the target company, buying
it outright for its shareholders.

In this context, it would be essential for us to understand what corporate

restructuring and mergers and acquisitions are all about.

1.3: OBJECTIVES BEHIND MERGERS &

ACQUISITIONS
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There are many reasons or factors that motivate companies to go for
mergers and acquisitions such as growth, synergy, diversification etc.

1. Growth: One of the most common reasons for mergers is growth.

There are two broadways a firm can grow. The first is through
internal growth. This can be slow and ineffective if a firm is
seeking to take advantage of a window of opportunity in which it
has a short-term advantage over competitors. The faster alternative
is to merge and acquire the necessary resources to achieve
competitive goals.

2. Synergy: Another commonly cited reason for mergers is the

pursuit of synergistic benefits. The most commonly used word in
Mergers & Acquisitions is synergy, which is the idea of combining
business activities, for increasing performance and reducing the
costs. Essentially, a business will attempt to merge with another
business that has complementary strengths and weaknesses. This is
the new financial math that shows that 1 + 1 = 3. That is, as the
equation shows, the combination of two firms will yield a more
valuable entity than the value of the sum of the two firms if they
were operating independently.
Value (A + B) > Value (A) + Value (B)

3. Diversification: Other reasons for mergers and acquisitions

include diversification. A company that merges to diversify may
acquire another company engaged in unrelated industry in order to
reduce the impact of a particular industry's performance on its
profitability. The track record of diversifying mergers is generally
poor with a few notable exceptions. A few firms, such as General
Electric, seem to be able to grow and enhance shareholders wealth
while diversifying. However, this is the exception rather than a
norm. Diversification may be successful, but it needs more skill
and infrastructure than some firms have.
4. Economies of scale: Yes, size matters. Whether it's purchasing
stationery or a new corporate it system, a bigger company placing
9
 the orders can save more on costs. Mergers also translate into
improved purchasing power to buy equipment or office supplies -
when placing larger orders, companies have a greater ability to
negotiate prices with their suppliers. This refers to the fact that the
combined company can often reduce duplicate departments or
operations, lowering the costs of the company relative to
theoretically the same revenue stream, thus increasing profit.

5. Increase Market Share & Revenue: This reason assumes that the
company will be absorbing a major competitor and increasing its
power (by capturing increased market share) to set prices.
Companies buy companies to reach new markets and grow
revenues and earnings. A merge may expand two companies'
marketing and distribution, giving them new sales opportunities. A
merger can also improve a company's standing in the investment
community: bigger firms often have an easier time raising capital
than smaller ones.
Example: Premier and Apollo Tyres.

6. Increase Supply-Chain Pricing Power: By buying out one of its

suppliers or one of the distributors, a business can eliminate a level
of costs. If a company buys out one of its suppliers, it is able to
save on the margins that the supplier was previously adding to its
costs; this is known as a vertical merger. If a company buys out a
distributor; it may be able to sale its products at a lower cost.

7. Eliminate Competition: Many mergers and acquisitions deals

allow the acquirer to eliminate future competition and gain a larger
market share in its product's market. The downside of this is that a
large premium is usually required to convince the target company's
shareholders to accept the offer. It is not uncommon for the
acquiring company's shareholders to sell their shares and push the
price lower in response to the company paying too much for the
target company.

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8. Acquiring new technology: To stay competitive, companies need
to stay on top of technological developments and their business
applications. By buying a smaller company with unique
technologies, a large company can maintain or develop a
competitive edge and vice versa.

9. Procurement of production facilities: Procurement of production

facilities may be the reason for acquiring company to go for
mergers and acquisition. It is a kind of backward integration.
Acquiring Firms will take the decision of merging with another
firm who supplies raw material to acquiring firm in order to
safeguard the sources of supplies of raw material or intermediary
product. It will help acquiring firm to bring economies in
purchasing of raw material. It will also help to cut down the
transportation cost.
Example: Videocon takes over Thomson picture tube in China to
procure supply of picture tube required for producing television
sets.

10. Market expansion strategy: Many firms go for mergers and

acquisitions as a part of market expansion strategy. Mergers and
acquisitions will help the company to eliminate competition and to
protect existing market. It will also help the firm to obtain new
market for promoting their existing or obsolete products.
Example, Lenovo takes over IBM in India to increase market for
Lenovo products like desktops, laptops in India.

11. Own development plans: The purpose of mergers &

acquisition is backed by the acquiring company's own
developmental plans. A company thinks in terms of acquiring the
other company only when it has arrived at its own development
plan to expand its operation having examined its own internal
strength where it might not have any problem of taxation,
accounting, valuation, etc. but might feel resource constraints with
limitations of funds and lack of skill managerial personnel. It has to
11
 aim at suitable combination where it could have opportunities to
supplement its funds by issuance of securities; secure additional
financial facilities eliminate competition and strengthen its market
position

12. Corporate friendliness: Although it is rare but it is true that

business houses exhibit degrees of cooperative spirit despite
competitiveness in providing rescues to each other from hostile
takeovers and cultivate situations of collaborations sharing
goodwill of each other to achieve performance heights through
business combinations. The combining corporate aims at circular
combinations by pursuing this objective.

13. Financial synergy: Financial synergy may be the reason for

mergers and acquisitions. Following are the financial synergy
available in case of mergers and acquisitions.

I. Better credit worthiness- This helps companies to purchase

good on credit, obtain bank loan and raise capital in the
market easily.
II. Reduces cost of capital- The investors consider big firms as
safe and hence they expect lower rate of return for the capital
supplied by them. So the cost of capital reduces after merger.
III. Increase debt capacity- After the merger the earnings and cash
flows become more stable than before. This increase the
capacity of the firm to borrow more funds.
IV. Rising of capital- After the merger due to increase in the size
of the company, better credit worthiness and reputation the
company can easily raise the capital at any time.

14. General gains:

I. To improve its own image and attract superior managerial
talents to manage its affairs.
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 II. To offer better satisfaction to consumers or users of the
product.

