MERGERS AND

ACQUISITIONS

IN

VARIOUS INDUSTRIES

MERGERS
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 merger 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

 Merger through absorption

 Merger through consolidation.

Absorption

Absorption is a combination of two or more companies into an existing company. All

companies except one lose their identify in a merger through absorption.

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. In

consolidation the acquired company transfers its assets, liabilities and share of the

acquiring company for cash or exchange of assets.

Types Of Mergers
Mergers are of many types. Mergers may be differentiated on the basis of activities, which are

added in the process of the existing product or service lines. Mergers can be a distinguished into

the following four types:

 Horizontal Merger

 vertical Merger

 Conglomerate Merger

 Concentric Merger

Horizontal merger

Horizontal merger is a combination of two or more corporate firms dealing in same lines of

business activity. Horizontal merger is a co centric merger, which involves combination of two

or more business units related to technology, production process, marketing research and

development and management.

Vertical Merger

Vertical merger is the joining of two or more firms in different stages of production or

distribution that are usually separate. The vertical Mergers chief gains are identified as the lower

buying cost of material. Minimization of distribution costs, assured supplies and market

increasing or creating barriers to entry for potential competition or placing, them at a cost

disadvantage.

Conglomerate Merger
Conglomerate merger is the combination of two or more unrelated business units in respect of

technology, production process or market and management. In other words, firms engaged in the

different or unrelated activities are combined together. Diversification of risk constitutes the

rational for such merger moves.

Concentric Merger

Concentric merger are based on specific management functions where as the conglomerate

mergers are based on general management functions. If the activities of the segments brought

together are so related that there is carry over on specific management functions. Such as

marketing research, marketing, financing, manufacturing and personnel.

ACQUISITION

A fundamental characteristic of merger is that the acquiring company takes over the ownership

of other companies and combines their operations with its own operations. An acquisition may

be defined as an act of acquiring effective control by one company over the assets or

management of another company without any combination of companies.

TAKEOVER

A takeover may also be defined as obtaining control over management of a company by

another company

Distinction between Mergers and Acquisitions

Although they are often uttered in the same breath and used as though they were synonymous,

the terms merger and acquisition mean slightly different things. When one company takes over

another and clearly established itself as the new owner, the purchase is called an acquisition.

From a legal point of view, the target company ceases to exist, the buyer "swallows" the business

and the buyer's stock continues to be traded. In the pure sense of the term, a merger happens

when two firms, often of about the same size, agree to go forward as a single new company

rather than remain separately owned and operated. This kind of action is more precisely referred

to as a "merger of equals." Both companies' stocks are surrendered and new company stock is

issued in its place.

For example

Both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new

company, DaimlerChrysler, was created. In practice, however, actual mergers of equals don't

happen very often. Usually, one company will buy another and, as part of the deal's terms,

simply allow the acquired firm to proclaim that the action is a merger of equals, even if it's

technically an acquisition. Being bought out often carries negative connotations, therefore, by

describing the deal as a merger, deal makers and top managers try to make the takeover more

palatable.

A purchase deal will also be called a merger when both CEOs agree that joining together is in the

best interest of both of their companies. But when the deal is unfriendly - that is, when the target

company does not want to be purchased – it is always regarded as an acquisition. Whether a

purchase is considered a merger or an acquisition really depends on whether the purchase is

friendly or hostile and how it is announced.

MERGERS AND ACQUISITIONS IN TELECOM INDUSTRY

  Etisalat-Allianz merger in May 2009

The Department of Telecom has given its nod to a proposed merger between Etisalat-Swan and

Allianz Infratech. Allianz has licenses to launch mobile services in Madhya Pradesh and Bihar.

UAE’s Etisalat had earlier picked up a 45 per cent stake in Swan, which has bagged licenses to

operate in 13 of the 22 telecom zones in India.

 Tata- Docomo Merger in August 2009

NTT DOCOMO is a Japanese Telecom famous for its most high-end telecom VAS, value added

services, is Japan’s premier provider of leading-edge mobile voice, data and multimedia services.

With more than 54 million customers in Japan, the company is one of the world’s largest mobile

communications operators.

The Deal goes in partnership with Indian Communications and Steel Giant TATA Group. Tata

DOCOMO is Tata Teleservices Limited’s telecom service on the GSM platform.

Tata DOCOMO marks a significant milestone in the Indian telecom landscape, as it stands to

redefine the very face of telecoms in India.

MERGERS AND ACQUISITIONS IN BANKING INDUSTRY

  HDFC-CBoP MERGER IN FEB 2008

The board of HDFC Bank approved issuance of one equity share for every 29 held in Centurion

Bank of Punjab for merger of the two financial institutions. The board has approved the share

swap ratio of one share of Rs 10 each of HDFC Bank for every 29 shares of Re 1 each held in

Centurion Bank of Punjab.

MERGERS AND ACQUISITIONS IN PHARMACEUTICAL INDUSTRY

 ORACLE-SUN

Oracle and Sun announced in April 2009 a deal in which Oracle acquire Sun common stock for

$9.50 per share in cash, putting the value of the transaction at about $7.4 billion.

 Zandu’s FMCG business merged into Emami IN JUNE 2009

Emami Ltd and its listed subsidiary, Zandu Pharmaceutical Works, have proposed to merge

Zandu’s FMCG business into Emami, demerge Zandu’s other (non-FMCG) assets and liabilities,

including real estate and investments, into a new entity.

MERGERS AND ACQUISITIONS IN HOSPITALITY INDUSTRY

  Sodexo Takeover Rkhs

French global food and facilities management company Sodexo has taken over India's largest

food and support services company, Radhakrishna Hospitality Services (RKHS), in an all-cash

deal worth more than Rs 400 crore.

MERGERS AND ACQUISITIONS IN INSURANCE AND FINANCIAL SERVICES

 Nomura Acquire 35% In LIC Mutual Fund In June 2009

Japan's Nomura Group acquire 35 per cent in LIC Mutual Fund, India's seventh largest mutual

fund

MERGERS AND ACQUISITIONS IN AUTOMOBILE INDUSTRY

 Chrysler, Fiat merger IN 2009

US carmaker Chrysler and Italian carmaker Fiat merged to create world's sixth largest global

auto giant