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STATEGIC FIT IN
MERGERS AND
ACQUISITIONS –
AN IMPERATIVE

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 INTRODUCTION
Mergers and acquisitions (M&A) and corporate
restructuring are a big part of the
corporate finance world. Every day, Wall Street
investment bankers arrange M&A transactions,
which bring separate companies together to
form larger ones.

Corporate mergers and acquisition is defined as “The process of

buying, selling & integrating different corporate with the desire of
expansion & accelerated growth opportunity.”
“1+1=3”
“One plus One Three, this equation is the special alchemy of an
Acquisition.”
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 DEFINATION

“Basically, when two companies

become one. This decision is
usually mutual between both
firms.”

MERGERS
“A combination of two or
more businesses into one
business.”
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 “A corporate action in which a
company buys most, if not all,
of the target company’s
ownership stakes in order to
assume control of the target
firm.”

ACQUISITIONS
“ACQUIRE MEANS TO BUY
OR TO PURCHASE”
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Types of Corporate Mergers
• Vertical
• Horizontal
• Varieties
• Conglomeration
• Product-extension
• Market extension
Types of Corporate Acquisition
• Friendly
• Hostile
• Depending upon
• Acquire or merging is or isn’t listed in public markets.
• How the communication is done and received by the target.
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 HISTORY
Most of the mergers and acquisitions are an outcome of
the favorable economic factors like the macroeconomic
setting, escalation in the GDP, higher interest rates and
fiscal policies. These factors not only trigger the M & A
process but also play an active role in laying the mergers
and acquisition strategies between bidding and target
firms.

The concept of merger and acquisition in India was not popular until the year 1988.

The key factor contributing to fewer companies involved in the merger is the regulatory and
prohibitory provisions of MRTP Act, 1969. (Monopolies and Restrictive Trade Practices
Act,1969)

The year 1988 witnessed one of the oldest business acquisitions or company mergers in
India.

As for now the scenario has completely changed with increasing competition and
globalization of business. It is believed that at present India has now emerged as one of the
top countries entering into merger and acquisitions. 7
 •Ten biggest Mergers and Acquisitions deals in
India
1. Tata Steel -Corus Group
2. Hutch / Essar –Vodafone
3. Hindalco Industries - Canada
based firm Novelis Inc
4. Indian pharma industry - Daiichi
Sankyo
5. ESSO- ONG
6. DoCoMo-Tata Tele
7. India's financial industry -
HDFC Bank and Centurion Bank
of Punjab.
8. Tata Motors - Jaguar and Land
Rover brands from Ford Motor
9. Adyta Birla Group – Columbian
Chemicals
10. Vedanta –Cairn Deal
Case study
The Vedanta – Cairn acquisition
December 2011 finally saw the
completion of the much talked
about Vedanta – Cairn deal that was
in the pipeline for more than 16
months. Touted to be the biggest deal
for Indian energy sector, Vedanta
acquired Cairn India for a neat 8.6
billion dollars. Although the Home
Ministry cleared the deal, it has
highlighted areas of concern with 64
legal proceedings against Vedanta.
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 Distinction between Mergers and Acquisitions
Merger
The case when two companies (often of same size) decide
to move forward as a single new company instead of
operating business separately.
The stocks of both the companies are surrendered, while
new stocks are issued afresh.
For example, Glaxo Wellcome and SmithKline Beehcam
ceased to exist and merged to become a new company,
known as Glaxo SmithKline.
Merging of two organizations in to one.
It is the mutual decision.
Merger is expensive than acquisition (higher legal cost).
Through merger shareholders can increase their net worth.
It is time consuming and the company has to maintain so
much legal issues.
Dilution of ownership occurs in merger.
Acquisition
The case when one company takes over another and
establishes itself as the new owner of the business.
The buyer company “swallows” the business of the target
company, which ceases to exist.
Dr. Reddy's Labs acquired Betapharm through an
agreement amounting $597 million.
Buying one organization by another.
It can be friendly takeover or hostile takeover.
Acquisition is less expensive than merger.
Buyers cannot raise their enough capital.
It is faster and easier transaction.
The acquirer does not experience the dilution of
ownership. 9
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 MERGERS AND ACQUISITIONS
TAKEOVER

Mergers, acquisitions and takeovers have been

a part of the business world for centuries.

TERMINOLOGY

Merger is an economic tool that is employed

for elevating the long-standing success which is
achieved by developing their functional
competence.
Acquisitions can be either friendly or
intimidating and takes place between the
bidding and the targeted firm. Reverse
acquisition take place when the target company
is bigger than the firm which offered the
takeover proposal. During the process the
bidder has the right to buy the share of the
targeted firm.

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Steps of Mergers and Acquisition Process

Preliminary
Assessment or
Business Valuation

Stage of Phase of Proposal

Integration

Structured Exit Plan

Marketing

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 REVERS MERGER
“A reverse merger is when a private company becomes a public company by
purchasing control of the public company. The shareholders of the private company
usually receive large amounts of ownership in the public company and control of its
board of directors (B of D).”

Advantages Disadvantages

•The ability for a private company to •Reverse stock splits are very
become public for a lower cost and in common with reverse
less time than with an initial public mergers and can significantly
offering (IPO). When a company plans reduce the number of shares
to go public through an IPO, the owned by stockholders.
process can take a year or more to
complete. This can cost the company
money and time. With a reverse
merger, a private company can go
public in as little as 30 days.

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 Merger and Acquisition Strategies
The merger and
acquisition strategies may
differ from company to
company and also depend
a lot on the policy of the
respective organization.
However, merger and
acquisition strategies have
got some distinct process,
based on which, the
strategies are devised.

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 BIBLIOGRAPHY

•WWW.GOOGLE.COM
•WWW.HATIMGLAZING.COM
•WWW.WIKIPEDIA.COM
•WWW.INVESTOPEDIA.COM
•WWW.YAHOO.COM
•WWW.SCRIBD.COM
•BUSINESS.MAPSOFINDIA.COM
•WWW.SLIDESHARE.NET
•WWW.STRATEGIC FIT IN MERGERS AND
ACQUISITIONS-AN IMPERATIVE.PPT
•WWW.INVESTOPEDIA.COM
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THANKING
YOU

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