15. Taxes: A profitable company can buy a loss maker to use the
target's loss as their advantage by reducing their tax liability. In the
United States and many other countries, rules are in place to limit
the ability of profitable companies to "shop" for loss making
companies, limiting the tax motive of an acquiring company.

 Ahmadabad Cotton Mills Merged with Arvind Mills ( Rs

=3.34 crores)
 Sidhaper Mills merged with Reliance Industries Ltd.(Rs. 3.34
crores)

1.4: BENEFITS/NEEDS OF MERGERS &

ACQUISITIONS

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Mergers and acquisitions is the permanent combination of the business
which vest management in complete control of the business of merged
firm. Shareholders in the selling company gain from the mergers and
acquisitions as the premium offered to induce acceptance of the merger
or acquisitions. It offers much more price than the book value of shares.
Shareholders in the buying company gain premium in the long run with
the growth of the company.
Mergers and acquisitions are caused with the support of
shareholders, managers and promoters of the combing companies. The
advantages, which motivate the shareholders and managers to give their
support to these combinations and the resulting consequences they have
to bear, are briefly noted below.

 From shareholders point of view: Shareholders are the owners of

the company so they must get be benefited from the mergers and
acquisitions. Mergers and acquisitions can affect fortune of
shareholders. Shareholders expect that investment made by them in
the combining companies should enhance when firms are merging.
The sale of shares from one company's shareholders to another and
holding investment in shares should give rise to greater values.
Following are the advantages that would be generally available in
each merger and acquisition from the point of view of
shareholders.

I. Face value of the share is increased.

II. Shareholders will get more returns on the investments made
by them in the combining companies.
III. Sale of shares from one company's shareholder to another is
possible.
IV. Shareholders get better investment opportunities in mergers
and acquisitions.

 From managers point of view: Managers are concerned with

improving operations of the company, managing the affairs of the
company effectively for all round gains and growth of the company
14
 which will provide them better deals in raising their status, perks
and fringe benefits. Mergers where all these things are the
guaranteed outcome get support from the managers.

 From Promoters point of view:

I. Mergers offer company's promoters advantages of increase in

the size of their company, financial structure and financial
strength.

II. Mergers can convert closely held and private limited company
into public limited company without contributing much
wealth and losing control of promoters over the company.

 From Consumers point of view: Consumers are the king of the

market so they must get some benefits from mergers and
acquisitions. Benefits in favor of the consumer will depend upon
the fact whether or not mergers increase or decrease competitive
economic and productive activity which directly affects the degree
of welfare of the consumers through changes in the price level,
quality of the products and after sales service etc.

Following are the benefits that consumers may derive from

mergers and acquisitions transactions:

I. Low price & better quality goods: - The economic gains

realized from mergers and acquisitions are passed on to
consumers in the form of low priced and better quality goods.

II. Improve standard of living of the consumers: - Low priced

and better quality products directly improves standard of
living of the consumers.
1.5: LIMITATIONS OF MERGERS &
ACQUISITIONS

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Merger or acquisition of two companies in the same field or in diverse
field may involve reduction in the number of competing firms in an
industry and tend to dilute competition in the market. They generally
contribute directly to the concentration of economic power and are
likely to lead the merger entities to a dominant position of market
power. It may result in lesser substitutes in the market, which would
affect consumer's welfare. Yet another disadvantage may surface, if a
large undertaking after merger because of resulting dominance becomes
complacent and suffers from deterioration over the years in its
performance. Following are some disadvantages of mergers and
acquisitions.

 Creates monopoly: when two firms merged together they get

dominating position in the market which may lead to create
monopoly in the market

 Leads to unemployment: Raiders shouldn't have the right to buy up

firms they have no idea how to run - the employees who have spent
their lives building up the firm should be making the decisions.

 Raiders become filthy rich without producing anything, at the

expense of hardworking people who do produce something.

 M&A damages the morale and productivity of firms.

 Corporate debt levels have risen to dangerous levels.

 Managers pressured to forego long-term investment in favor of

short-term profit.

 Shareholders may be payed lesser dividend if the firm is not

making profits. There may be a possibility that shareholders would
be paid less return on investment if the company is not earning
enough profit.

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 Corporate raiders use their control to strip assets from the target,
make a quick profit, destroying the company in the process,
throwing people out of work.

1.6: PROCEDURE OF MERGER

1. Search for merger partner: The first step in mergers is to search for
merger partner. The top management may use their own contact in
the same line of economic activity or in the other diversified field
17
 which could be identified as a better merger partners. Such
identification should be based on the detail information of the
merger partners collected from public and private sources.

2. Agreement between the two companies: The beginning of actual

merger procedure starts with agreement between the merging
companies, but mere agreement does not provide legal cover to the
transaction unless it is sanctioned by the Court under section 391
of Companies Act 1956.

3. Scheme of merger: The scheme of merger should be prepared by

the companies which have taken decision of merging. There is no
specific form prescribed for scheme of merger but scheme should
contain following information EDURE OF MERGER.

 Particulars about the merging companies.

 Main terms of transfer of assets and liabilities from transferor to

transferee.

 Conditions of conducting business.

 Particulars about share capital of merging companies specifying

authorized capital issued capital and paid up capital.

 Description of proposed profit sharing ratio and any condition

attached to it.

 Conditions about payment of dividend.

 Status of employees of the merging companies and also status of

provident fund, gratuity fund or any funds created for the benefits
of existing employees.

 Treatment of debit balance of merging companies.

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 Miscellaneous provisions covering income tax dues, contingencies
and other accounting entries.

4. Approval of Board of Directors for the scheme: The scheme for

merger must be approved by the respective Board Of Directors of
transferor and transferee companies.

5. Approval of scheme by financial institutions: The Board of

Directors should in fact approve the scheme after it has been
approved by the financial institutes, debenture holders, banks
which have granted loans to the companies. Approval of Reserve
Bank of India is also needed.

