MERGERS AND ACQUISITIONS

GROUP 5
Shreya Shree
Krishika Bansal
Amrita Patil
Ratuja Jadhav
Pratham Tadasare
Shreyal Kothari
 CONTENT

 MERGERS:
• What are Mergers
• Characteristics of Mergers
• Types of Mergers

 ACQUISITIONS:
• What are Acquisitions
• Characteristics of Acquisitions
• Types of Acquisitions

 Process of Mergers and Acquisitions

 Business policies and strategies of Mergers and Acquisitions
 The future of Mergers and Acquisitions
 Major Mergers and Acquisitions
 The legal forces of Acquisitions
 Case Studies on Mergers and Acquisitions
 What is a Merger?

•
• A merger is an agreement that unites two existing companies into one new company.
• The firm that agree to merge are roughly equal in terms of size, customers and scale of
operations.
• Due to a large number of mergers, a mutual fund was created, giving investors a chance
to profit from merger deals called the Merger Fund from Virtus Investment Partner.
 What are
Acquisitions?

• An acquisition is when one company purchases most or all of another company’s shares to
gain control of that company.

• If a firm buys 50% more than 50% of a target company’s shares, it effectively gains control of
that company.

• Companies acquire other companies for various reasons to seek scale of economies,
diversification, greater market share, increased synergy, cost reductions, or new niche offerings.
 Importance of Mergers and
Acquisitions

• Mergers and Acquisitions are important because they help the companies in growing efficiently,
profitable and powerful.

• Mergers and Acquisitions are the acts of consolidating companies or assets which help in
stimulating growth, gaining competitive advantages, increasing market share or influencing supply
chains.

• M&A help in boosting profits and shareholders value by diversifying products and market risks,
increasing market share etc.
 Types of Mergers and Acquisitions

• A horizontal merger is a merger between companies that directly compete with

each other.
Horizontal • A famous example of a horizontal merger was that between HP (Hewlett- Packard)
Mergers
and Compaq in 2011.

• A vertical merger is a merger between companies that operate along the same
Vertical supply chain.
Mergers • A notable vertical merger happened between America Online and Time Warner
in 2000.

• A market- extension merger is a merger between companies that sell the same
Market-
products or services but operate in different markets.
Extension
• For example, Eagle Bancshares owned Tucker Federal Bank, one of the biggest
Mergers
banks in Atlanta with over 250 workers.
 Types of Mergers and Acquisitions

• In a congeneric merger, the acquirer and target company have different

products or services, but operate within the same market and sell to the
CONGENE same customers. They could be indirect competitors, although their
RIC products often complement each other.

• Unlike the other types of merger, a conglomerate merger occurs between

CONGLOMER two companies whose business activities and industries may be
ATE MERGER completely unrelated. In pure conglomerate mergers, the two firms may
continue to operate separately within their own markets, whereas in a
mixed one, they may look to expand product or market reach.
 Process of Mergers and
Acquisitions

Develop an acquisition
strategy. Set the M&A search acquisition targets
criteria Search for potential

Begin acquisition
planning Perform Valuation
Negotiations
Analyses

M&A due diligence Purchase and sale

contract Financing strategy
for the acquisition
 Business Policies and Strategies of
Mergers and Acquisitions

• Mergers and Acquisitions (M&A) strategy refers to the driving idea behind the deal.
Companies and investors motivations determine the types of deal they pursue.

• Strategic buyers undertake mergers and acquisitions to further their own strategic
objectives such as acquiring products or expertise, expanding markets or gaining
customers.

• Financial buyers are interested in performing M&A transactions for the purpose of
financial return such as increasing operating cash flow.
 The future of Mergers
and Acquisitions

• The M&A current trends indicates an upcoming run. But this doesn’t mean that next year there will be
challenges.

• According to one study, mergers and acquisitions were down 57% in 2020 from where they were in 2019.

