MERGER AND

ACQUISITION OF
VODAFONE
WITH HUTCH
BY : -
HETAL VISARIA
ROLLNO:- 156
T.Y.B.M.S-B
The announcement is a clear evidence of how we are
executing our strategy of developing our presence in
the emerging markets. Hutch Essar is an impressive,
well-run company that will fit well into the Vodafone
Group.
Arun Sarin, CEO, Vodafone Ltd., in February
2007
"We exit the Indian market as one of the best
capitalized telecom companies in the region which will
enable us to react swiftly to new opportunities and to
accelerate growth in our existing markets.
Canning Fok, Chairman, HTIL, in May
2007
WHAT IS MERGER?
 In business or economics a merger is a
combination of two companies into one larger
company.
 Such actions are commonly voluntary and
involve stock swap or cash payment to the target.
WHAT IS ACQUISITION?
 An acquisition, also known as a takeover, is the
buying of one company by another.
 An acquisition may be friendly or hostil
Company
TYPES OF MERGER
 Horizontal merger- 
Two companies that are in direct competition and
share the same product lines and markets.
 Vertical merger –
A customer and company or a supplier and company.
Think of a cone supplier merging with an ice
cream maker.
 Market-extension merger –
Two companies that sell the same products in different
markets.
MOTIVE BEHIND MERGER AND ACQUISITION

 Taxes: A profitable company can buy a loss maker to use

the target's loss as their advantage by reducing their tax
liability.
 Geographical or other diversification: This is designed to
Smooth the earnings results of a company, which over the long
term smoothens the stock price of a company, giving conservative
investors more confidence in investing in the company.
 Resource transfer: Resources are unevenly distributed
across firms and the interaction of target and acquiring firm
resources can create value through either overcoming
information asymmetry or by combining scarce resources
NEED FOR MERGER AND ACQUISITION

1. Gain market share

2. Economies of scale
3. Enter new markets
4. Acquire technology
5. Utilization of surplus funds
6. Managerial Effectiveness
7. Strategic Objective
VODAFONE
PURCHASED
HUTCH
AT USD 11.08
BILLION
HISTORY OF HUTCH
 2000: Acquisition of Delhi operations Entered Calcutta
and Gujarat markets through ESSAR acquisition
 2001: Won auction for licenses to operate GSM
services in Karnataka, Andhra Pradesh and Chennai.
 2003: Acquired AirCel Digilink (ADIL - Essar
Subsidiary) which operated in Rajasthan, Uttar Pradesh
East andHaryana telecom circles and renamed it under
Hutchbrand
 
HISTORY OF HUTCH
 2004: Launched in three additional telecom circles of India
namely Punjab, Uttar Pradesh and West Bengal.
 2005: Acquired BPL, another mobile service provider in
India
 2007: Vodafone acquired HTIL stake in Hutchison- Essar
 ‡2008: Vodafone acquired Dishnet Wireless, a service
provider in Orissa and has successfully launched its
services in the following circle.
 ‡2008: Vodafone launched the Apple iPhone 3G to be used
on its 17 circle 2G network
BENEFITS OF VODAFONE
 Accelerates Vodafone’s move to a controlling position in a leading
operator in the attractive and fast growing Indian mobile market
 India is the fastest growing major mobile market in the world, with
around 6.5 million monthly net adds in the last quarter
 India benefits from strong economic fundamentals with expected
real GDP growth in high single digits
 Potential for Hutch Essar to bring Vodafone’s innovative products
and services to the Indian market, including
 Vodafone’s focus on total communication solutions for customers
 Vodafone and Hutch Essar both expected to benefit from
increased purchasing power and the sharing of best practice
HISTORY OF VODAFONE
 Founded : 1983 as Racal Telecom, independent 1991
 Group: Vodafone Plc
 Headquarters : Berkshire, UK
 Key People : Vittorio Colao, CEO & Sir John Bond, Chairman
 Industry: Mobile Telecommunications.
 Presence: Equity Interest in 25 Countries & Network Partner in 42
 Strength: 2,30,000 (Employees)
 Revenue: £ 35,478 Million(14.1% Growth)
 Net Income: £ 10,047 Million(10.1% Growth)
 EPS: 7.51 Pence Dividend Per Share(11.1% Growth)
 
 
REASONS FOR HUCHISON EXIT
 Urban markets in the country had become saturated.
 Future expansion would have had to be only in the rural
areas, which would lead to falling average revenue per user
(ARPU) and consequently lower returns on its investments
 The sale of its interests in India will enable Hutchison
 Telecom to become one of Asias best capitalized
companies
 Relations between Hutchison Telecom and the Essar group
of India will be key to the sale of Hutch's 67% stake in
Hutch-Essa
WHY AND HOW THE DEAL…..
 None of its recent global acquisitions, including those of the
German business of Mannesmann, telecom businesses in
Japan and Belgium, were performing up to the mark
 Markets, including the US, were maturing and were not
growing in a big way
 Stiff competition among almost all major players in the
industry, including global telecom majors like BT,O2 of UK,
Verizon from the US, the Hinduja group, Reliance
and Bharti Airtel from India deal size-
 Fourth largest deal of the year 2007 (to date) at $13.3bn ($11.1 bn
plus $2 bn debt). Hutchison Essar valued at $18.8 bn.
CONCLUSION
 Taken steps to make a positive difference, by
supporting recycling campaigns
 Win-win-win situation for shareholders,
employees & the environment
 Improved relationships between stakeholders &
has helped to ensure future growth
THANK YOU