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The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.
An acquisition, also known as a takeover or a buyout, is the buying of one company (the ‘target’) by another. Merger is when two companies combine together to form a new company all together. An acquisition may be private or public, depending on whether the acquiree or merging company is or isn't listed in public markets. An acquisition may be friendly or hostile. Whether a purchase is perceived as a friendly or hostile depends on how it is communicated to and received by the target company's board of directors, employees and shareholders. It is quite normal though for M&A deal communications to take place in a so called 'confidentiality bubble' whereby information flows are restricted due to confidentiality agreements (Harwood, 2005). In the case of a friendly transaction, the companies cooperate in negotiations; in the case of a hostile deal, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Hostile acquisitions can, and often do, turn friendly at the end, as the acquiror secures the endorsement of the transaction from the board of the acquiree company. This usually requires an improvement in the terms of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover. Another type of acquisition is reverse merger a deal that enables a private company to get publicly listed in a short time period.
both to the buyer and to the seller's shareholders. Ownership control of the company in turn conveys effective control over the assets of the company. usually one with no business and limited assets. particularly outside the United States. The terms "demerger". A buyer often structures the transaction as an asset purchase to "cherry-pick" the assets that it wants and leave out the assets and liabilities that it does not. A disadvantage of this structure is the tax that many jurisdictions. . which have different tax and regulatory implications: The buyer buys the shares. Achieving acquisition success has proven to be very difficult. while various studies have shown that 50% of acquisitions were unsuccessful. employee benefits or terminations. whereas stock transactions can frequently be structured as like-kind exchanges or other arrangements that are tax-free or tax-neutral. if the buyer buys out the entire assets. or environmental damage.A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly listed shell company. generating a second company separately listed on a stock exchange. of the target company being purchased. This type of transaction leaves the target company as an empty shell. The buyer buys the assets of the target company. impose on transfers of the individual assets. this form of transaction carries with it all of the liabilities accrued by that business over its past and all of the risks that company faces in its commercial environment. "spin-off" and "spin-out" are sometimes used to indicate a situation where one company splits into two. but since the company is acquired intact as a going concern. with many dimensions influencing its outcome. unquantified damage awards such as those that could arise from litigation over defective products. The cash the target receives from the sell-off is paid back to its shareholders by dividend or through liquidation. and therefore control. There is also a variety of structures used in securing control over the assets of a company. The acquisition process is very complex. This can be particularly important where foreseeable liabilities may include future.
it is always regarded as an acquisition. The firms are often of about the same size. however. When one company takes over another and clearly establishes itself as the new owner. both firms ceased to exist when they merged. the purchase is called an acquisition. For example. deal makers and top managers try to make the takeover more palatable. and a new company. therefore.that is. as part of the deal's terms. Being bought out often carries negative connotations. the terms merger and acquisition mean slightly different things. the target company ceases to exist. one company will buy another and. actual mergers of equals don't happen very often. Usually. . From a legal point of view. GlaxoSmithKline. in the 1999 merger of Glaxo Wellcome and SmithKline Beecham. But when the deal is unfriendly . even if it is technically an acquisition. the buyer "swallows" the business and the buyer's stock continues to be traded. In the pure sense of the term.Distinction between mergers and acquisitions Although often used synonymously. a merger happens when two firms agree to go forward as a single new company rather than remain separately owned and operated. by describing the deal euphemistically as a merger. Both companies' stocks are surrendered and new company stock is issued in its place. An example of this would be the takeover of Chrysler by DaimlerBenz in 1999 which was widely referred to in the time. when the target company does not want to be purchased . was created. This kind of action is more precisely referred to as a "merger of equals". In practice. simply allow the acquired firm to proclaim that the action is a merger of equals. 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.
MERGERS AND ACQUISITIONS IN INDIA: The process of mergers and acquisitions has gained substantial importance in today's corporate world. The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. India is now one of the leading nations in the world in terms of mergers and acquisitions. The increased competition in the global market has prompted the Indian companies to go for mergers and acquisitions as an important strategic choice. The trends of mergers and acquisitions in India have changed over the years. This process is extensively used for restructuring the business organizations. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy. Some well known financial organizations also took the necessary initiatives to restructure the corporate sector of India by adopting the mergers and acquisitions policies. the concept of mergers and acquisitions was initiated by the government bodies. In India. .
