Project Report - M&A - Krishna Patel

Aṣ
Project Report
On
“Mergers And Acquisitions

And Its Effects On Organisations In India”
Submitted By
Krishna Patel (Seat no. 618128)
Under the Guidance Of

DR. RAKESH KUMAR MANJHI
Assistant Professor
Department Of Accounting And Financial Management
Faculty of Commerce, MSU Baroda.
Submitted To
BBA Programme,
Faculty Of Commerce,
The Maharaja Sayajirao University Of Baroda, Vadodara
Academic Year 2020-21
Mergers and Acquisitions, and its Effects on Organisations in India
MSU BBA, Academic Year 2020-21
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2
Index
Chapter No. Particulars Page No.
Declaration 3
Acknowledgement 4
List of tables and charts used 4
Executive Summary 5
1 Introduction
1.1 Preface 6
1.2 Large mergers and acquisitions in the world 7
1.3 Large mergers and acquisitions of Indian companies 8
1.4 Merger and Acquisition Strategy 10
2 Review of Literatures
2.1 Definition 11
2.2 Mergers and Amalgamations 12
2.3 Acquisitions and Takeovers 14
2.4 Difference between Mergers and Acquisitions 16
2.5 Motives for Mergers and Acquisitions 17
2.6 Previous Empirical Studies 24
2.7 Causes of Failures 27
2.8 ICAI and M&A 29
3 Research Methodology
3.1 Research Problem- Effect of M&A on Organisations 31
3.2 Objectives of the Study 31
3.3 Motivation of the Research 32
3.4 Type of Research Design 32
3.5 Scope of the Research 33
3.6 Data Collected 33
3.7 Data Analysis and tools and techniques 43
3.8 List of Hypothesis 43
3.9 Limitations of the study 43
4 Data Analysis And Interpretation 44
5 Findings, Conclusions, Suggestions And 48

Recommendations
References 52
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4
Acknowledgement
I would like to thank my guide, DR Rakesh Kumar Manjhi, for helping me in undertaking this
project and guiding my way through it. I’m thankful to the Maharaja Sayajirao University of
Baroda to give me this wonderful opportunity to study this topic and present my report on this.
Lastly, I’m thankful to all the publications and writers who helped me by providing valuable
information to carry my research. It would not be without the data made available to us on the
internet platform.
List of Tables and Charts used
● Table 1: Acquiring company’s Change in Stock

● Figure 2: M&A surge in Q3 2020
● Figure 3: Merger explanation
● Figure 4: Amalgamation explanation
● Table 2: Difference between Merger and Acquisitions
● Table 3: Type of merger V/s Synergy
● Table 4: Data of various Mergers
● Table 5: Data of various Acquisitions
● Table 6: ANOVA of Mergers
● Table 7: ANOVA of Acquisitions
● Pie chart 1: Change in profit V/s Merger
● Pie chart 2: Change in Profit V/s Acquisiti
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Executive Summary
It is obvious that M&A creates thousands of must – buy opportunities for businessmen,
which add remarkably huge value to global economic growth. M&A effectiveness is
undiminished and it depends on the depth of resources of both sides as well as the
experience in restructuring companies after the deal. Many research showed that the
main percentage of M&A cases take place in banking and finance sectors when banks
and financial firms want to approach a new market; pharmaceuticals or software
technology when one firm might merge with the other companies in their production
system. There are many deals between thousands of the largest and most successful
global firms such as Daimler Chrysler, Chase-J.P. Morgan, NationsBank- Bank of
Americaâ€¦ regarded as the most impressive deals in M&A history. However, there are
still some arguments that suspect the benefits of M&A and emphasize too many firms
which could not reach the intended results. Therefore, I think that we should consider
the benefits of M&A carefully and help companies be confident when they conduct M&A
deals. Particularly, I write this research project to study more specifically what
companies receive in M&A cases. This research included statistical analysis of 50
mergers and 50 acquisitions that took place between the years 2010 to 2020 in India. It
was reached to the conclusion that mergers and acquisitions do not significantly
change the profits of the organisation, at least not in the short run. However, it was also
suggested that acquisitions had better success chances than mergers. Managers
should get involved in mergers and acquisitions for the right reason with the right
compatible partners to achieve the maximum benefits.
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1. Introduction
1.1 Preface
In today’s market, the main objective of the firms is to earn profit and create shareholder’s
wealth. Growth can be achieved by introducing new products and services or by expanding with
its present operations on its existing products. Internal Growth can be achieved by introducing
new products however external growth can be achieved by entering into mergers and
acquisitions. (Ghosh and Das,2003). Mergers and acquisitions as an external growth strategy has
gained spurt because of increased deregulation, privatization, globalization and liberalization
adopted by several countries around the world. Mergers and acquisitions have become an
important medium to expand product portfolios, enter new markets, and acquire technology, gain
access to research and development and gain access to resources which would enable the
company to compete on a global scale (Yadav and Kumar,2005). However, there have been
instances where mergers and acquisitions have been entered into for non value maximizing
reasons i.e. to just build the company’s profile and prestige (Malatesta,1983:Roll,1986).
Consolidations in the form of mergers and acquisitions have been witnessed around the world in
almost all the industries ranging from automobile, banking, aviation, oil and gas to telecom.
Some of the biggest mergers in automobiles like Daimler-Benz and Chrysler, airlines Air France
and KLM and telecom SBC and At&T are the ones which the world can never forget. Lot of
research and investigation has gone both in the field of economics and strategic management on
the kind of benefits which are derived out of mergers to both the acquiring and target company,
the consumers and the society at large. However one of the most widely used investigations has
been into the shareholder wealth maximization which makes the profit being under the spotlight
of mergers and acquisitions. The news of mergers is so sensitive that it can immediately impact
the price of the share months before the actual merger takes place for both the involved parties.
The information and the news which can flow can bring in positive or negative sentiments which
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would lead to a rise or fall in share price and ultimately shareholders wealth. The perception in
information about merger is such that it tries to project the future increase or decrease in the cash
flow derived out of the combination (Hitt,Ireland and Hoskission,2005).
The following table depicts the change in share price of the acquiring company on the day when
the merger and acquisition announcement was made.
Acquiring Company Target Company Movement in Price of Stock
Daimler-Benz Chrysler +8%
Time Warner AOL +9%
Vodafone Mannesmann +6%
Air France KLM +4%

