MERGERS AND

ACQUISITIONS!
Under The Guidance
Of Ms.Deepika Rathi
Definition of Merger and Acquisition.
Distinction between Mergers and Acquisitions.
Types of Mergers.
Merger Waves.
Motives behind Merger of Companies.
Advantages of Merger and Acquisition.
Laws Regulating Mergers.
Legal procedures for bringing about merger of
companies.
Emerging market see M&A volume at record high
of $215bn.
Top 10 acquisition by Indian co. worldwide year
wise data and graph.
 Top 11 latest Merges.
 DEFINIT
OF
MER
ION
GER
A merger occurs when two or more companies combines and
the resulting firm maintains the identity of one of the firms.
One or more companies may merge with an existing
company or they may merge to form a new company.
Usually the assets and liabilities of the smaller firms are
merged into those of larger firms. Merger may take two
forms-
1. Merger through absorption
  2. Merger through consolidation.
Merger through Absorption.
 Absorption is a combination of two or more companies
into an existing company. All companies except one loose
their identify in a merger through absorption.

Merger through Consolidation.

 A consolidation is a combination if two or more combines
into a new company. In this form of merger all companies
are legally dissolved and a new entity is created.
 INIT
OF
SITION
ON

May be defined as an act of one

enterprise of acquiring, directly or
indirectly of shares, voting rights,
assets or control over the management,
of another enterprise
 DEFINITION OF AMALGAMATION
Combination of two corporate entities where
the assets and liabilities of both are vested in a
third entity, with the effect that both former
entities lose their identities to form a new
entity.
 
Distinction between Mergers and
MERGERS
 The case when two companies
(often of same size) decide to
move forward as a single new
company instead of operating
business separately.
 The stocks of both the
companies are surrendered,
while new stocks are issued
afresh
Acquisitions
ACQUISITIONS
 The case when one company
takes over another and
establishes itself as the new
owner of the business.
 The buyer company “swallows”
the business of the target
company, which ceases to exist.
 Types of Mergers

Horizontal Mergers.
Vertical Mergers.
Conglomerate merger.
A. Product-extension Merger.
B. Market-extension Merger.
C. Pure Conglomerate merger.
 Merger waves
The economic history has been divided into Merger Waves based
on the merger activities in the business world as:

1889 – 1904 First Wave Horizontal mergers

1916 – 1929 Second Wave Vertical mergers
1965 – 1989 Third Wave Conglomerate mergers
1992 – 1998 Fourth Wave Congeneric mergers
2000 - Fifth Wave Cross-border mergers
Motives behind Merger & Acquisitions
These motives are considered to add shareholder value:-

• Economies of Scale.
• Increased revenue /Increased Market Share.
• Corporate Synergy.
• Taxes.
• Geographical or other diversification
 Advantages of Merger and Acquisition:-
The general advantage behind mergers and acquisition:-
Accessing new markets
Maintaining growth momentum
Buying cutting edge technology rather than importing it
Taking on global competition
Improving operating margins and efficiencies
Developing new product mixes.
`
Legal Procedure For Bringing About
Merger Of Companies:-
Examination of object clauses.
 Intimation to stock exchanges.
Approval of the draft merger proposal by the
respective boards.
Application to high courts.
Dispatch of notice to share holders and creditors.
Holding of meetings of share holders and
creditors.
Petition to High Court for confirmation and
passing of HC orders
 Legal Procedure For Bringing About
Merger Of Companies(Cont.)
Filing the order with the registrar.
Transfer of assets and liabilities.
Issue of shares and debentures.
The merging company, after fulfilling the
provisions of the law, should issue shares and
debentures of the merging company. The new
shares and debentures so issued will then be
listed on the stock exchange
 Laws Regulating Merger:-
Following are the laws that regulate the merger of the company:-

The Companies Act , 1956

The Competition Act ,2002
Foreign Exchange Management Act,1999
SEBI Take over Code 1994
The Indian Income Tax Act (ITA), 1961
Mandatory permission by the courts
Stamp duty
Emerging Market See M&A Volume
At Record High Of $215bn:-
"Emerging markets' targeted
volume has reached $215.1
billion in 2010 year-to-
date-- the highest YTD
volume on record,”
The largest targeted emerging
market deal on record is
Prudential's $35.5-billion
bid for AIG' Asian insurance
unit AIA Group Ltd.
Emerging Market See M&A Volume
At Record High Of $215bn(Cont.)
The $10.7-billion bid by Bharti Airtel for acquisition of Zain
Telecom's African operations was the third largest deal
announced in the emerging marketing sector.
"The BRIC region with M&A activity worth $69.6 billion
accounts for 32 per cent of emerging markets' volume in 2010
YTD, the lowest share since 2004 YTD.”
Telecommunication is the leading sector to witness M&A in
emerging economies. The space has seen deals worth $54.5
billion in 2010 YTD -- the highest volume for it since 2000 YTD.
 Top 10 acquisition by Indian
co. worldwide-
Acquirer Target Country Deal value Industry
Targeted ($ ml)
Company
Steel (January
Tata Steel Corus Group plc UK 12,000
30, 2007)

Hindalco Novelis Canada 5,982 Steel

Daewoo
Videocon Korea 729 Electronics
Electronics Corp.
Dr. Reddy
Betapharm Germany 597
Labs Pharmaceutical
Suzlon
Hansen Group Belgium 565 Energy
Energy
 Top 10 acquisition by Indian
co. worldwide-
Kenya Petroleum
HPCL Kenya 500 Oil and Gas
Refinery Ltd.

Ranbaxy Labs Terapia SA Romania 324 Pharmaceutical

Tata Steel Natsteel Singapore 293 Steel

Videocon Thomson SA France 290 Electronics

VSNL Teleglobe Canada 239 Telecom

Graphical representation of Indian
outbound deals since 2000:-
Top 10 latest Mergers.
Tata Steel-Corus $12.2 billion January 30, 2007

Vodafone-Hutchison $11.1 billion February 11, 2007

Essar

Hindalco-Novelis $6 billion February 2007

Ranbaxy-Daiichi Sankyo $4.5 billion June 2008

ONGC-Imperial Energy $2.8 billion January 2009

Top 10 latest Mergers(Cont.)
NTT DoCoMo-Tata Tele $2.7 billion November 2008

HDFC Bank-Centurion $2.4 billion February, 2008

Bank of Punjab

Tata Motors-Jaguar Land $2.3 billion March 2008

Rover

Sterlite-Asarco $1.8 billion May 2008

Suzlon-RePower $1.7 billion May 2007

QUESTIONS?
Submitted To:- Submitted By:-
Deepika Mam Vivek Kumar Singh
Roll no-0914670082
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