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Sparsh Goel

10 March 2022

Recent Mergers & Acquisitions and its Impact

Mergers and Acquisitions (M&A) have increased in the Indian subcontinent over the
years. These deals play a very important role in the growth of any company in the long term
and also in the economy. The process of mergers and acquisitions has gained substantial
importance in today's corporate world. This process is extensively used for restructuring the
business organizations. The purpose of such an M&A revolves around a company’s growth
strategy. The M&A may take place in the company’s efforts to increase market share,
geographical outreach, reduce competition, profit from patents, or even enter new sectors or
product lines. Companies often take advantage of other underperforming companies or
governments looking to disinvest.

Recent M&A deals across various industries

Some of the recent mergers and acquisitions in India are:

1. ZEEL – SPNI: Merger

On December 22, 2021, ZEEL announced their merger with and into SPNI. Sony will have a
stake of 50.86 per cent in the merged entity, and the founders of Zeel, the Essel Group, will
own a 3.99 per cent stake. Punit Goenka will head the company as CEO and the MD.

2. Air India – Tata Group: Acquisition

Tata Sons signed a share purchase agreement for buying Air India for Rs 18,000 crore. The
sale of Air India was a part of GoI's strategic disinvestment plan.

3. Tata Digital – Big Basket: Acquisition

On May 28, 2021, Tata Digital announced that they had acquired a majority stake in online
grocery seller BigBasket.

4. Wipro – Capco: Acquisition

On March 4, 2021, Wipro Ltd announced that they are buying British consultancy Capco for
$1.45 billion in cash, as the Indian software giant looks to boost its offerings for the financial
services industry that generates the bulk of its revenue, as per Reuters.

5. Aakash Educational Services – BYJU’s: Partnership

On April 5, 2021, BYJU'S, India's leading ed-tech company, announced its strategic
partnership with Aakash Educational Services Limited (AESL), a leader in test-prep services.
The deal was pegged close to $1 billion, according to a person familiar with the transaction,
as per IANS.
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6. Tata Digital – 1MG: Acquisition

On June 10, 2021, Tata Digital Ltd purchased a majority stake in the online pharma startup
1MG at an undisclosed amount. Tata Digital earlier invested in similar startups like CureFit
and BigBasket.

7. Adani Green Energy Limited (AGEL) – SB Energy India: Acquisition

In May 2021, AGEL completed the acquisition of SB Energy Holdings Limited (SB Energy
India) in an all-cash deal worth US$3.5 billion. This is the largest acquisition in the
renewable energy sector in India.

8. HDFC Life – Exide Life Insurance: Acquisition

On September 3, 2021, HDFC Life acquired a 100% stake in Exide Life Insurance from
Exide Industries via issuance of 8,70,22,222 shares at an issue price of Rs. 685 per share and
a cash payout of Rs. 726 crores, aggregating to Rs. 6,687 crores.

9. Piramal Group – DHFL: Acquisition

In 2021, Piramal Group completed the acquisition of Dewan Housing and Finance Limited
(DHFL) for US$4.7 billion, which includes a cash component and non-convertible
debentures.

10. Amazon acquires Perpule: Acquisition

On March 31, 2021, Amazon Technologies paid $14.7 million(about Rs 107.5 crore) to
acquire Perpule in an all-cash deal. The company is likely to spend an additional $5 million
(Rs 36.5 crore) or so to compensate Purple, as per IANS report.

11. PharmEasy acquires Thyrocare at US$610 million

PharmEasy has become the first Indian start-up to acquire a publicly listed company
Thyrocare, which runs a chain of diagnostic and preventive care laboratories. The acquisition
will enable PharmEasy to build an end-to-end healthcare platform from a customer’s point of
view.

Reasons for merging or acquiring

The purpose for an offer or company for acquiring another company shall be reflected

in the corporate objectives. It has to decide the specific objectives to be achieved through

acquisition. The basic purpose of merger or business combination is to achieve faster growth
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of the corporate business. Faster growth may be had through product improvement and

competitive position. Other possible purposes for acquisition are short listed below: -

1. Procurement of Supplies

2. Revamping production facilities

3. Market expansion and strategy

4. Financial strength

5. General gains

6. Own developmental plans

7. Strategic purpose

8. Corporate friendliness

How these M&A deals impacted the environment

Global mergers and acquisitions (M&A) hit new highs in 2021—breaking prior
records by a long shot. The number of announced deals exceeded 62,000 globally in 2021, up
an unprecedented 24% from 2020. Publicly disclosed deal values reached all-time highs of
US$5.1tn—including 130 megadeals with a deal value greater than US$5bn—a whopping
57% higher than in 2020 and smashing the previous record of US$4.2tn set in 2007. The
often-frenzied M&A activity in 2021 was fuelled by intense demand for technology, and for
digital and data-driven assets, and the pent-up deal-making demand from 2020 that was
unleashed.

Conclusion

In 2021, there is a wave of cautious optimism in the M&A space. With a shift in
priority by firms in response to societal evolution, M&A can support the evolving enterprise
strategies to stimulate growth and scope of companies in the short and medium-term. With an
overflow of debt and equity financing, a prevailing seller’s market will prevail. However, in
the short and medium term, it is crucial for buyers, sellers, and even investment bankers to
build their resilience against similar external threats such as the COVID-19 virus.
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Sources

https://tradebrains.in/biggest-mergers-acquisition-india/

https://www.pwc.com/gx/en/services/deals/trends.html

https://www.india-briefing.com/news/mergers-acquisitions-activity-in-india-in-2021-

24074.html/

http://www.iitmjanakpuri.com/iitmjournal/data/2013_Vol4No2_it10.pdf

https://www.mdpi.com