product lifecycle management. is a leading information. communications and technology (ICT) company providing top-class business consulting. Subsidiaries: • • • • • • • • • • • • • • • • Satyam BPO Limited Satyam Computer Services (Shanghai) Company Limited Satyam Computer Services (Nanjing) Company Limited Satyam Technologies. the UK. operations management. Singapore and Australia serve numerous clients.1 billion Mahindra Group.COMPANY PROFILE Mahindra Satyam (NYSE: SAY). They are part of the $7. among other capabilities. leading technology practices and a global delivery model. Canada. Citisoft Inc.DE C. E.DE R. a global industrial conglomerate and one of the top 10 industrial firms based in India. digital convergence. The Group’s interests span financial services. Inc. retail and logistics. Leveraging deep industry and functional expertise. Brazil. including several Fortune 500 companies. client relationship management. Hungary. A. Their development and delivery centers in the US. China. Malaysia. Satyam Computer Services (Egypt) S.V Satyam Computer Services Belgium BVBA C&S System Technologies Private Limited S&V Management Consultants NV . trade. Ltd. information technology and infrastructure development. India.L. Knowledge Dynamics Private Limited Citisoft Plc. They are powered by a pool of talented IT and consulting professionals across enterprise solutions. they enable companies achieve their business goals and transformation objectives. automotive products. Knowledge Dynamics Pte. engineering solutions. and infrastructure management services. UAE. Egypt. Nitor Global Solutions Limited Satyam Servicos De Informatica LTDA Bridge Strategy Group LLC Satyam Computer Services De Mexico S. business intelligence. business process quality. information technology and communication services.
1 billion (FY2010) Businesses Automotive: India’s fourth largest Automobile company Farm equipment: One of the 3 largest global manufacturers Financial services: Leader in rural financing IT: Leader in Telecom Software (Tech Mahindra). ICSI National Award for Excellence in Corporate Governance – 2008. Logistics. Defense. diversified service offerings through Satyam acquisition Forging: One of the 5 largest global manufacturers Infrastructure development: Promoter of two largest IT SEZs in India Others: Limited presence in – Retail.About Mahindra Group Genesis Incorporated in 1945. One of the few Indian companies to receive an A+ GRI checked rating for its first Sustainability Report for the year 2007-08. M&M started production of vehicles in 1949 Mahindra Group’s revenues increased fourfold over the past six years to USD 7. .000+ professionals across the globe Awards and recognition Ranked amongst India’s 6 most respected companies by Forbes. Engineering & Chemical Products Employees Around 100.
Motorola. Qwest. StarHub. Managed Services. TNZ. .About Tech Mahindra Genesis Incorporated in 1986 as a joint venture of Mahindra Group & BT IPO in 2006. Application Development & Management. Vodafone. rechristened to “Tech Mahindra” Business Comprehensive service offerings for TSPs. Microsoft. NSN. Cisco. Alcatel Lucent. Leader in Telecom offshoring Ranks 5th among the Top 20 IT Software and Service exporters in India (excluding BPO revenues) Stands 11th in the IT-BPO Employers category Global presence Operations in more than 25 countries Global presence with 16 sales offices & 13 delivery centers Customer profile Clients include 11 Fortune Global 500 companies (5 US) Customers include 12 of Top 20 wireless TSPs & Top 5 TEMs Major clients BT. Hutchison. MTN. O2. Network Services. Product Engineering. Airtel. Telus. Zain. Unisys. Remote Infrastructure Management and BPO. Etisalat. Huawei. Cox. TEMs & ISVs Consulting. TMobile. Solution Integration. BSNL.
000+ professionals across the globe.Employees Around 33. .
— Satyam’s first Fortune 500 customer—announced Recognized as a public limited company.Milestones 1987 1991 • • • Incorporated as private limited company Offshore software project with John Deere & Co. debuts on the Bombay Stock Exchange (BSE) IPO oversubscribed by 17 times Satyam signs joint venture with Dun & Bradstreet for IT Services Awarded ISO 9001 Certification Satyam Technology Center (STC) inaugurated Assessed at SEI CMM® Level 5 Satyam Infoway (Sify) becomes the first Indian Internet company listed on NASDAQ Satyam forms joint venture with TRW Inc.000 Satyam receives National HRD Award from Indian government 2001 • • • Satyam becomes world’s first ISO 9001:2000 company to be certified by BVQI Listed on the NYSE (SAY) APAC headquarters established in Singapore . Presence established in 30 countries 1993 • • • • • • • • 1999 2000 • • Associate count reaches 10.
