CROSS BORDER

M&A

NEVILLE .J.
RAJNAIGAM
Introduction

Merger:- May be defined as the Combination of two or

more independent business corporations into a single
enterprise, usually involving the absorption of one or more
firm by a dominant firm
Mergers may be broadly classified as Horizontal, Vertical or
Conglomerate (Pile Up )

Acquisition:- May be defined as an act of one

enterprise of Acquiring, directly or indirectly of shares, voting
rights, assets or control over the management, of another
enterprise
Objectives

Greater Economies Access to Markets

of Scale

Access to
Diversification
Raw Material
of Business
 India Inc. Goes Global
 Tata Steel acquired UK based Corus for $ 8 billion.

 Suzlon Energy Ltd acquired German firm Repower Systems AG

for $ 1.7 billion.

 United Spirits bought Scotch whisky distiller Whyte & Mackay for
US$ 1.11 billion

 Hindalco acquired Novelis for $ 6 billion

 TATA Chemical acquires US based SodaAsh Maker General

Industrial Products for $ 1 billion

 Indian shipping company Great Offshore acquires UK based Sea

Dragon for US$ 1.4 billion

 Essar Energy acquires 50% stake in Kenya Petroleum refineries

ltd.

 Banswara Syntex to acquire France firm Carreman Michel Thierry

for around US$ 125 million
Inbound Transactions
 Sistema, Russian Joint Stock Company’s acquisition of 74% stake in Shyam
Telelink – Telecommunications

 French banking major BNP Paribas’s acquisition of 45% stake in financial

services firm Sundaram Home Finance for $45.81 million

 Standard Chartered Bank bought 49% stake for $34.19 million in UTI Securities
and Interpublic Group hiked its stake in Lintas India to 100% for $100 million

 Fursa Mauritius’s acquisition of 42.63% equity in Gayatri Starchkem

 UBS Global Management’s Acquisition of Standard Chartered Asset

Management Company for $ 117.78 Million

 EMC Corporations Acquisition of Valyd Software Pvt. Ltd.

 Orkla’s Acquisition of MTR foods for $ 100 Million

Destination India
 Amongst Fastest growing market Economies in the World, @ over 7% p.a. last 4 years

 Liberal FDI Policy Framework FDI up to 100% allowed in most sectors

 Rationalization of Tax Structure to promote Investment

 High Foreign Exchange Reserves

 Liberal outbound investment

 Currency appreciation

Entry Routes for Investment in India

Approval
 Decision generally within 4-6 weeks
 Govt. Approval required

Automatic
 No Prior Permission Required
 RBI to be informed
 within 30 days of inflow/issue of shares
Advantage India
 One of the Largest Free Market Democracies in the world

 Unparalleled resource of educated, hard-working, skilled and ambitious workforce


 Youngest workforce in the world

 Working age population estimated to rise 70% of the total population by 2030

 70 million new entrants to its work force every 5 years

 English the language of business in India

 one of the largest Pools of English Speaking Manpower after the US

 Manpower
1. Over 3 million scientific and technical manpower
2. Over 2.5 million graduates added to the workforce every years
3. 3rd largest pool of educated personnel

 A large and Growing Middle class with per capita income of more than 1000 US$ p.a.

 Amongst the largest and ever growing domestic market

 Abundant Resources

 Sound economic Fundamentals Stable Economic reform regime

 Vibrant Financial Sector

 Data on Overseas Direct Investments
S.no. Country Outflow 2008-2009
(In US$ Million)
1. US 413.379
2 Canada 497.772

3 China 5.176

4 Netherlands 1055.518

5 Czech Republic 66.008

6 Italy 10.104

7 Germany 32.858

8 France 1.693

9 Portugal 0.909

10 Poland 1.454

11 Hungary 0.345
 FDI Policy
Sno. Sector Sectoral Cap

1. Manufacturing (Exceptions- Defense products, 100%

Products reserved for Small Scale Sector

2. Coal Mining 100%

3. Electricity (Generation, Transmission, Distribution and 100%
Power Trading)

4. Roads & Highways 100%

5. Airport Projects (Greenfield) 100%
6. Telecom-
Basic & Cellular, Unified Access Services 74%
ISP without Gateway Infrastructure Provider
providing Dark fibre, right of way, duct space, tower 100%
etc.
 FDI POLICY

7. Hotels & Tourism 100%

8. Shipping & Ports 100%
9. Industrial Parks 100%
10. Hospitals 100%
11. SEZ’S 100%
Prohibited Sectors

 Atomic Energy
 Lottery Business
 Betting & Gambling
 Agriculture (excluding Floriculture,
Horticulture, Development of seeds, Animal
Husbandry, Pisciculture and Cultivation of
vegetables, mushrooms etc. under controlled
conditions and services related to agro and
allied sectors) and Plantations (Other than
Tea plantations)
 ISSUES IN CROSS BORDER M&A

Business Cultural
Environment Issues

Business
Accounting
Dynamics
treatment

Legal & regulatory Tax regimes &

framework treaties

Identifying and
delivering synergies
The top 10 acquisitions made by Indian
companies worldwide
Any Questions
 Thank You

SOURCE :GOOGLE