Table 1: Acquiring company’s Change in Stock
Source: Yahoo Finance
However, it is important to note that mergers and acquisitions do not regularly create value for
shareholders which means that they do not always result in increase in the profits. Many mergers
and acquisitions fail as well. Failure occurs and it deteriorates the wealth of the shareholders.
Consulting firms also estimate that almost two thirds of the firms who enter into mergers and
acquisitions result into failure which leads to disinvestments at a later stage (Schweiger, 2003).
1.2 Large Mergers And Acquisitions in the world
Mergers and acquisitions have been taking place since the last 100 years. Between 1895 and
1995 over 1800 mergers took place in the US alone. This phase was named as the “The Great
Merger Movement” (Lamoreaux, 1989). However, large sized billion dollar merger details have
seen spurt in the last two decades. Between 1991 and 2000 some of the top mergers and
acquisitions have been Vodafone Airtouch PLC and Mannesmann valuing $183 billion
(CNN,2000). In the pharmaceutical sector, the merger between Pfizer and Warner-Lambert was
valued at $90 billion (Pfizer,2000). In 1998, Exxon combined its business with Mobil and the
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deal was valued at $77 Billion (CNN,1998). Other such large sized mergers took place between
Citicorp and Travelers Group, Worldcom and MCI Communications, BP and Amoco.
The year 2000 also saw some of the biggest deals like America Online Inc (AOL) with Time
Warner valued at $164 Billion(CNN,2000) and in the same year Glaxo Wellcome Plc merged
with SmithKline Beecham Plc valuing $75 Billion. The year 2004 saw one of the largest mergers
between Royal Butch Petroleum and Shell Transport. In the same year JP Morgan Clause and
Company took over Bank One Corp (CNN,2004). The year 2008 saw the merger of Inbev Inc
and Anheuser-Busch Companies Inc valued at $52 Billion.
1.3 Large Mergers and Acquisitions of Indian Companies.
The news about Indian companies acquiring foreign based companies was new a decade back but
the present times have changed. The situation about Indian companies venturing abroad and
taking foreign companies has become very frequent. Some of the well known deals which have
made India famous all over the world have been the merger of Tata Steel and Corus Corp.
Second biggest merger was between the metal giant Hindalco and Novelis. Videocon and
Daewoo Electronics corporation from Korea was the third largest overseas deal. In the
pharmaceutical sector, Doctor Reddys Laboratories acquired Betapharm from Germany. The top
mergers and acquisitions originating from India itself value to be close to USD 21,500 million.
In 2001, the value of mergers and acquisitions abroad was only USD 0.7 billion which by 2005
had risen to USD 4.3 billion (Prabhudesai,2008).
On 20th March 2017 There was a drastic change in Indian Telecom industry when Idea cellular
decided to merge with Vodafone. It is India's largest Telecom merger. It is also the world's 2nd
largest telecom company after China Mobile. The reason for this massive merger was Reliance
Jio’s entry in the Telecom Industry with their cheap data, voice calling and handset.
Reliance Jio is valued at $30 billion with fastest 160 million subscribers while airtel has 270
million users at that time. Airtel had acquired Telenor India in the month of Feburary’17 to
create a combined database of 315 million subscribers. In the month of October’17 Tata
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teleservices decided to merge with Airtel and on 23rd March 2017 Airtel acquired Tikona digital
networks for the same reason.
Uber has launched its food ordering application “UberEats'' in India. In order to compete with it
Ola decided to acquire Foodpanda which was the 3rd largest food ordering application after
Zomato and Swiggy. In 2018, the US-based retail giant Walmart acquired a 77% controlling
stake in the Indian e-commerce company, Flipkart for $16 billion.
The growth in M&As in Q3 2020 is a clear indication of a consolidation wave, stronger in some
sectors than others. M&As surged by a whopping 79% in Q3 and it saw an average growth of
23% in 2020. The following table shows the trend of mergers and acquisitions of all the quarters
of the past few years.
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1.4 Merger and Acquisition Strategy
1.4.1 Firm Diversification
Generally firms enter into mergers and acquisitions with firms which normally are in the same
connected line of business than to diversify it and enter into businesses in which the firm lacks
experience(Hitt, Ireland and Hokisson,2005). Companies which enter into mergers with
diversified firms can explore various advantages which are not available with undiversified
firms. Diversification is a process of operating into different industries and to diversify in such a
way which helps to influence the value of the firm and enhance shareholders value(Jose,Nicholas
and Stevens, 1986). The reason for firms to opt for diversification as a strategy is so that the risk
can be divided across the industries in which it operates. Secondly, the capital markets would
welcome the multilevel activities which the firm carried on through the diversification route
which would result in growth and profitability of the firm. However, danger lies in mergers and
acquisitions as it has to conduct its own strengths and weaknesses before exploring its wings in
other industries and markets.
1.4.2 Cross-Border Mergers and Acquisitions
Internationalization is one of the important strategies which firms are adopting in today’s market
to spread its operations in foreign countries. Cross border acquisitions refer to acquisitions done
by parent companies with headquarters in one country and merger in different countries.
Domestic mergers are easier to execute because of the familiarization of both the involved
companies, the laws, procedures and other such factors. However, in the case of international
mergers there are various complications involved(Ireland and Hokisson,2005). The reason for
firms opting for cross border mergers and acquisitions is because it is a time consuming option to
enter and set up operations in a foreign country. A lot of time and cost is saved in building up its
own infrastructure and supply chain. Various studies have shown that cross border acquisitions
have resulted in positive gains for the shareholders. Eun et al(1996) conducted a study in the US
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which shows that cross border acquisitions have created immense wealth for acquiring
shareholders.
2. Review Of Literature
2.1 Definition
There are various strategic and financial objectives that influence mergers and acquisitions. Two
organisations with often different corporate personalities, cultures and value systems are brought
together (Sudarsanam,2003). The terms ‘mergers’ and ‘acquisitions’ are often used
interchangeably. In lay parlance, both are viewed as the same. However, academics have pointed
out a few differences that help determine whether a particular activity is a merger or an
acquisition.
A particular activity is called a merger when corporations come together to combine and share
their resources to achieve common objectives. In a merger, both firms combine to form a third
entity and the owners of both the combining firms remain as joint owners of the new
entity(Sudarsanam,1995).
An acquisition could be explained as an event where a company takes a controlling ownership