6. Application to the Court: The next step is to make an application

under section 39(1) of Indian Companies Act 1956 to the High
Court for getting permission for merging between companies.

7. Approval of scheme by the Court: On the receipt of the application

for merger the Court will decide whether to approve the scheme of
merger or not. Once the Court has approved the application then
firms can merged.

8. Transfer of assets and liabilities: The High Court has the power to
give order for transfer of any property from Transferor Company to
Transferee Company. By the virtue of such order assets and
liabilities of the Transferor Company shall automatically stand
transferred to Transferee Company.

9. Allotment of shares to shareholders of Transferor Company: By

the virtue of sanctioned scheme of merger, the shareholders of
Transferor Company are entitled to get shares in Transferee
Company in the exchange of ratio provided under the said scheme.

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 10. Intimation to stock exchanges: After merger is effected;
the company which takes over assets and liabilities of the
Transferor Company should apply to the Stock Exchanges where
its securities are listed, for listing the new shares allotted to the
shareholders of the company.

11. Public announcement: Public announcement shall be

made at least in one national English daily one Hindi daily and one
regional language daily newspaper of that place where the shares
of that company are listed and traded. Public announcement should
be made within four days from finalization of negotiations or
entering into any agreement of merger. Public announcement
should contain following information;

1.7: MERGERS AND ACQUISITIONS VALUATION

METHODS

Following are some methods that are employed by the merging firms:

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1. Comparative Ratios: The following are two examples of the
many comparative metrics on which acquiring companies may
base their offers:

 Price-Earnings Ratio (P/E Ratio): With the use of this ratio, an

acquiring company makes an offer that is a multiple of the earnings
of the target company. Looking at the P/E for all the stocks within
the same industry group will give the acquiring company good
guidance for what the target's P/E multiple should be.

 Enterprise-Value-to-Sales Ratio (EV/Sales): With this ratio, the

acquiring company makes an offer as a multiple of the revenues,
again, while being aware of the price-to-sales ratio of other
companies in the industry.

2. Replacement Cost: In a few cases, acquisitions are based on the

cost of replacing the target company. For simplicity's sake, suppose
the value of a company is simply the sum of all its equipment and
staffing costs. The acquiring company can literally order the target
to sell at that price, or it will create a competitor for the same cost.
Naturally, it takes a long time to assemble good management,
acquire property and get the right equipment. This method of
establishing a price certainly wouldn't make much sense in a
service industry where the key assets - people and ideas - are hard
to value and develop.

3. Discounted Cash Flow (DCF): A key valuation tool in mergers

and acquisitions, discounted cash flow analysis determines a
company's current value according to its estimated future cash
flows. Forecasted free cash flows (net income +
depreciation/amortization - capital expenditures - change in
working capital) are discounted to a present value using the
company's weighted average costs of capital (WACC). Admittedly,
DCF is tricky to get right, but few tools can rival this valuation
method.
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 1.8: PARTICIPANTS TO MERGERS AND
ACQUISITIONS

Mergers and Acquisitions process requires highly skilled and qualified

group of advisers. Each advisor specializes in a specific aspect of the
22
merger and acquisition process. The role played by such advisers or
professional experts are as follows:

1. Investment bankers: Investment banking is one of the most

important departments in the process of mergers and acquisitions.
It is fee based adviser department which works with the company
that wish to acquire other company or with industries that wish to
purchase a smaller industry. The main role of investment banks is
to provide finance for mergers and acquisitions transactions.

2. Lawyers: The legal framework surrounding a typical transaction

has become so complicated that no one individual can have
sufficient expertise to address all the issues. In large and
complicated transactions, legal teams consists of more than one
dozen lawyers each of them represents specialized aspects of law.
Lawyers are expected to perform all legal proceedings.

3. Accountants: Services provided by accountants include advice on

the optimal tax structure, financial structuring and performing
financial due diligence. A transaction can be structured in many
different ways, with each having different tax implications for the
parties involved. Tax accountants are vital in determining the
appropriate tax structure. Accountants also perform the role of
auditors by reviewing the transferor company's financial statements
and operations through a series of interviews with senior and
middle level managers.

4. Valuation experts: They may be appointed either by the bidder or

the Transferor Company to determine the value of the transferor
company. They build models that incorporate various assumptions
such as costs or revenue growth rate.

5. Institutional investors: They include public and private pension

funds, insurance companies, banks, mutual funds. Collection of

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 institutions can influence firm's action. They invest their money in
the company.

1.9: FACTORS RESPONSIBLE FOR SUCCESSFUL

MERGERS AND ACQUISITIONS

1. Strategy: Strategy is the basis for any merger and acquisition.

Company should be able to express in one sentence the motive
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 behind merger and acquisition. If the transferor company is not
able to express the motive for doing a deal for merger then the deal
should not be done. There are many strategic reasons to buy a
company some of them are listed as follows:

 Acquire Innovative technical skills.

 Obtain new markets and customer.

 Enhance product line.

2. Motive: Buying company i.e. transferor company does not know

reasons why another company is being sold. It should ask reasons
for selling the company. Transferor Company should also try to
know what selling company knows about the business that they are
not telling potential buyers. After knowing all reasons for selling a
company buying company would be in a position to decide
whether to go for a deal or not. If they are going for deal then
buying company should decide appropriate price for the deal.
Buying company should also examine its own motive for wanting
to acquire the company, whether it is good asset for the company
that would enhance the market of buying company.

3. Price: A low price does not always equate to a good deal, but
higher the price; it is fewer cushions for unexpected problems.
Buying company is often forced to pay more price than they want
to pay for the deal. In a competitive situation the buying company
needs to decide how much it is willing to pay and not exceed that
level, even if it means losing the company. However, in any merger
and acquisition there is a pricing range, based on different
assumptions of the future performance of the merger and
acquisition. The buying company has to decide the price to offer
for the deal, or how risk will be divided between shareholders of
merging company.

