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L&T Drama (RIL Takeover of L&T

The one battle lost

One corporate battle which Dhirubhai did not win was the battle for control of
Larsen & Toubro. In 1988, L&T was in bad shape, and the Ambanis thought that
the time was ripe for an acquisition. Having secured the support of L&T's
chairman, who saw Dhirubhai as a white knight in the battle against the raider
Manu Chhabria, Mukesh and Anil Ambani became directors of L&T. By April 1989,
Dhirubhai became chairman of L&T.

Reliance, L&T's biggest private-sector customer, bought 12.4 percent and got
two nominees on the L&T board. L&T later won a substantial contract to build
Reliance's Hazira petrochemical plant. Meanwhile a state-linked financial
company bought L&T shares from India's biggest mutual fund and largest
insurance company. It then sold the shares to a little-known investment company
connected with Reliance. Desai surprised the L&T board by stepping down, and
Ambani took over as chairman. Bombay's clubby corporate world was shocked at
what seemed to be a behind-the-scenes takeover.

Unfortunately, things didn't go smoothly. In December Reliance's old bete noire,
VP Singh, became prime minister. The Indian Express once again did the muckraking, and found that the takeover had been effected by financial institutions
like the Life Insurance Corporation and the General Insurance Corporation selling
their shares. Since the institutions were not allowed to sell to private parties, the
Indian Express alleged that the whole operation was a fraud.

The matter moved to the courts. Sensing defeat, the Ambanis reversed the
transaction, taking a substantial loss. An extraordinary general meeting was
called to decide whether the Ambanis would remain on the L&T board. Dhirubhai
resigned. Eleven years later, Reliance sold its holdings in L&T to Grasim. Even
that transaction was not free of controversy, as the Securities and Exchange
Board of India felt that Reliance should not have bought L&T shares from the
market a few months before deciding to sell its stake. The insider trading charge
was settled with Reliance paying a nominal fine.

thus encouraging bigger consolidations in the software industry... Oracle Corporation.ORACLE ACQUISITION OF PEOPLESOFT On January 07. Oracle announced its bid to acquire PeopleSoft for $16 per share or approximately $5. in future Oracle had initially announced that it would discontinue PeopleSoft's products. in July 2003.3 bn. It raised corporate governance issues when PeopleSoft’s shareholders opposed the use of poison pills by the company's management. the company changed its stand and stated that it would support the products and would not drop them immediately. the second largest software company in the world. Oracle would emerge as the second largest manufacturer of business application software in the world. PeopleSoft acquired JD Edwards.4 Oracle's acquisition of PeopleSoft finally materialized after an 18-month struggle between the two companies that involved multiple litigations and bitter exchanges between Oracle's Larry Ellison (Ellison) and the then PeopleSoft's CEO Craig Conway (Conway). The offer was made just four days after PeopleSoft had announced its decision to buy JD Edwards for $1. It brought defeat to the US Department of Justice (DOJ) in an antitrust case.. Most analysts expressed doubts on the success of the merger.7 billion in stock. It also led to debates regarding the use of poison pills and whether prevailing regulations required a review. announced that it would acquire PeopleSoft Inc. 2003. The acquisition was unique in many ways. Later. On June 06. Post-merger. 2003. Oracle first made its hostile bid to acquire PeopleSoft on June 06. . 2005. Meanwhile. The announcement followed a tender offer in which more than 97 percent of PeopleSoft's shareholders tendered their stock.1 billion in cash.3 at $10.

.94BN. 5. Though the bid was eventually raised to $11.7BN. $164BN. Nasdaq was ultimately forced to withdraw its $13.4BN. NASDAQ OMX/INTERCONTINENTALEXCHANGE AND NYSE EURONEXT.7bn. $7.4bn offer amid concerns from regulators. The main point of contention was the price per share Air Products was offering. 2010 Airgas was forced to take Air Products to court in Delaware to avoid the hostile takeover. 2011 In a battle for control over the New York Stock Exchange. CEO Carl Icahn sent a full-caps letter to the Clorox board directly telling them shareholders should decide on the takeover. ICAHN ENTERPRISES AND CLOROX. But the dotcom boom meant the new AOL Time Warner lost over $200bn in value in less than two years. AIR PRODUCTS & CHEMICALS AND AIRGAS. 4. AOL AND TIME WARNER. after the buyer attempted to seal the deal over the course of a year. and eventually a judge sided with the short-changed seller.The top five hostile takeovers of all time 1. 2000 When AOL announced it was taking over the much larger and successful Time Warner. $24. $11. Icahn was eventually forced to withdraw and drop the push for a proxy fight. Nasdaq was determined to undermine Deustche Borse’s bid to buy the NYSE parent company with an unsolicited and valuable bid.5BN. 2. 2010 Sanofi fought hard to takeover biotechnology company Genzyme in 2010. 2011 When Clorox refused Icahn’s bid of $10bn. SANOFI-AVENTIS AND GENZYME CORP. it was hailed the deal of the millennium. $13. 3. It had to offer significantly more per share than they initially wanted before triggering a topup option to assume control over around 90 percent of its target company.

only weak companies face hostile takeovers.It can best be argued that hostile takeovers are ethical. typically. some of you may argue that hostile takeovers are unethical. From this angle. . too. shareholders and customers of the company benefit from the new organization. Most employees and managers benefit. Usually. but some employees and top managers usually lose their jobs when the takeover is consummated. and.