interest in another firm, a legal subsidiary of another firm, or selected assets of another firm. This
may involve the purchase of another firm’s assets or stock(Donald M. DePamphilis,2008).
Acquiring all the assets of the selling firm will avoid the potential problem of having minority
shareholders as opposed to acquisition of stock. However, the costs involved in transferring the
assets are generally very high(Ross, Westerfield, Jaffle, 2004).
There is another term, ‘takeover’ which is often used to describe different activities.
Gaughan(2007) says that this term is very vague. It is a broad term that sometimes refers to
hostile transactions and sometimes to both friendly and unfriendly mergers(Gaughan,2007).
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Takeover is slightly different from acquisition, however the meaning of the later remains the
same. When the acquisition is forced in nature and without the will of the target company’s
management, it is known as takeover. Takeover normally undergoes the process whereby the
acquiring company directly approaches the minority shareholders through an open tender offer to
purchase their shares without the consent of the target company’s management. In mergers and
acquisitions scenarios the terms mergers, acquisitions, takeovers, consolidation and
amalgamation are used interchangeably(Chandra,2001).
2.2 Mergers And Amalgamations
A merger is a combination of two or more businesses into one business. Laws in India use the
term 'amalgamation' for merger. The Income Tax Act,1961 [Section 2(1A)]defines
amalgamation as the merger of one or more companies with another or the merger of two or
more companies to form a new company, in such a way that all assets and liabilities of the
amalgamating companies become assets and liabilities of the amalgamated company and
shareholders not less than nine-tenths in value of the shares in the amalgamating company or
companies become shareholders of the amalgamated company.
Merger
Amalgamation
Thus, mergers or amalgamations may take two forms:-

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● Merger through Absorption: - An absorption is a combination of two or more companies into an

'existing company'. All companies except one lose their identity in such a merger. For example,
absorption of Tata Fertilizers Ltd (TFL) by Tata Chemicals Ltd. (TCL). TCL, an acquiring
company (a buyer), survived after merger while TFL, an acquired company (a seller), ceased to
exist. TFL transferred its assets, liabilities and shares to TCL.
● Merger through Consolidation: - A consolidation is a combination of two or more companies
into a 'new company'. In this form of merger, all companies are legally dissolved and a new
entity is created. Here, the acquired company transfers its assets, liabilities and shares to the
acquiring company for cash or exchange of shares. For example, merger of Hindustan
Computers Ltd, Hindustan Instruments Ltd, Indian Software Company Ltd and Indian
Reprographics Ltd into an entirely new company called HCL Ltd.
A fundamental characteristic of merger (either through absorption or consolidation) is that the

acquiring company (existing or new) takes over the ownership of other companies and combines
their operations with its own operations.
Besides, there are following types of mergers:
1. Horizontal merger:- is a combination of two or more firms in the same area of business. For
example, combining two book publishers or two luggage manufacturing companies to gain
dominant market share.For example Lipton India and Brooke Bond, Bank of Madura and ICICI
Bank, Vodafone and Idea ltd.
2. Vertical merger:- is a combination of two or more firms involved in different stages of

production or distribution of the same product. For example, joining a TV manufacturing
(assembling) company and a TV marketing company or joining a spinning company and a
weaving company. Vertical merger may take the form of forward or backward merger. When a
company combines with the supplier of material, it is called backward merger and when it
combines with the customer, it is known as forward merger. Example is merger of Reliance and
Flag Telecom Group.
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3. Conglomerate merger:- is a combination of firms engaged in unrelated lines of business activity.