China 2007 • • • • • Satyam becomes the Official IT Services Provider for the FIFA World Cups. Belgium-based supply chain management (SCM) consulting firm Becomes the first company to launch a secondary listing on Euronext Amsterdam under NYSE Euronext’s new “Fast Path” process for cross listings in New York and Europe Becomes the first company to be invited by the National Stock Exchange (NSE) to ring the opening bell Enters into a definitive agreement to acquire Chicago-based Bridge Strategy Group 2008 • • • • • 2009 . India Becomes the first Asian company to feature in the Training Magazine’s list of Top 125 companies for learning Adopts new tagline “Business Transformation. 2010 (South Africa) and 2014 (Brazil) Announces acquisition of UK-based Nitor Global Solutions Limited Opens Global Development Center (GDC) in Malaysia Opens Development Center in Vizag. Together.” Enters agreement to acquire S&V Management Consultants. a Ghent.2002 • • Satyam BPO launched in Hyderabad First Customer Summit conducted 2005 • • FLC framework launched across the entire organization Largest global development center outside India (in Melbourne) begins operation Citisoft and Knowledge Dynamics acquired • 2006 • • Sets up the first “Global Innovation Hub” in Singapore Sets up operations in Guangzhou.
Mahindra Satyam developed the Event Management Solutions system with various software modules focusing on specific areas such as Accreditation. In addition. Mahindra Satyam was entrusted with the responsibility of developing the core IT event management system for FIFA and the Local Organizing Committee of South Africa. . leading technology practices and an advanced. staff and volunteers. All these initiatives reiterate Mahindra Satyam’s commitment to bring technological services to the sport.• • • • Unveils the new brand identity. Additionally. Mahindra Satyam supported application users and deployed infrastructure and resources at the venue. South Africa. Volunteer Management and Space & Material Management. leaving a lasting impression in the world of sports and a legacy in South Africa. As part of this partnership. The Mahindra Satyam team developed solutions that enriched the experience of all fans arriving in the stadia to watch the 64 matches and ensured seamless movement of all the delegates. This demonstrated Mahindra Satyam’s technology prowess to enhance the FIFA World Cup™ experience from the end-user perspective. Mahindra Satyam leveraged its deep industry and functional expertise. global delivery model to help FIFA transform their solutions and provide a unique experience to football fans across the globe. The company also provided helpdesk services for the event. “Mahindra Satyam” Tech Mahindra announces an open offer to buy an additional 20% in Satyam from existing shareholders Tech Mahindra acquires a 31% stake (Preferential Shares) in Satyam Venturbay Consultants Private Limited. Mahindra Satyam developed Extranets and the Intranet for FIFA. a Tech Mahindra subsidiary. emerges as the highest bidder to acquire a controlling stake in Satyam. these solutions were available at the right place and the right time. Transportation. 2010 FIFA World CupTM Mahindra Satyam is the first Indian company to join FIFA as the Official IT Services Provider for the 2010 FIFA World Cup™.
The Foundation has chapters in Hyderabad (Head Quarters). wherever required. Health (Blood Donation Camps). is a support framework aiding the vulnerable and underprivileged sections of the society. Innovation and Leadership—as change agents.Corporate Social Responsibility Mahindra Satyam Foundation. Volunteering. Core Values and Guiding Principles • • • Involving People: Volunteers. partnerships are our other strengths to focus and create maximum impact for Social Transformation. and Disaster Management. Livelihoods. The Foundation believes in engaging with the problem rather than cheque -book charity. Process and Managerial competency Making Things Happen: All initiatives are outcome-oriented. Empowering Persons with Disability. Bengaluru. . Civilians. enabling transformation for the deprived. creating enabling platforms. scalability driven and capable of execution Awards and accolades such as the Business World-FICCI-SEDF 2006 award for ‘Best Corporate Citizen’and the TERI Corporate Award 2006-2007. stand testimony to our commitment to make a positive difference to the society. Community. deploying technology and harnessing volunteerism. Bhubaneswar and Chennai. the CSR arm of Mahindra Satyam. creating alliances. NGOs and Government Applying Knowledge: Leveraging the core competencies of Satyam Technology. The Foundation focuses its activities in the core areas of Education. and uses all core competencies of Mahindra Satyam—Technology. Its various initiatives are aimed at transforming the quality of life.