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 4. Post Merger Management: For a merger to succeed much work a
remain after the deal has been signed. The strategy and business
model of the old firms may no longer be appropriate when a new
firm is formed. Each firm is unique and presents it's own set of
problems and solutions. It takes a systematic effort to combine two
or more companies after they have come under a single ownership.

5. DUE DILIGENCE: Due diligence means, "A large part of what

makes a deal successful after completing it, is what is being done
before completing it". Before the closing of the deal, the buyer
should engage in a thorough due diligence review of the sellers
business. The purpose of the review is to detect any financial and
the business risk that the buyer might inherit from the seller. The
due diligence team can identify ways in which assets, process and
other resources can be combined in order to realize cost saving and
other expected synergies. The planning team can also try to
understand the necessary sequencing of events and resulting pace
at which the expected synergies may be realized.

1.10: FACTORS RESPONSIBLE FOR FAILURE OF

MERGERS AND ACQUISITIONS
As there are many factors responsible for success of mergers similarly
there are many factors responsible for failure of the merger. The main
factor is buying wrong company at wrong time, at wrong place and by
26
paying wrong price. If the process through which merger is executed is
faulty then it will affect merger adversely. Historical trends show that
roughly two thirds of big mergers will disappoint on their own terms,
which means they will lose value on the stock market. Some of reasons
for failure of mergers and acquisitions are listed below:

1. Payment of high price: The merger fails when the maximum price
is paid to buy another company. In such situation shareholders of
Transferee Company will receive more cash but the shareholders of
Transferor Company will pay more cash. As a result of this deal for
merger will fail.

2. Culture clash: Lack of proper communication, differing

expectations and conflicting management styles due to differences
in corporate culture contribute to failure in implementing plan and
therefore, failure of mergers and acquisitions.

3. Overstated synergies: An acquisition can create opportunities of

synergy by increasing revenues, reducing costs, reducing net
working capital and improving the investment intensity. Over
estimation of such synergies may lead to a failure of this merger.
Inability to prepare plans leads to failure of mergers and
acquisitions.

4. Failure to integrate operations: Once firms are merged

management must be prepared to adapt plans in favor of changed
circumstances. Inability to prepare plans leads to failure of mergers
and acquisitions.
5. Inadequate due diligence: The process of the due diligence helps
in detecting any financial and business risks that the buyer might
inherit from the seller. Inadequate due diligence results in the
failure of the mergers and acquisitions.

27
 1.11: LITRETURE REVIEW

The following were the major efforts at research in the subject, which
have been referred for the research purpose.

(A) P Akhil Bhan has made an attempt to study the insight into the
motives and benefits of the mergers in Indian banking
28
 sector .This is done by examining the eight merger deals of the
banks in India during the period of reforms from 1999 to 2006 .
Through the empirical methods by applying t-test and EVA value
calculations the potential of the mergers has been evaluate to
study the efficiencies or benefits achieved due to the
merger .Through this paper and the sample taken for analysis it
has been concluded that the mergers in the banking sector in the
post reform period possessed considerable gains which was
justified by the EVA of the banks in the post merger period.

(B) Dr. V. K. Shobhana and Dr. N. Deepa (2011) made a probe

into the fulfillment of motives as vowed in the merger deals of
the nine select merged banks. The study uses Summary
Statistics, Wilcoxon Matched Paired Signed Rank Test and‘t’
test for analysis and interpretation of data pertaining to the five
pre and post merger periods each. The result indicates that there
has been only partial fulfillment of the motives as envisaged in
the merger deals.

(C) Egl Duksait and Rima Tamosiunien (2009) described the most
common motives for companies decision to participate in
mergers and acquisitions transactions. The reason is growth,
synergy, access to intangible assets, diversification, horizontal
and vertical integration and so on arises from the primary
company’s motive to grow. Most of the motivations for mergers
and acquisitions feature serve as means of reshaping competitive
advantage within their respective industries.

(D) Mital Menapara evaluated the impact of mergers and

acquisitions on financial Performance of Indian Corporate
Sectors and examined the impact of merger and acquisitions on
Return on Investment, Profitability and Liquidity position of
selected companies. The authors concluded that emerging from
the point of view financial evaluation is that the merging
Companies were taken over by companies with reputed and
29
 good management. And therefore, it was possible for the
merged firms to turnaround successfully in due course.

(E) Pramod Mantravadi & A Vidyadhar Reddy (2008) studied

the impact of mergers on the operating performance of
acquiring corporate in different industries, by examining some
pre- merger and post-merger financial ratios, with the sample
of firms chosen as all mergers involving public limited and
traded companies in India between 1991 and 2003. The results
from the analysis of pre- and post- merger operating
performance ratios for the acquiring firms in the sample
showed that there was a differential impact of mergers, for
different industry sectors in India. Type of industry does seem to
make a difference to the post-merger operating performance of
acquiring firms.

(F) Jagdish R. Raiyani (2010) in her study investigated the

extent to which mergers lead to efficiency. The financial
performance of the bank has been examined by analyzing data
relevant to the select indicators for five years before the merger
and five years after the merger. It is found that the private sector
merged banks are dominating over the public sector merged
banks in profitability and liquidity but in case of capital
adequacy, the results are contrary.

CONCLUSION:

Although there is enough research literature on mergers and

acquisitions, most of the studies have been done for the efficient
markets of the developed world especially US and UK. In India, very
limited research has been done on this topic.

30
Books available are in plenty but they are mostly theory based. None of
the few studies conducted in India have explored the performance of
mergers and acquisitions empirically in terms of their effect on
Performance of Company. The present study makes an attempt to fill
these voids and aims to investigate the performance of Pre – Post
mergers and acquisitions that have taken place in India.

1.12: RESEARCH METHODOLOGY

The research methodology is a systematic way of studying the research
problem. The research methodology means the way in which we can
complete our prospected task. Before undertaking any task it becomes

31
very essential for anyone to determine the problem of study. I have
adopted the following procedure in completing my report study.

