Professional Documents
Culture Documents
ACQUISITIONS
Video fr om Janhvi S hah
History
• 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.
It is a strategy of combining
different companies into a
Merger is the activity by
single company in order to
which two companies unite
enhance the financial and
into one new company
operational strengths of
both organizations.
We have 5 different types of mergers,
namely:
TYPES OF MERGER
Horizontal Concentric
Merger Market Merger/
Vertical Extension Product
Merger Merger Extension
Merger
Conglomerate
Merger
Horizontal Merger
When two firms working in the same industry or
producing similar kind of products combine, it is known
as a horizontal merger
When a FMCG
company acquires an
Examples A tyre manufacturer
advertising company
or a retailing outlet
Conglomerate Merger
Example: Merger of a
company that produces DVD
players with a company that
produces DVD’s
Diagrammatic Representation
• Here is a diagram that clearly explains the first
four types of merger:
Market Extension Merger
•The main purpose of merger is to reduce •Acquisitions usually take place for having
competition and to increase efficiency instantaneous growth of the firm.
Activity time
CAUSES OF M&A
Causes of Mergers and
Acquisitions
Increasing Capabilities
Improvised
Better
services
technology
Expanded
research
More Robust
development manufacturing
opportunities
Larger Market Share
New dealers
overnight
Goodwill of other
company
Eliminate initial
struggles
Gaining a Competitive Advantage
• Monopoly
• Better to Best
Higher profits
Variety of products
E.g.: PepsiCo
Replacing Leadership
Ineffective leaders
Mismanagement
Only Financial
option crisis
Unable to
Pressure for
handle
betterment
competition
Cutting Costs
Integrated
Lower cost on
Contacts of
Transportation
Suppliers
Availability of
Advantages of
missing
Location Commodity
Foreign Exchange and Foreign Market
For
Merger &
Acquisition
• Strategies play an integral role when it comes
to merger and acquisition.
• Every company has different cultures and
follows different strategies to define their
merger.
• Through market survey & analysis of different
mergers and acquisitions, it has been found
out that there are some GOLDEN RULES which
can be treated as the
Understanding
Market
Technological Share
Requirements
Accessing the Market
• Identification of:
1. Future Market Opportunities
2. Market Trends
3. Customers Reaction
Integration Process
Restructuring Plans
Take Steps
Board
Managers Members
Stakeholders
/Investors
MERGER
Requirements for a merger
1.Coordinate and compromise
They decide the new agreement policy
without any conflicts.
Check on Difference of Opinions
They are not able to decide among
themselves then they may appoint
third party of executor.
2. Excellent organizational skills
Team members Manager needs
may not know to motivate
whom to report people around
to. him
3. Manager must be comfortable with
ambiguity.
He should be able
to facilitate groups.
Mobilize people
Add quick
strategies
4. He needs to think like an
entrepreneur
Analytical
Innovation
Legal Procedure for Mergers
and Acquisition
Permission for Sanction by Filing of the
a Merger the High Court Court Order
Approval of Payment by
Application in
Board of Cash or
the High Court
Directors Securities
Permission for a Merger
Information to Stock Exchange
Approval of Board of Directors
Board of directors
Application in the High Court
Shareholders’ and Creators' Meetings
Sanction by the High Court
Filing of the Court Order
Transfer of Liabilities and Assets
Payment by Cash or Securities
WHO GETS BENEFIT ?
Merger
Contribution in
Share in profit
Merged firm
Shares
2. A T
Deal in cash
The Target company being paid in the merger 125Cr.
Earnings based
valuation
Multiple valuation
method
Valuation is not exact
Valuation is Essential
It is an estimation
Valuation of the company is done.
Now what to do ??
Exchange of shares
Methods of calculating
Shares Exchange Ratio
Intrinsic
value per Market
share / Earnings price per
Per Share Combination
Book value share
per share
Intrinsic value per share/
Book value per share
4. Combination 25%
Really a tough job …
PRACTICAL EXAMPLES OF M&A IN
INDIA
The Indian Telecommunication Industry
The Indian Telecom Industry
AN INTRODUCTION
Emerging as one of the leading
potential markets, it has
witnessed high paced growth
in the past 15 years.
MTNL
(Mahan agar Telecom Nigam Limited)
BSNL
(Bharatiya Sanchar Nigam Limited)
VSNL
(Videsh Sanchar Nigam Limited)
Economic Reform of 1991
In the course of the reform, in the
Indian Economy, this was one of the
many sectors which was privatized.
Most successful
Telco in India
Managed by Bharti
Enterprises Ltd.
Vodafone
It provided it’s 4G
Launched by Mukesh
VoLTE network services
Ambani, it is a Telecom
free of cost for a
Revolution.
period of 6 months.
ESTABLISHED ON-
July 21st, 2016 It disrupted the market
This had a significant
for eliminating all of
effect on the entire
ORIGIN- it’s potential compete
market.
India tents.
Relative Market Share
Market Share after Jio
Resultant Mergers and Acquisitions
1. Jio
1. Voda-Idea
2. Airtel
2. Jio
3. Vodafone
3. Airtel
4. Idea
5. Others 4. Others
Facebook and WhatsApp
Acquisition Case Study
In 2014, Facebook CEO Mark Zuckerberg
managed to agree on the deal with
WhatsApp founders Jan Koum and Brian
Acton for astonishing $19 billion.
2014
19 billion
34 million
600 Million photos
uploaded.
200 Million of voice
messages sent.
100 Million of video
messages.
DAILY, and all the numbers
were doubling year over
year.