For example, merging of different businesses like manufacturing of cement products, fertilizer
products, electronic products, insurance investment and advertising agencies. L&T and Voltas
Ltd are examples of such mergers.
4. Reverse Merger:- A reverse merger is a merger in which a private company becomes a public
company by acquiring it. It saves a private company from the complicated process and expensive
compliance of becoming a public company. Instead, it acquires a public company as an
investment and converts itself into a public company. The merger of Godrej Soaps Ltd. with
Gujarat Godrej Innovative Chemicals Ltd is an example of reverse merger.
5. Negotiated Merger:- A merger carried out in which a negotiation process is conducted for the
merger or joining of two companies into a single business entity, or the outright purchase of a
company by another company is called a negotiated merger. ITC Classic ltd and ICICI bank such
a merger.
6. Downstream Merger:- A merger in which a partially-owned subsidiary takes over its

parent company is called a downstream merger.ICICI Ltd merged with its subsidiary
ICICI bank.
7. Upstream Merger:- An upstream merger involves merging into a significantly larger firm. One
reason for the smaller firm to do so is that it can gain access to the broader product line,
geographical reach, expertise, and administrative capabilities of the larger firm. Bhadrachalam
Paper Board merging with parent company ITC ltd is an example of such a merger.
2.3 Acquisitions And Takeovers
An acquisition may be defined as an act of acquiring effective control by one company over
assets or management of another company without any combination of companies. Thus, in an
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acquisition two or more companies may remain independent, separate legal entities, but there
may be a change in control of the companies.
When an acquisition is 'forced' or 'unwilling', it is called a takeover. In an unwilling acquisition,
the management of the 'target' company would oppose a move of being taken over. But, when
management of acquiring and target companies mutually and willingly agree for the takeover, it
is called acquisition or friendly takeover. Under the Monopolies and Restrictive Practices Act,
takeover meant acquisition of not less than 25 percent of the voting power in a company. While
in the Companies Act (Section 372), a company's investment in the shares of another company in
excess of 10 percent of the subscribed capital can result in takeovers. An acquisition or takeover
does not necessarily entail full legal control. A company can also have effective control over
another company by holding a minority ownership.
Acquisitions are also divided into following types:
1. Horizontal Acquisition:- This is when a company acquires another company in the same
business, or industry or sector, that is, a competitor. A real-life example of the same would be
Facebook acquiring Whatsapp. Whatsapp still exists with its brand name, however, it is now
owned by Facebook. In the purpose classification of acquisitions, we can further elaborate on
this transaction. Facebook & Whatsapp are both in the same industry, that is social media,
however, the acquisition has led to both benefiting from each other’s expertise.
2. Vertical Acquisition:- This is when a company acquires either a supplier of inputs or a distributor
of its products or the company to which it sells its products. For example, a garment company
acquiring the source of cotton such as a farm. This is mostly done to have higher control over the
supply chain and therefore impacting the receipt of raw material and delivery of products and in
turn, impacting the turn-around time of the sourcing of input and delivery of the product to the
end-user.
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3. Conglomerate Acquisition:- This is when a company acquires a company in a completely

different kind of business, industry or sector. This is mostly done for diversification. An example
of this would be a food industry company acquiring a company in the clothing industry. Reliance
Industries recently took over Hamley’s, a toy products company. Reliance is a giant
conglomerate, which wanted to diversify into the toy industry and therefore undertook the
acquisition by getting the 100% ownership transferred to itself.
4. Congeneric Acquisition:- This is when companies sharing a similarity come together. This can
be anything, either similar production technology or similar distribution channel and so on but
the production activity of the two companies is not related. This terminology exists because it is
assumed that there can’t be any other kind of similarity except that being considered while
defining the types of acquisitions explained till now, however that is not the case practically.
There is always some kind of overlap and therefore if an acquisition is not purely any other type,
it is classified as the congeneric one.
5. Financial Acquisitions:- Such acquisitions are not very commonly discussed while classifying
acquisitions. Such acquisitions are driven by the financial logic of transactions. They generally
fall under either Management Buyouts (MBOs) or Leveraged Buyouts(LBOs) (H. Ross
Geddess,2006).
2.4 Difference between Merger And Acquisition
Sr No. Point Of Difference Merger Acquisition

1. Definition The merger is a process in The acquisition is a process
which more than one company in which one company takes
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comes forward to work as one. control of another company.
2. Terms Considered to be friendly and Considered to be hostile and

planned. sometimes involuntary(not
always).
3. Title A new name is given. The acquired company

comes under the name of the
acquiring company.
4. Scenario Two or more companies that Acquiring company is

merge usually consider each always larger than the
other on equal terms. acquired company.
5 Power The power-difference is The Acquiring company gets

almost nil between two to dictate terms.
companies.
6 Stocks The merger leads to new In acquisition, there are no

stocks being issued. new stocks issued.
7 Example Merging of Glaxo Wellcome Tata Motors acquiring Jaguar

and SmithKline Beecham to Land Rover.
GlaxoSmithKline.
2.5 Motives for Mergers And Acquisitions
Factors affecting mergers change with the changing legal, political, economic and social
environments (Kaushal,1995). Business Organisation literature has identified two common
reasons which are derived out of mergers and acquisitions i.e. efficiency gain and strategic
rationale(Neary,2004). Efficiency gain means the merger would result in benefits in the form of
economies of scope. Economies of scale and scope are achieved because of the integration of the
volumes and efficiencies of all the companies put together. Secondly, the strategic rationale is
derived from the point that mergers and acquisition activity would lead to change in the structure
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of the combined entity which would have a positive impact on the profits of the firm. Other
Factors that lead to mergers and acquisitions are discussed below:
1. Synergy:
Synergy has been described as 2+2=5 (Pearson, 1995). In other words, the whole would be
greater than the sum of its parts (Sherman, 1998). It implies that the combined holding of
different activities in a single combined organisation is better, larger or greater than what it
would be in two distinct entities (Bakker, Helmink, 2004).
The word synergy comes from a greek word that means to co-operate or work together (Bruner,
2004). Mergers theoretically revolve around the same concept where two corporations will come
together and pool in their expertise and resources to perform better. Estimating synergies and its
effect is an important decision in the merger process, primarily for four reasons. Firstly, mergers
are meant for value creation and hence assessing the value that would be created by the synergies
is important. Secondly, assessing how investors would react to the merger deal is another
important consideration. Thirdly, managers need to disclose these strategies and benefits of such
deals to investors and hence their perfect estimation and knowledge is important. Lastly, valuing
synergies is important for developing post merger integration strategies (Bruner,2004). However,
valuing synergies may be practically very few companies actually develop a transactional team,
draw up a joint statement regarding the objectives of the deal or solve the post choosing
operating and financial problems timely.
Synergies can be further discussed as following:
a) Operational Synergy-
Operational synergies refer to those classes of resources that lead to production and/or
administrative efficiencies (Peck, Temple, 2002). Product related diversification or
mergers are often carried out by keeping operational synergies in mind. These strategies
help the firms in bringing down the unit costs due to product relatedness. Common
technology, marketing techniques like common brands and manufacturing facilities like
common logistics are essentially the components of operational synergy (Peng, 2009).
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Operational synergy can be explained as a combination of economies of scale, which