• Although there appears to be no end in sight in the immediate future to the record- breaking year, M&A is
currently experiencing, federal regulation and its strict enforcement may be a cause for concern and makes
one wonder how the M&A market will adapt to these new challenges.
MAJOR MERGERS AND ACQUISITIONS
IN 2022
SR NO. MERGER AND ACQUISITION COMPANY REMARKS

1. Reliance Retail Ventures Stake Silver Lake- 1.75% Stake (7500cr)

KKR- 1.28% equity (5500cr)

2. Tik-Tok to merge with Oracle recent firm. Byte Dance a Chinese Company which owns a popular
video-sharing app called TikTok in its recent merger
deals choose Oracle a US-based firm.

3. Yes Bank acquires 24.19% stake in Dish TV Yes Bank Ltd acquired a 24.19% stake in direct-to-home
service provider, Dish TV India Ltd, by invoking
pledges against 44.53 equity shares kept as collateral
with the private lender for a loan.

4. Manulife picks 49% stake in Mahindra AMC Mahindra & Mahindra Financial Services (Mahindra
Finance) on 29th April announce global financial
services group Manulife has acquired 49 per cent stake
in its wholly-owned subsidiary Mahindra Asset
Management Company. invested $35 million or Rs 265
crore
 Major Mergers and
Acquisitions in 2020

SR.NO MERGER AND ACQUISITION REMARKS

COMPANY
1. Tata acquires Air India i) Tata sons signed a share purchase agreement for
buying Air India for
ii) Rs.18,000 crore. The sale of Air India was a part of
GOI’s Strategic disinvestment plan.
2. Wipro acquires Capco On 4 March, 2020 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.
 Legal forces of
Acquisitions

 Different legal forces arise at different stages of the acquisition process and require separate and sequential
treatment.

 Carrying out due diligence: Due diligence is the process of uncovering all liabilities associated with the process.
For legal purposes of carrying out diligence, business should obtain proofs such of assets such as property,
equipment's, intellectual property, copyrights and patents.

 Completing deal for a merger or acquisition: When the general terms of a potential deal is considered, certain
commitments or confirmations must be received form the seller of the target business. They will provide a level
of assurance and comfort about the deal and are the indications of the seller’s own confidence in their business.
 Continued

 Warranty- A written statement from the seller that confirms a key fact about the business. You may
requires warranties on the business assets, the order books, debtors and creditors, employees, legal claims
and the business audited accounts.

 Indemnity- A commitment from the seller to reimburse you in full in certain situations. You might seek
indemnities for unreported tax liabilities.

 Notifying Authorities- The competition and markets authority (CMA) is responsible for investigating
mergers in the UK. Mergers are investigated if they meet certain criteria. However, many businesses
choose to advise the CMA, typically before the merger occurs, to gain legal certainty.
 Case Study of
Mergers

 Vodafone- Idea Merger:

In August 2018, the National Company Law Tribunal approved the merger of the U.K based
Vodafone group (comprising of Vodafone Mobile Services Limited (VMSL) & Vodafone India) with
Aditya-Birla Group’s Idea Cellular. The purpose of the merger was to create the largest telecom network
in India with the highest customer base in India. Post the merger, the Vodafone group owns
approximately 45% stake in the merged entity whereas Idea Limited has a share of approximately 26%.
The telecom market India is an oligopolistic market and the two companies were facing stiff
competition from the two other major operators, Reliance’s Jio and Bharti- Airtel. Moreover, a ruling of
the Supreme Court which ordered them to pay crores worth of adjusted Gross Revenue necessitated that
the two companies combine in order to leverage each other’s customer base in order to comfortably pay
the dues. With this merger, the two companies have gained immensely.
 Case Study of
Acquisitions

 L&T Acquisition of Mindtree:

One of the most talked about acquisition in the Indian M&A market last year, was the
acquisition of the information technology services company Mindtree by construction and engineering
major Larsen and Toubro (L&T). The deal was one of the kind because it has been called the first ever
hostile takeover in the Indian market. It was a hostile takeover, as L&T who was interested in acquiring a
controlling stake in Mindtree to enlarge its technological arm, offered to purchase Mindtree’s shares from
its promoters who unanimously rejected the same. Therefore, L&T purchased a 20.32% stake in Mindtree
from its non-promoter shareholder Mr V.G.Siddharta. Thereafter, it purchased 15% stake from, post
which it acquired a stake of another 31% after making an open offer, to finally acquire approximately
60% holding in the company.
THANK YOU