1. Research Problem.
2. Research Design.
3. Determining the data sources.
4. Tools used for analysis of data
5. Analyzing the Data.
6. Interpretation of the data.
7. Preparing research report.

1) Research Problem: I am interested in corporate sectors and I want

to make future in it. So, l have decided to make my research study on
the MERGER & ACQUISITION.
Merger & acquisition is one of the important factors as far as
corporate sector is concerned. As my training is at a corporate, I have
got the project upon “MERGER & ACQUISITION” the great
challenge before the banks. This is my problem to be studied.

2) Research Design: The project is divided into two parts. The first part
of the project deals with Mergers and Acquisitions as a concept on a
whole. I have researched about the basic knowhow of Mergers and
Acquisitions, the history of the industry and the present state by
using secondary data. The first part of the project is descriptive study
giving an overview of the Mergers and Acquisitions. The first part of
the project is collected through secondary data obtained from the
internet, newspaper, magazines whereas the second part of the
project relating to the Trends in Mergers and Acquisitions and the
analysis of the M&A Market in India and the senior executives
perception of Mergers and Acquisitions is covered using primary
data.

3) Determining the data sources: Both primary and secondary data

are required in this study. Primary data is the first hand information
collected directly from respondents. The tool used here is
questionnaire. Primary Data is collected through surveys conducted
32
 among existing executives and employees working in today’s Global
Work Environment, including some top level executives from some
of the big MNC's functioning in Gurgaon.

4) Tools used for analysis of data: The survey process involved two
phases: First phase included identification and selection of the target
audience to be studied and to determine the parameters on which
respondents will justify their preferences. A questionnaire was
designed to collect the needed information from the respondents. The
Second Phase involves collection of the primary data by making the
respondents fill up questionnaires.

5) Analyzing the Data: The Primary or secondary data both would

never be useful until they are edited and studied or analyzed. When
the person receives the data many unuseful data would also be there.
So, I analyzed the data and edited it and turned it in the useful
manner. So, that it can become useful in my report study.

6) Interpretation of the data: With the use of analyzed data I managed

to prepare my project report. But an analyzing of the data would not
help my study to reach towards its objectives. The interpretation of
the data is required so that the others can understand the Crux of the
study in more simple way without any problem. So I have added the
chapter of analysis that would explain others to understand my study
in simpler way.

7) Preparing research report: This is the last step in preparing the

project report. The objective of the report writing was to report the
findings of the study to the concerned authorities. I have attached all
the requirements with my repo

33
 CHAPTER: 2

CONCEPTUAL FRAMEWORK &

STUDY OF MAJOR M&A's

2.2: NATIONAL SCENATIO

2.2.1: MERGER OF TATA MOTORS & FORD
MOTORS
34
1) About Tata Motors:
Tata Motors is India’s largest automobile company, with revenues
of US$ 8.8 billion in 2007-08. With over 4 million Tata vehicles
plying in India, it is the leader in commercial vehicles and among
the top three in passenger vehicles. It is also the world’s fourth
largest truck manufacturer and the second largest bus manufacturer.
Tata cars, buses and trucks are being marketed in several countries
in Europe, Africa, the Middle East, South Asia, South East Asia
and South America. Through subsidiaries and associate companies,
Tata Motors has operations in South Korea, Thailand and Spain. It
also has a strategic alliance with Fiat.

2) About FORD
Ford Motor Company is a multinational automobile
manufacturer with its roots in America. It manufactures and sells
automobiles, trucks, buses and tractors across the world. ...
Currently, Lincoln and Troller (Brazilian SUV manufacturer) are
the active Ford marques. Ford has its headquarters in Dearborn,
Michigan, in U.S.A.

3) MERGER OF TATA MOTORS & FORD:

Tata Motors today acquired the Jaguar Land Rover businesses from
Ford Motor Company for a net consideration of US $2.3 billion, as
announced on March 26, in an all-cash transaction. Ford has
contributed about US $600 million to the Jaguar Land Rover
pension plans.

Mr. Ratan N. Tata, Chairman of Tata Sons and Tata Motors, was
present at the handing over ceremony at the head quarters of Jaguar
Land Rover at Gaydon in the UK along with Mr. Don Leclair, the
Executive Vice President and Chief Financial Officer of Ford
Motor Company, and Mr. Lewis Booth, Executive Vice President
of Ford Motor Company, who has responsibility for Ford of
Europe, Volvo and Jaguar Land Rover.
35
Commenting on the occasion, Mr. Tata said, “This is a momentous
time for all of us at Tata Motors. Jaguar and Land Rover are two
iconic British brands with worldwide growth prospects. We are
looking forward to extending our full support to the Jaguar Land
Rover team to realize their competitive potential. Jaguar Land
Rover will retain their distinctive identities and continue to pursue
their respective business plans as before. We recognize the
significant improvement in the performance of the two brands and
look forward to this trend continuing in the coming years. It is our
intention to work closely to support the Jaguar Land Rover team in
building the success and preeminence of the two brands.”

Tata Motors confirmed that Mr. David Smith, the acting Chief
Executive Officer of Jaguar Land Rover, would be the new CEO of
the business. Mr. Smith has 25 years of experience with Jaguar
Land Rover and Ford. Before recently returning to Jaguar Land
Rover as its Chief Financial Officer, he was Director Finance and
Business Strategy for PAG and Ford of Europe.

Mr. Smith said, “We are very pleased with the association with
Tata Motors. We look forward to a sustained bright future for the
company and its stakeholders.”

Jaguar Land Rover has been acquired at a cost of US$ 2.3 billion
on a cash free, debt-free basis. The purchase consideration includes
the ownership by Jaguar and Land Rover or perpetual royalty-free
licenses of all necessary Intellectual Property Rights,
manufacturing plants, two advanced design centers in the UK, and
worldwide network of National Sales Companies.