would reduce average costs as a result of more efficient use of resources and economies
of scope, which would help a company deliver more from the same amount of inputs
(Bakker, Helmink, 2004).
b) Financial Synergy-
Financial synergy refers to the impact of mergers and acquisitions on lowering the cost of
capital of the merged or newly formed entity (DePamphilis, 2005). Financial synergies
lead to reduced cost of capital and /or increased borrowing power (Hankin, Seidner and
Zietlow, 1998).
Conglomerate mergers actually focus on financial synergies that increase the
competitiveness for each individual unit controlled by one centralised parent company
beyond what could have been achieved by each unit competing individually (peng, 2009).
Along with a lower cost of capital, financial synergies also bring about a larger capital
base which helps funding of larger investments. In case of conglomerate mergers,
financial diversification can bring about various other advantages like more stable cash
flows, lower performance variations, insurance gains and other tax advantages (bakker,
Helmink, 2004).
Financial synergies are possible between related and unrelated firms unlike operational
synergies that take place only between related firms (Peck, Temple, 2002).
c) Managerial Synergy:
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Managerial synergy refers to the increased efficiency as a result of management teams of

two firms coming together. Often management teams have different strengths and their
coming together could result in improved managerial expertise (Ross, Westerfield, Jaffle,
2004).
These synergies occur when competitively relevant skills possessed by managers of
previously independent companies can be successfully transferred to the merged
entity(Hitt, Harrison, Ireland, 2001).
2. Growth:
Growth is imperative for any firm to succeed. This growth can be achieved either through organic
or inorganic means. However, mergers (inorganic) are considered as quicker and better means of
achieving growth as compared to internal expansions(organic). Along with additional capacity,
mergers bring with them additional consumer demand as well (Sloman, 2006). Mergers also
bring with them access to facilities, brands, trademarks, technology and employees (Cameron,
Green, 2004).
Although mergers sound relatively easier and convenient compared to internal growth, there are
risks in actually realising the intended benefits. The convenience associated with the growth
needs to be seen along with risks of running a larger corporation as well (Cameron, Green,
2004).
3. Diversification and Risk Management:

One argument often presented in favour of mergers is that they help in diversifying the group’s
lines of businesses and hence helps reduce risk. Risk could be interpreted as risk from the point
of view of shareholders, lenders i.e. insolvency risk, business risk, etc.
(Levy and Sarnat, 1970) point out that the probability of a financial failure of two individual
corporations is more than that in case of a conglomerate merger of the two. From the viewpoint
of a shareholder, the combination of the financial resources of two firms reduces lenders risk as
compared to the risk from combining the shares of individual corporations (Levy and Sarnat,
1970).
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Diversification often leads to possession of the necessary management and technical and
marketing expertise which leads to an increase in market share (Pearson, 1999).
Different types of mergers can help reduce business risk in their own ways. Vertical integration
reduces risk by controlling the production process. Horizontal mergers reduce competition and
hence reduces uncertainties. Conglomerate mergers put a corporation’s eggs in several baskets
and help it diversify. However, it is claimed that conglomerate mergers are often done in the
interest of managers since shareholders can diversify their portfolios themselves (Goldberg,
1986).
4. Tax Advantages:
Mergers can benefit the corporations and individuals in their own way by helping them reduce
the tax bill. However, with strict laws, undue advantages taken by corporations of tax reduction
can be managed. Often large profitable corporations merge with certain ones to help them take
advantage of reduced expenditure on taxation. However, small shareholders of acquired
companies tend to receive substantial tax benefits on merger with large corporations.
Loss making corporations can combine with fully taxable firms and can increase the value of
their own tax benefits. This happens because as per law, taxable firms could offset losses and
credits of an acquired firm with its current and future incomes. However, this could not happen
in a visa versa situation. So acquiring corporations could benefit by means of a reduced tax bill.
On the other hand, shareholders of small acquired corporations also tend to have tax benefits.
However, these benefits are restricted to situations where they receive shares as the mode of
payment. They receive shares in a more stable, large and profit making company and also do not
land up paying capital gains tax as their old shares are not sold but swapped as part of
organisational restructuring (Auerbach, 1988).
Various other benefits also accrue as part of the merger activity. Assets can be transferred within
the group without giving rise to stamp duty. Capital assets can be transferred on a no profit, no
loss basis. Interest could be paid within group companies so as to use it as a tax shield (Defriez,
2000). Some nations also give tax reliefs to corporations that acquire sick units (Kaushal, 1995).
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5. Managerial Hubris:
As cited in Moeller et al, 2004, Roll (1986) in his study concluded that managers of acquiring
firms often suffer from hubris and hence tend to overpay. This term refers to the confidence in
managers in terms of evaluating potential takeover targets. Managers often fail due to negligence
and overconfidence of managers because of which they often make mistakes in selecting the
right corporations.
Managerial hubris results in takeovers even in the absence of any synergy. Although managers
are equally likely to underestimate the synergies, more often they overestimate them and are
likely to overpay. While synergies lead to a positive correlation between target and acquirer
gains, hubris is likely to result in a negative correlation (Berkovitch and Narayan,1993).
While hubris should ideally depend on every individual, managers of larger firms are generally
more prone to suffer from it. This probably happens because they are probably socially more
important as managers or large firms tend to have more funds at their disposal and hence mergers
are easier for such firms (Moeller et al, 2004).
6. Increased Managerial Compensation and rewards:

There is a tendency among managers, especially those of corporations where ownership and
control are distinct, to enter into mergers for the lure of a higher pay packet and more rewards.
This tends to happen in corporations where reward is related to performances of employees.
Such motives are often destructive in nature and result in failed mergers.
Managers often prioritise personal gains over the benefits for the corporation. They often enter
into mergers and seek growth of the corporation only for the power and prestige that is
associated with corporate size, leisure, staff and other forms of on-the-job are other motives
behind the growth policies of many managers (Dennis c Muelleer, 2003).
It is seen that bidders and acquirers are rewarded handsomely in the form of high managerial
compensation and management dividends. Shareholders of the acquiring company often tend to
be losers in such cases. Managers tend to benefit at the expense of shareholders. Hence only
successful mergers that create true value must be rewarded. Other issues that need to be
23
addressed in mergers are the differences between CEOs of merging companies on issues like
control, authority and power (Gaughan, 2005).
7. Improved Market Standing:

Mergers are often carried out to achieve a better standing in the market by means of an increased
market share and by becoming a leading player in the concerned sector. Reducing competition is
another key concern when contemplating mergers. Often it is necessary to protect a key source of
supply from a competitor which can be done through mergers (Pearson, 1999).
Market power is the ability of a corporation in a market to profitably charge prices above the
competitive level for a sustained period of time (American Bar Association, 2005).
Mergers are regarded as being successful if they can result in an increase in market power or can
eliminate a threat of increased competition. Mergers are also used to protect dominant positions
(George, Joll, Lynk, 2005). However, it has also been seen that the mergers do not provide much
evidence that market control leads to an increase in profitability (Griffiths, Wall, 2007).
8. Empire Building
The term empire building could be quite closely related to the previous points about increasing
market power and diversification. An empire would comprise a cross section of business which
would boost the ego and the personal satisfaction of the managers and at the same time also
spread business risk. Controllers of large organisations carry out mergers and acquisitions out of
their personal whims and fancies of building an empire (Kaushual, 1995).
Managers are often motivated by their egoistical need to exercise power who like to flex their
muscles by engaging in empire-building (Cartwright, Cooper, 1992). Often managers state
diversification as the motive while fulfilling their empire building ambitions (George, Joll, Lynk,
2005).
9. Free Cash Flow Theory