Livelihood The Livelihood program of Mahindra Satyam Foundation believes in enabling individual capacities. in association with The Red Cross Society of India. Mathematics. observing important days and fund raising events. to improve the quality of education. They believe that in enabling an individual they can create confident and skilled workers. they add value to the individual as well as job markets. This is achieved by identifying. The initiatives focus on increasing individual skills. training and providing livelihood opportunities to Persons with Disabilities through employment and self employment both in organized and unorganized sectors. increase pass percentage through various interventions such as Notebook and Study Material Distribution. Livelihood Program is deeply experienced in identifying the needs of underprivileged people and transferring appropriate skills. Summer Camps. Their initiatives urge the need to maximize the potential of under privileged people and instill confidence so they can compete in emerging job markets. Infrastructure Support. and basic Computer skills. Empowering Persons with Disability All initiatives under this program endeavor to integrate Persons with Disabilities into the society. and other reputed Blood Banks regularly conducts blood donation drives across all Mahindra Satyam locations. regular mentoring by Mahindra Satyam volunteers who teach English. to live as dignified and responsible citizens. Motivational Tours. An individual or an organization is modeled around specific skills and practical knowledge. Kid Smart Centers. Their policy recognizes the fact that by providing skills to the underprivileged individual. Empowering Persons with Disability program has been striving to provide livelihoods to Persons with Disability through employment and self employment.Education The Education program works with students of government schools. Science. Awareness Programs on Health and Environment. Livelihood Program Initiatives speak for themselves. Key Achievements: . to bring about a decrease in school dropout rates. Health (Blood Donation Drives) Mahindra Satyam Foundation. The Program works to sensitize both corporates and communities through workshops.
000 Units) More than 1. best-of-breed practices. and our experience in servicing key Fortune 100 companies in the USA and other locations Third company in India in the IT and ITES sector to be certified to BS 25999. ensuring consistency and compliance Multi-layered Crisis Management Teams to monitor and manage business disruptive situations Integration of Customer and Location Business Continuity Plans Business Continuity Planning integrated with the Project Management Life cycle. the latest standard in Business Continuity Management from the British Standards Institute BCM operations at Mahindra Satyam is maintained and managed as follows BCM processes integrated into the Quality Management System.• • • • • The largest corporate blood donor recognized by Red Cross Society (5. .929 units of blood donated to various blood banks Business Continuity Management Business Continuity and recovery practice capitalizing our world class global infrastructure backed by a resilient network.000 Thalassemic children supported with fresh blood H1N1 Swine flu awareness and hand-washing in schools and orphanages 2009-2010 .Conducted 21 blood donation camps across chapters 1.
according to reports. Tech Mahindra has its headquarters at Pune. for a cashless merger. UK with M&M holding 44% and BT holding 39% of the equity. 2007) and 2nd largest Telecom Software Provider in India (Voice & Data. Tech Mahindra Ltd. The merger between Tech Mahindra and Satyam. It has more than 24. India. . Tech Mahindra has grown rapidly to become the 6th largest software exporter in India (Nasscom.The Merger (Tech Mahindra & Satyam) Mahindra Group Company has approached Satyam Computer Services. 2007). formed the third-largest IT company in the country. India’s fourth-largest IT services company.000 employees. (TechM) formerly known as Mahindra British Telecom (MBT) is a joint venture between Mahindra & Mahindra Limited (M&M) and British Telecommunications plc (BT).
the company’s open offer for 20% of Satyam’s capital is unlikely to get any response. Besides. Currently.900 crore in cash (including the initial investment for a 31% stake). As both the companies have a good image in the market it was a better option to merge both the companies and create a new . On April 13th 2009 Tech Mahindra took over major stakes of Satyam and finally on June 21st 2009 a new brand Mahindra Satyam was launched. J.R. In the event of a merger. Tech Mahindra can walk away and put Satyam into bankruptcy. which has effectively been funded by debt on Tech Mahindra’s books.” With the company already merged. the cash can be used to pay back the debt. As a result. one is tempted to think that the management’s assessment of the “net worth” of the company has enhanced.The company had created a special purpose vehicle to acquire Satyam. This view is supported by another statement by the company that client attrition has practically stopped since the time of the acquisition. Ahmedabad. Tech Mahindra has subscribed to a fresh issue of shares and Satyam will end up with Rs. then Tech Mahindra can merge Satyam into itself and absorb the surplus assets. had blogged around the time of the acquisition. “If Satyam’s liabilities turn out to be larger than the cash and other assets. It must be noted here that Tech Mahindra is making an attempt to reduce its reliance on debt through a planned QIP (qualified institutional placement) of about Rs. there’s cash sitting in Satyam’s books. If the liabilities turn out to be small. CONCLUSION The merger of Tech Mahindra & Satyam definitely proved to be a beneficial deal for both the companies as they saved time and money by just creating a new but reliable brand. Varma of the Indian Institute of Management. For instance.000 cr. which some analysts had felt was done to ring-fence itself from any negative fallout of the acquisition.1.2. Creating a totally new entity would have been much more difficult because it is much more difficult to establish a successful brand name.
Mahindra was able to take over the majority stakes of Satyam and take over the company.brand. . Due to the financial status of Satyam.
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