MERGERS AND ACQUISITION

MERGERS A merger is a combination of two or more

companies into one company. It may be in the form of one or more companies being merged into an existing company or a new company may be formed to merge two or more existing companies.
ACQUISITION When a company takes-over the control of

another company through mutual agreement, it is called acquisition or friendly take-over. On the other hand, if the control is acquired through unwilling acquisition, i.e., when the takeover is opposed by the target company it is known as take-over or acquisition.

Strategies in M&A

Same industry/ Same market

Related industries - Horizontal -Jet-Sahara Same industry/ Different market (Conglomerate) -LIC-UTI Bank

Suppliers -Vertical -ITC

ARCELOR MITTAL
On 25th June, 2006 the deal was finalised when the shareholders of Arcelor agreed to Mittal to $32.9 billion

The Mittal family holds 43 percent of the combined groupThe combined company holds 10 percent of the global market for steel
Arcelor Mittal is now the largest steel company in the world ArcelorMittal is the leader in major global markets, including automotive, construction, household appliances & packaging
The company is headquartered in southern

Luxembourg City, the former seat of Arcelor

Lakshmi Mittal (owner of Mittal Steel), is the Chairman and CEO

 It employs 310,000 employees in

more than 60 countries

ArcelorMittal key financials for 2007 show revenues of US$ 105.2 billion A crude steel production of 116 million tones, representing around 10% of world steel output As of May 17 2008, the market capitalization of ArcelorMittal was $144.37 billion

 India is also the biggest foreign investor in the UK.. Accessing new markets. Maintaining growth momentum. Acquiring visibility and international brands, buying cutting-edge technology rather than importing it. Improving operating margins and efficiencies, and taking on the global competition. It helps market penetration. Competitive pressures in the domestic economy force MNCs to invest abroad.

The government will have its task cut out as sectors like infrastructure, power, telecommunication are in urgent need of investments estimated at more than $700 billion over the next five years to provide the country a strong foundation to achieve a target GDP growth of 10%.

 China's direct investments overseas were $6.92 billion in 2005, up 25.8 per cent over the previous year. In 2005-06 and 2006-07, over 80 per cent of Indian investment abroad was made in the US and the UK.

India's outbound investment is more accountable in global FDI outflow than China's. India's primary motive is to increase market penetration while China's aim is to bolster its domestic industries. Rapid growth in India's investments abroad is the benefits they bring to domestic industry are many and significant.

The most important benefit that the developing and transition economies derive from outward investments is increased competitiveness.

Therefore, the more the domestic industries invest abroad, the more the benefits to the home economy.

Resent report for merger and Acquisitions in 2007 and 2008

Indian Mergers and Acquisitions: The changing face of Indian Business Indian outbound deals, which were valued at US$ 0.7 billion in 2000-01, increased to US$ 4.3 billion in 2005, and further crossed US$ 15 billion-mark in 2006. In fact, 2006 will be remembered in Indias corporate history as a year when Indian companies covered a lot of new ground. They went shopping across the globe and acquired a number of strategically significant companies. This comprised 60 per cent of the total mergers and acquisitions (M&A) activity in India in 2006. And almost 99 per cent of acquisitions were made with cash payments.

Biggest-ever cross-border deal

The Bharti-MTN deal, if it goes through, will usher in the next round of the Indian telecom M&A story. Proposed $23-29 bn deal would be biggest ever M&A transaction involving an Indian company. Bharti-MTNs combined subscriber base of 200m would make it the worlds 4th-largest telecom entity, and largest outside China

To beat US telecom giants

Gets access to 21 nations

US giants Verizon (122m) and AT&T (108m)

Bharti is already the worlds sixth largest telecom company, purely on the basis of the booming Indian economy. But a deal with MTN would give it access to 21 more countries, allowing it to boast of being a true Indian multinational, and a champion player in emerging markets. The merger, which will bring in additional foreign investment into Bharti Airtel, could convert Indias largest telecom company into a foreign-owned entity,

Become MTN's largest shareholder