Long term agreements have been entered into for supply of

engines, stampings and other components to Jaguar Land Rover.
Other areas of transition support from Ford include IT, accounting
and access to test facilities. The two companies will continue to
36
cooperate in areas such as design and development through sharing
of platforms and joint development of hybrid technologies and
power train engineering. The Ford Motor Credit Company will
continue to provide financing for Jaguar Land Rover dealers and
customers for a transition period. Tata Motors is in an advanced
stage of negotiations with leading auto finance providers to support
the Jaguar Land Rover business in the UK, Europe and the US, and
is expected to select financial services partners’ shortly.

37
 2.2.2: MERGER OF TECH MAHINDRA &
MAHINDRA SATYAM

1. ABOUT TECH MAHINDRA:

Tech Mahindra is a leading provider of solutions and services to
the telecommunications industry with a majority stake owned by
Mahindra & Mahindra Limited, in partnership with British
Telecommunications Plc. Tech Mahindra serves telecom service
providers, equipment manufacturers, software vendors and systems
integrators worldwide and their proven delivery models, distinctive
IT skills and decades of domain expertise enable clients to
maximize returns on their IT investment.
Tech Mahindra has principal offices in the UK, United States,
Germany, UAE, Egypt, Singapore, India, Thailand, Taiwan,
Malaysia, Philippines, Canada and Australia. Tech Mahindra Ltd is
part of the US $14.4 billion Mahindra Group, a global industrial
federation of companies and one of the top 10 business houses
based in India.

2. About Mahindra Satyam:

Mahindra Satyam is a leading global business and information
technology services company that leverages deep industry and
functional expertise, leading technology practices, and an
advanced, global delivery model to help clients transform their
highest-value business processes and improve their business
performance.
Mahindra Satyam is part of the $14.4 billion Mahindra Group, a
global federation of companies and one of the top 10 business
houses based in India. Mahindra operates in the key industries that
drive economic growth, enjoying a leadership position in tractors,
utility vehicles, information technology, vacation ownership, rural
and semi-urban financial services, etc. Mahindra has a significant
and growing presence amongst others, in the automotive industry,
agribusiness, aerospace, automotive components, consulting

38
 services, defense, energy, industrial equipment, logistics, real
estate, retail, steel and two wheelers.
Mahindra Satyam development and delivery centers in the US,
Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China,
Malaysia, Singapore, and Australia serve numerous clients,
including many Fortune 500 organizations.

3. About the Merger:

Tech Mahindra acquired Satyam Computers through a government-
mediated auction in April 2009 after a multi-billion dollar scam by
its founding Chairman B Ramalinga Raju was unearthed.

The Board of Directors of Tech Mahindra and Mahindra Satyam

had approved the Scheme of Amalgamation at their respective
Board Meetings held on 21st March 2012.

Appointed Date fixed for the Scheme: 1st April 2011

The Scheme was approved by the Bombay High Court on the

grounds that,

 The Scheme would also be subject to the approval of the

Andhra Pradesh High Court.

 The Scheme appears to be fair and reasonable and is not

violative of any provisions of law and is not contrary to public
policy.

 Also, none of the parties concerned had come forward to

oppose the Scheme before the Bombay High Court.

The decision was since pending for the receipt of approval from the
Andhra Pradesh High Court.

39
 4. The Verdict:
Judge N.R.L. Nageswar Rao dismissed all petitions seeking to bar the
merger on the grounds that the scheme of amalgamation is in the
interest of the public and the shareholders and the interest of the
workmen is also protected. He ordered that the scheme of amalgamation
—a detailed merger plan—be filed with the Registrar of Companies
within 30 days.

The high court, while sanctioning the merger, said pending

investigations and prosecution against Ramalinga Raju and others will
continue. Tech Mahindra should co-operate with investigating agencies
such as the Serious Fraud Investigation Office and Enforcement
Directorate, it said. The scheme of amalgamation of the two companies
would be backdated to April 2011 as per the terms of the merger

5. Analysis of the Approval granted by Andhra Pradesh High

Court:
For a Scheme of Arrangement sought under section 391 of the
Companies Act, 1956 the Court must see whether the provisions of the
Act have been complied with, whether the majority is bona fide and
whether the scheme is a reasonable one. In this case, the Judge found
the Scheme to be a reasonable one and in the interest of the public.

Also, the Court should not refuse to sanction the Scheme merely
because of a few objectors. In this case, the Court dismissed the
objections of the stakeholders as the role of the Court is just supervisory
and the Court cannot ignore the opinion of experts who have worked
upon the Swap Ratio and when the same has been accepted by majority
shareholders.  Valuation is a technical method requiring expertise and
there can be genuine differences of opinion about the correct Swap
Ratio. Unless the person who challenges the valuation satisfies the
Court that the valuation is unfair, the Court will not disturb the scheme
of amalgamation.

40
The Court also ordered that all pending investigations against
Ramalinga Raju will continue till they are vacated or disposed of by
relevant competent authority and Tech Mahindra should cooperate with
all the respective agencies which Tech Mahindra agreed to readily.

Conclusion:
For Tech Mahindra, the operational merger with its affiliate will help
reduce its dependence on the telecom sector, which now contributes
97% of its revenue, a share that will fall below 50% in the combined
entity.
For Satyam, the union may help finally put behind it the scandal that its
founder B. Ramalinga Raju caused when, in January 2009, he confessed
to having misstated accounts to the tune of Rs7,136 crore over a period
of several years. His confession triggered a flight of employees and
client defections that resulted in the sale of the firm he founded in 1987
and built into India’s fourth largest software services provider. This
merger results in the dilution of the Satyam brand name so whatever
negative connotation that brand name had will be dissolved.

41
 2.2.3 : MERGER OF VODAFONE & IDEA

Introduction
On March 20, 2017, India’s third-largest telecommunications company,
Idea Cellular (Idea), announced US $ 23 billion, to merge with the
world’s second-largest company, Vodafone India Limited (Vodafone), to
build India’s most lucrative company estimated at US $ 12.5 billion.