Cash flows available to suppliers or lenders of money after all operating expenses and necessary
investments in working capital and fixed capital are termed as free cash flow (Stowe et al, 2007).
This cash flow is free and available for managers to either reinvest or distribute as dividends
(DePamphilis, 2008).
24
Jensen (1986) pointed out that often when a firm has sufficient free cash flows at its disposal,
managers tend to enter into mergers and acquisitions as a means to use these funds since other
investment and buyback options do not prove to be that lucrative. Managers tend to use this free
cash flow for acquisitions as it increases their empire and hence market power even though such
acquisitions may not create shareholder value. On the other hand, any distribution of cash flows
as dividends would lead to reduced resources at their disposal and loss of power (Wubben,
2007).
2.6 Previous Empirical Studies Regarding Post Merger Performances
Several researchers have tried to study the performances of acquiring firms post the merger.
However, there has been no concrete conclusion or consensus regarding the same. The most
popular forms of empirical studies are event studies, accounting studies, clinical studies and
executive surveys.
From the most of the studies conducted till date, it only appears that mergers do not improve the
financial performance of the acquirers. Event studies and accounting studies point to the fact that
these gains are either small or non-existent (Kumar, 2009). However, it must also be noted that
there have been studies conducted that show that post merger performance also largely depends
on the industry or sector and cannot be generalized (Mantravadi & Reddy, 2008).
1. Event Studies
Event studies measure the abnormal returns to the shareholders during the period surrounding the
announcement of the merger. This abnormal return is essentially the difference between the raw
returns which is simply the change in share prices and a benchmark index like the one calculated
by CAPM or S&P 500, etc. (Krishnamurthy and Vishwanath, 2008).
It has been seen that often the stock market performances of acquiring firms have been below
expectations or negative. These returns tend to vary by the time horizon being studied. Studies of
one year returns post merger by Jensen & Ruback (1983) showed that returns averaged -5.5%.
25
Longer time frame studies by Magenheim & Mueller (1987) concluded that 3 year post merger
studies showed a -16% return (Peck, Temple, 2002).
The share returns of acquiring companies tend to be fairly positive prior to the announcement of
mergers. However, on the announcement the returns are mixed. In general, it can be safely said
that on announcement of the merger, the acquiring firms’ shares decline and this process may
sometimes continue for a few years together (Mussati, 1995).
Studies on short term performance reveal that the target shareholders are clear winners. On
surveying the performances of acquiring and target shareholders, it is seen that over a period of
three days spanning from one day prior to one day post the announcement, the share performance
of the target companies tend to show positive returns consistently across decades as compared to
the acquiring companies (Andrade, Mitchell, Stafford, 2001).
These results may also vary by the characteristics of the acquiring company and the mode of
financing the transaction. Loughran and Vijh (1997) show that cash financed mergers do better
than stock financed ones. Rau and Vermaelen (1998) show that value acquirers outperform the
glamour ones.
2. Accounting Studies
This method involves the study of financial statements and ratios to compare the pre merger and
post merger financial performance of the acquiring company. It is also used to study whether the
acquirers out performed the non acquirers (Daughan, 2007). Various ratios like return on equity
or assets, EPS, liquidity, etc are studied.
Whether a merger actually improves the operating performance of the acquiring company is
uncertain, but mostly leads to a conclusion that mergers do not really benefit in improving
operating performances. Meeks (1977) studies the impact of mergers on UK companies and
concludes that in the long run the profitability reduces drastically below the pre-merger levels,
sometimes to the extent of 50%. Similarly, a study conducted by Ravenscraft andScherer (1987)
on US companies also pointed at the same result, wherein the profitability post merger declined
26
or at best showed marginal improvements. Dickerson et al, in their research on a cross section of
UK companies, led to a conclusion that acquisitions have a detrimental effect on company
performance and lead to additional and permanent reduction in profitability (Dickerson, Gibson,
Tsakalotos, 1997). Similarly, a research conducted on Indian companies from 1999-2002 also
showed no real signs of better post merger operating performance of the acquiring company
(Kumar, 2009).
3. Executive Surveys
This method is the primary source of information collection whereby the managers are asked
about the success or otherwise of the merger. Standardized questionnaires are presented and
managers are asked to respond to them and views of the management and executives are not
given the due importance. However, it must be noted that views of practitioners are equally
important to supplement the large sample scientific studies (Bruner, 2001).
In a survey of 50 executives regarding the success of mergers, on average respondents said that
only 37% of deals created value for the buyers and only 21% achieved the buyer’s strategic goals
(Bruner, 2001).
On the other hand, a study conducted by Ingham, Kran and lovestam (1992) said that 77% of the
146 CEOs surveyed believed that there was an increase in the short term profitability after the
merger and 68% believed that the profitability increased in the long run.
This shows that one’s frame of references has a major impact on the responses. Either due to
better information or just ego, executive opinions are much more positive in case of mergers
where the particular executive is involved (Bruner, 2001).
4. Clinical Studies
One case or a small sample is studied in depth and insights are derived from field interviews with
executives and knowledgeable observers. This is an inductive form of research whereby
27
researchers often induce new insights (Bruner, 2004). The purpose of these clinical studies is to
fill in the gaps left by the study of the stock returns and accounting performances (Jensen, 1986).
Various clinical studies conducted over the years have led to uncovering of the results behind the
success or failures of mergers. A study of the ATT/NCR merger revealed that the failure was a
result of 3 factors. One that management objectives were not consistent with maximising
shareholders wealth, second was managerial overconfidence or hubris and thirdly, ignorance of
available information. The attempted merger of Renault with Volvo failed because of disbelief in
merger synergies and transfer of control to Renault (Bruner, 2001). These were only a few
examples of how clinical studies often helped in unmasking the truths behind the failure of
mergers.
2.7 Causes of failures
There could be many causes of failed mergers and acquisition. It is most likely that a failed
merger would be a result of poor management decisions and overconfidence. There could be
personal reasons considering which managers tend to enter into such activities and hence tend to
ignore the primary motive of mergers, creating shareholder value. Sometimes however good
decisions may also backfire due to pure business reasons. These factors can be summarized by
the following points.
1. Integration Issues
It is rightly said that “few business marriages are made in heaven” (Sadler, 2003). Both merging
companies need to be compatible with each other. Business cultures, traditions, work ethics, etc.
need to be flexible and adaptable. Inefficiencies or administrative problems are a very common
occurrence in a merger which often nullifies the advantages of the merger (Straub, 2007). Often
it is necessary to identify the people needed in the future to see the merger through. There must
be some urgency between the parties and good communication between them. Due to lack of
these qualities, mergers often do not produce the desired results (Sadler, 2003).
28
2. Overpayment
A very common cause of failed mergers is overpayment. This situation arises essentially due to
overconfidence or urge for expansion. Overpayment often has disastrous consequences.
Overpayment leads to expectations of higher profitability which is often not possible. Excessive
goodwill as a result of overpaying needs to be written off which reduces the profitability of the
firm (Depamphilis, 2005).
3. Personal motives of executives

Managers often enter into mergers to satisfy their own personal motives like empire building,
fame, higher managerial compensation, etc. As a result, they often lose focus on the fact that they
need to look at the strategic benefits of the organisation they entered into. These executives enter
into these mergers for the purpose of seeking glory and satisfying their ‘executive ego’, leading
to failure of mergers. (http://finance.mapsofworld.com/merger-acquisition/failure.html)
4. Selecting the target

Selecting the appropriate target firm is an extremely important stage in the merger process.
Executives must be able to select the target that suits the organization's strategic and financial
motives and needs. Often the incapability or lack of motivation and interest on the part of
executives leads to incorrect target selection. Lubatkin (1983) very appropriately said that
selecting a merger candidate may be more of an art than a science (Straub, 2007).
5. Strategic Issues
Strategic benefits should ideally be the primary motive of any merger activity. However,
managers sometimes tend to overlook this aspect. Faulty strategic planning and unskilled
execution often leads to problems. Over expectation of strategic benefits is another area of
concern surrounding mergers. (Schuler, Jackson, Luo, 2004). These issues which form the core
of all merger activities are not addressed adequately leading to failures of mergers.
29
2.8 ICAI and Mergers and Acquisitions
The Council considered the matter of 'Issues relating to taking on record the particulars
of merged/merging firms of chartered accountants including that of date(s) of joining
partner(s) of merging firm(s)' at its 250th meeting held from 19th to 22nd April, 2005
and decided as under :-
In order to bring clarity for the purpose of removing doubts over the issues relating to
taking on record the particulars of merged/merging firms of chartered accountants
including the date(s) of joining of partner(s) of merging firm(s), the Council
unanimously decided to accept the recommendation of the Executive Committee as
under :-
(1) The first two examples approved by the Council at its 198th meeting, in order to
elucidate the nature of merger/amalgamation as given hereunder be retained as they are.
Name of firm Name of Name of new Seniority

