SUBMITTED TO:

Dr. Ranjan UpadhyayFMS (WISDOM)

SUBMITTED BY:

Aakansha Agarwal(7132)Arti Surtaniya(7155)Jyoti Yadav(7193)MBA 3rd sem

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INTRODUCTION OF MERGER TYPES OF MERGER STRATEGIC PLANNING ACQUISITIONS & TAKEOVERS MERGER & ACQUISITION DEALS CONTRIBUTION OF MERGER & TAKEOVER FIVE STAGES OF MERGER MERGERS IN INDIA ADVANTAGES DISADVANTAGES CONCLUSION

whereby at least two companies combine to form one single company .

one corporation survives and the merged corporations go out of business.

A subsidiary merger is a merger of two companies where the target company becomes a subsidiary or part of a subsidiary of the parent company.+ =

X Y+ = XExample

X Y Z

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Horizontal Mergers

- between competing companies Vertical Mergers

- Between buyer-seller relation-ship companies

Conglomerate Mergers

- Neither competitors nor buyer-seller relationship

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It is a management tool period.

To help any organization do a better job.

To ensure that members of the

organization

are working toward the same goals.

To assess and adjust the organization's

direction in response to a changing

environment.6

An act of acquiring effective control by one company over assets or management of another company.

Two or more companies may remain independent. Separate legal entities. When an acquisition is 'forced' or 'unwilling', it is

called a takeover. When managements of acquiring and target

companies mutually agree for the takeover, it is called acquisition or friendly takeover.

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USD 12.1 billion USD 12.1 billion Tata Steel buys Corus PlcTata Steel buys Corus Plc

USD 6 billion USD 6 billion Hindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.

USD 730 million USD 730 million Videocon Industries acquired

Daewoo Electronics Corporation Limited

Videocon Industries acquired Daewoo Electronics Corporation

Limited

USD 11 billion USD 11 billion Vodafone buys HutchVodafone buys Hutch

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Merger and Acquisitions have evolved in five stages .

They are triggered by economic factors.

The macroeconomic environment, which includes the growth in GDP, interest rates and monetary policies play a key role in designing the process of mergers or acquisitions.

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First Wave Mergers.

Second Wave Mergers.

Third Wave Mergers.

Fourth Wave Mergers.

Fifth Wave Mergers.10

The first wave mergers commenced from 1897 to 1904.

During this phase merged companies enjoyed monopoly over their lines of production.

The first wave mergers were mostly horizontal mergers.

End Of 1st Wave Merger

The 1st phase ended in failure since they could not achieve the desired efficiency.

The failure was fuelled by the slowdown of the economy.

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The second wave mergers took place from 1916 to 1929.

It focused on the mergers between oligopolies, rather than monopolies .

Technological developments provided the necessary infrastructure.

They were mainly horizontal or conglomerate in nature.

End Of 2nd Wave Mergers They ended with the stock market crash

in 1929 and the great depression.12

The mergers that took place during this period (1965-69) were mainly conglomerate mergers.

Mergers were inspired by high stock prices & interest rates.

End Of The 3rd Wave Merger

The 3rd wave merger ended with the plan to split conglomerates in 1968.

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The 4th wave merger started from 1981 and ended by 1989.

Mergers took place between the oil and gas industries, pharmaceutical industries, banking and airline industries.

They ended with anti takeover laws, Financial Institutions Reform and the Gulf War.

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The 5th Wave Merger (1992-2000) was inspired by globalization, stock market boom and deregulation.

It took place mainly in the banking and telecommunications industries.

The 5th Wave Merger ended with the burst in the stock market bubble.

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From 1991 to date, mergers are not regulated from a competition perspective.

The Asian Development Outlook 2005 mentions the impact of M&As in India.

It indicates for example – Coca Cola re-entered the Indian market in 1993 by acquiring Parle.

Pepsi gained a major market presence by acquiring Duke in 1988.

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HLL has succeeded in enhancing its market share through a process of Mergers /Acquisitions

Product 1992-93 1997-98

Ice Cream 0.00 74.06Sauces,ketchups,jams 0.00 63.54Dental hygiene product 11.20 41.56Soaps 19.66 26.01Synthetic detergents 33.12 46.72Vanaspati 0.85 13.90

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• Revival in deal activity in the country.• More than double the transactions in first five months as compared to same period last year. Jan – May ‘10 Jan – May ‘09

No of deals 439 179

Value of deals USD 30 bn USD 8 bn

• Rebound linked to recovery of Indian and global economy.• Active sectors – Telecom, Pharma, Cement, FMCG.

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•Expansion and growth•Tax Benefits•Financial Synergy•Creating value to stakeholders•Risk reduction•Balancing product cycle•Gain in market share•Increasing EPS•Gaining cost efficiency

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• Costs of mergers and takeovers• Legal expenses• Short-term opportunity cost• Intangible costs• Potentially lowered industry innovation• Decline in equity pricing and investment value

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Two companies are more valuable, profitable than individual companies.

The shareholder value is also over and above that of the sum of the two companies.

M&A’s continue to be an important tool behind growth of a company.

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The list of past and anticipated mergers covers every size and variety of business.

The basic reason is: To achieve economies of scale, Widen their reach, Acquire strategic skills, and Gain competitive advantage.

Therefore, it is right time for business houses and corporate to watch the Indian market, and grab the opportunity.

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