The company will have a subscription base of 394 million and a

customer market share of 35% and 41% respectively. As the merger is
expected to take 24 months to complete, both companies have agreed to
operate as separate companies until then. Together, Kumar Mangalam
Birla, Chairman of Aditya Birla Group said, “Idea and Vodafone will
build a very important company when we look at our mutual power.”
The merger of fierce competitors in the Indian telecommunications
industry came after India’s largest company Reliance Industries
Limited, owned by Mukesh Ambani, launched Reliance Jio Infocomm
Limited (Jio) in September 2016. Jio came up with prices, offering free
voice and the lowest prices in the world. It has disrupted the
telecommunications industry in the country where telecom operators
receive 70% of their revenue through voice telephony.

Valuation
Until the merger is completed, Vodafone and Idea will be operating
separately and after merger they may use both brand names for at least a
few years until a full customer migration. The transaction values
Vodafone at Rs.82,800 crore (EV) and Idea for Rs.72,200 crore (EV)
and debt of Rs.55,200 and Rs.52,700 crores respectively. Opinions are
far more limited than the current market price and are also reflected in
the declining price of Idea Cellular post announcement. Vodafone’s high
ratings are supported by high revenue, customer base and full spectrum
capture compared to Idea.
While Airtel is diverse with additional services and presence in South
Asia and Africa it has a market capitalization by Rs.1,36,570 / – crores
and debts of Rs.96,078 / – crores.
42
Vodafone’s concept is equally balanced and note that the Aditya Birla
team made a fixed amount of dollars of Rs.109 per share to receive a
share of 4.9% at the end of the merger (2018) from Vodafone Group.
Also, there is an option to get a stake of 9.5% for Rs.130 per share over
a 4-year period to bring about equality.

Challenges
However, the markets did not respond well to the merger. After the
announcement, Idea’s price range began to decline. The share price
dropped from Rs.97.70 on March 20, 2017 to Rs.81.80 on September
06, 2017. Analysts were of the opinion that this would be similar to a
three-legged race with Usain Bolt. In other words, the feeling of
competing with two leading brands (Airtel and Jio) for two different
brands could be a daunting task.

Market Movement
Since the announcement of the agreement on 20 March, 2017, the
market price of Idea Cellular has declined by approximately 10-15%. It
seems that the shareholders of the Idea Cellular community are not
happy with the balance.

Conclusion
The merger between Idea and Vodafone will make them a top player.
For the benefit of co-operative management, synergies of up to INR 670
billion can be acquired & INR 140 billion on operating costs for 4th
year. It will also bring credit for the sale of Towers Assets to a
consolidated business.
The concept of consolidation seems to save costs and financial
opportunities that aid financial performance. And whether the company
will be able to monetize the remaining spectrum must be seen.
Aditya Birla Group’s promoters are smart enough to integrate with
Vodafone in this price war and at the same time they have the rights to
measure the pole in stages. So far, there is no benefit for public
shareholders and they will hope to benefit from the long-term merger.

43
References:
https://www.icmrindia.org/casestudies/catalogue/Business
%20Strategy/BSTR530.htm
https://mnacritique.mergersindia.com/idea-vodafone-telecom-merger/

44
 2.3: INTERNATIONAL SCENATIO

VODAFONE AND MANNESMANN

This merger, which took place in 2000, was worth over $180 billion and
is the largest merger and acquisition deal in history. In it, U.K.-based
Vodafone acquired German company Mannesmann. As a result,
Vodafone became the largest mobile operator in the world while setting
the stage for future deals in the telecom industry. Many Germans were
against this deal because they wanted German businesses to remain key
players in the global marketplace.
The deal was significant because it signaled the telecom boom as
mobile phones began increasing in popularity. However, it was not
ultimately successful. “After Mannesmann rejected Vodafone’s first
offer, Vodafone had to nearly double its offer…Unfortunately, the
combination didn’t work out the way Vodafone hoped, and as a result, it
had to write off tens of billions of dollars in the following years because
of it,” Business Insider explains.

AMERICA ONLINE AND TIME WARNER

This merger is the second largest in history, and it took place during the
same year as the Mannesmann acquisition. In 2000, America Online
(more widely known as AOL) acquired Time Warner for $164 billion.
At the time, most Americans used their landline phone service to access
the internet through provider AOL, making the company one of the
biggest technology organizations in America. Though expensive, this
deal lasted only nine years. In 2009, Time Warner became an
independent company as AOL continued to lose value in the post-dial-
up age.

AT&T AND BELLSOUTH

In 2006, AT&T announced its plans to acquire BellSouth. This deal
would ultimately cement AT&T’s place as a major player in the wireless
industry. In purchasing BellSouth for $86 billion, AT&T was able to
expand coverage into rural areas of the United States, giving AT&T an
advantage as the mobile phone market expanded. “The firm used its
45
new position to create bundled services that included mobile services
along with television and internet connections in an effort to gain new
subscribers and dissuade customers from switching to new providers,”
Yahoo Finance explains.

PFIZER AND WARNER-LAMBERT

Also in 2000, pharmaceutical company Pfizer acquired Warner-Lambert
for $90 billion. This merger is considered by some experts to be “one of
the most hostile in history” because Warner-Lambert was originally to
be purchased by consumer goods company American Home Products.
However, American Home Products “walked away from the deal with
$1.8 billion worth of break-up fees, one of the largest ever payouts for a
failed deal,” according to Yahoo Finance.
When Pfizer acquired Warner-Lambert, the result was the second largest
drug company in the world. The main reason for the acquisition was
ownership of top-selling cholesterol medication Lipitor: “Pfizer had
commercial rights to Lipitor, but Pfizer was splitting profits on it with
Warner-Lambert, and in 1999, Warner-Lambert sued Pfizer to end their
licensing pact,” Business Insider explains. By acquiring Warner-
Lambert, Pfizer removed any risk associated with the lawsuit and
gained sole control of Lipitor’s skyrocketing profits, which grew to
more than $13 billion annually.

EXXON AND MOBIL

This merger took place in 1999 and created a “superpower” in the
energy industry. Oil prices were consistently low, and energy companies
were taking a hit as a result. This led Exxon and Mobil to merge in a
deal that Yahoo Finance calls “one of the most successful in M&A
history.” The U.S. government approved the deal after assurances that
the two merging companies would sell over 2,400 gas stations across
the country. “Exxon defended the deal, the largest in a string of
consolidation moves in the industry, citing price pressure on crude oil,
the need for greater efficiency and new competitive threats overseas,”
CNN Money explains.

46
 CHAPTER: 3

DATA FINDING & ANALYSIS

47
 DATA FINDING AND ANALYSIS

1) How strong will the overall Indian M&A market be during the
next 12 months?

64 percent of survey respondents saw the future of the M&A market as

strong or somewhat positive. Advisors were slightly more confident than
company respondents on the future of the Indian M&A market. 38 percent
of respondents had a neutral view of the market.

2) Which of the following is most responsible for fueling current

Indian M&A active?

In a continued trend, about 48 percent of respondents feel current M&A

activity is being fueled by private equity buyers. However, 26 percent of
respondents said strategic buyers have the most influence. Foreign buyer
currently just at a 10% are playing an important role in this matter, since

48
 they are in the race to establish themselves in the growing Indian markets
by merging with existing firms.
3) What is your outlook for the Indian economy, generally, over the
next 12 months?

74 percent of respondents have a Positive outlook for the Indian economy in

the next year, considering that we are growing at a rate of 8 percent, making
India stand amongst the fastest growing economies in the world. India also
has the youngest population and is the main source for Human resources in
an aging world. 20 percent have a Neutral outlook.

4) Which of the following buyers will INCREASE their presence

the most in the Indian M&A Market over the next 12 months (as
a percentage of total transactions)?

Survey results indicate that there is more emphasis on Foreign Buyers since
inflow of FDI's is increasing at a rapid rate. Thus fuelling the economic
growth in the country.
49
5) Which of the following types of buyers have been most
responsible for high company valuations over the past 12
months?

24 percent of respondents thought strategic buyers had the most influence

driving up deal valuations. Opinions regarding financial and foreign buyers
were that 50 percent of participants felt financial buyers were most
responsible for high valuations and 10 percent of participants felt foreign
buyers had the most influence.

6) What sector will see the most M&A activity, globally, in the
next 12 months?

20 percent of company respondents selected the automotive industry, 18

percent chose technology, and 10 percent chose biotechnology and life
sciences as the industry which will see the most global activity in the

50
coming year. 18 percent of respondents selected energy, 18 percent said
technology, and 16 percent named the automotive industry.

51
7) Where will the most foreign buyers in the Indian M&A market
come from in the next 12 months?

Respondents agreed that most foreign buyers in the Indian M&A market
will come from China. Survey analysts note that Chinese investors in the
M&A market are generally more visible shoppers because they tend to
come to the market in groups. The second choice was the United States of
America (24 percent). After USA, respondents pointed to United Kingdom
(14 percent)

8) What is the single biggest challenge you encounter when

dealing with INBOUND cross-border mergers and
acquisitions?

Those respondents who felt that the most foreign buyers in the Indian M&A
market will come from China are most concerned about doing effective due
diligence (36 percent), followed by labor issues (30 percent).

52
9) In the next 12 months, do you believe your company will be
involved in an acquisition?

60 percent of all respondents who identified themselves as a company

officer or executive felt they would be involved in an acquisition in the
coming year.

10) In the next 12 months, do you believe your company will

be sold, downsized, or involved in a spinoff?

58 percent of all respondents who identified themselves as a company officer

or executive felt their company will be involved in a sale, downsizing, or
spinoff in the coming year.

53
11) Do you feel the management and position of a company's
employees is compromised upon after an acquisition take place.

The majority of the respondents (74 percent) believed that Post merger or
acquisition ,their place in the organization does get jeopardized. There
could be many chances of either of the two organizations employees not
settling in with the other. This could lead to inefficient functioning of the
organization till the time a synergy is created.

54
 CHAPTER: 4

CONCLUSION & RECOMMENDATION

55
 CONCLUSION

One size doesn't fit all. Many companies find that the best way to get
ahead is to expand ownership boundaries through mergers and
acquisitions. At least in theory, mergers provide economies of scale by
expanding operations and cutting costs. Investors can take comfort in the
idea that a merger will deliver enhanced market power.
Now a day, many companies are taking decision to go for merger and
acquisitions to expand their business. But, the procedure for merger is
time consuming it almost takes 6 to 7 months. Therefore, most of the
mergers and acquisitions are not completed.
Mergers and acquisition transactions are often affected by government
rules and regulations, most of the countries do not allowed foreign
companies to enter into local market alone. Such foreign companies can
enter only when they make merger with any local company.
The current trend shows that there is decline in the number of mergers and
acquisitions.
It is because of mergers and acquisitions transactions the needs of
expertise persons have increased. Expertise persons include valuation
expert, lawyers, accountants, etc.
Merger and acquisition will give positive result only when it is executed
properly.

RECOMMENDATION

Recommendations for successful mergers & acquisitions are as follows:

 Securing the value of the acquisition by reasonable decisions on
staff.

 Effective implementation of the acquisition strategy.

 M&As are teamwork.

 Rapidness counts.
 Avoidance of disruptions of ordinary business.
56
 CHAPTER: 5

BIBLIOGRAPHY

57
 BIBLIOGRAPHY

1. CMIE Reports
2. Economic Times
3. DNA money
4. Essentials of Business Environment - K. Ashwathapa
5. Business Environment - Kale Ahmed

WEBLIOGRAPHY
1. www.bseindia.com
2. www.yahoo.com (links and search data)
3. www.google.co.in (links and search data)
4. www.investopedia.com
5. http://en.wikipedia.org/wiki/Mergers_and_acquisitions"
6. www.chartadvisor.com (term of the day)
7. www.moneycontrol.com
8. www.lenovo.com
9. www.hindubusiness.com

58