firm firm
1. A & Co., B & Co., A & Co Date of establishment will be 1966
1966 1980
2. A & Co., B & Co., B & Co Date of establishment will be 1980
1966 1980
(2) The third example approved by the Council in its 198th meeting as given under be
30
deleted altogether.

firm firm
1. A & Co., B & Co., Y & Co Date of establishment will be date of
1966 1980 approval of Y & Co. by the Institute or
constitution of the Partnership firm,
whichever is later.
(3) As far as the fourth example approved by the Council in its 223rd meeting given
below, is concerned, the same needed modification to the effect that without
restricting the new name of the firm as either "AB & Co." or "BA & Co" and the like,
complete flexibility be given so as to permit any other name but subject to
compliance with the condition(s) prescribed under Regulation 190(2).

firm firm
1. A & Co., B & Co., Either AB & Date of establishment will be 1966
1966 1980 Co. or BA & Co
While, in the constitution certificate, the actual date(s) of joining (of partner(s) the
merging firm(s) would continue to be the respective date(s) of joining the merged
firm, however against each such entry the clarificatory words "deemed date of
joining" should be mentioned without fail.
3. Research Methodology
31
3.1 Research Problem- Effect of M&A on Organisations
Merger and Acquisition has been widely acclaimed by scholars and professionals in
business as the most desirable and effective strategy to revive the difficult situations in
the world economy. The world is going through a pandemic and the situation is so
terrible that the organizations have to turn around and adopt these strategies to survive
through this turbulent water.
This research work has the objective of undertaking to examine, analyse and evaluate the
effectiveness of mergers and acquisitions as a strategy for organizational survival in India
and will investigate whether it can result in increase profitability of the combined
firms.The analysis aspect of this project will talk about the data of various mergers and
acquisitions of the past decade and its interpretation.
Thus, this project is an assessment of the effect of Mergers and Acquisitions on the
organizations concerned as the tool to survive and as the weapon to grow huge in the
market.
3.2 Objectives of the Study
The main aim of the research is to analyze the impact of mergers and acquisitions on the profits
of the firms involved. Objectives of the research are as follows-
● To estimate the correlation between mergers and increase in the profits after mergers and
amalgamations for two or more organizations.
● To estimate the correlation between acquisitions and increase in the profits after
acquisitions of the acquiring companies.
32
● To estimate the probability of Success rates and failure rates of mergers and acquisitions.
3.3 Motivation of the Research
The researcher in her entire journey has focused towards learning something about finance. In
this journey of studying about finance and the markets, as a student I have learnt about many
companies merging and getting acquired in India through the medium of news channels and
newspapers. In India, the media gives due attention to mergers and acquisitions which increases
the curiosity to know more about such happening. Over the years, I have seen many mergers
happening in India across various industries. Because of this reason, mergers and acquisitions as
a subject have been very close to my heart. At this point in my career I am motivated to study
about mergers and acquisitions happening in India and the impact it has on the profits on the
acquiring firm. I have noticed that not all mergers have been successful and the shareholders
wealth in most of the mergers have also not been maximised. My main motivational factor for
doing this research comes here where I want to understand what impact does post merger and
acquisitions hold on the profit of the firm as profit is the fuel of any business.
3.4 Type of Research Design
The nature of the research is quantitative research. Quantitative research deals with numbers and
statistics, while qualitative research deals with words and meanings. Quantitative methods allow
you to test a hypothesis by systematically collecting and analyzing data, while qualitative
methods allow you to explore ideas and experiences in depth. The type of research design is
correlational. The data of the profits of the firms involved in mergers and acquisitions of pre and
post years are collected. The correlation between merged and acquiring companies and the
change in profit is tested using parametric test and statistical analysis of ANOVA (analysis of
variance) method.
33
3.5 Scope of the Research
The characteristics of the proposed project population is the well known present/prior
organisations in the various industries of market ranging from small scale to big scale
organisations, small capital to large capital organisations and public to private
organisations. This will make the proposed projects interpretation helpful to all the
organisations no matter its nature and size. The organisations merged and acquired
within the past 10 years, which is from year 2010 to year 2021, will be considered for
the proposed research project. This will help us to include all the stages of the economic
cycle and help us with more accurate and diverse interpretation. The organisations
studied will either be Indian organisations or the organisations carried out in India.
3.6 Data Collected
The data collected for the research is all the secondary data collected from authentic sites of the
firms taken into consideration or the news and data providing sites. The data collected is the
profit of 50 mergers and 50 acquisitions that took place in India or with Indian companies. The
data includes the profit of the pre merger/ pre acquisition year and the post merger/ post
acquisition year respectively. The sources of the data used are listed below the table showing the
data collected and represented in table form. (The profits are in INR crore).
Data of various mergers in the market in the previous 10 years:
34
Sr. Year Entity 1 Profit Entity 2 Profit New Entity Profit Perce
No Of Before Before After ntage
. Merg Merge Merge Merge Incre
e (p.y) (in (p.y) (in ase/
Rs. Cr.) Rs. Cr.) Decre
ase in
Profit
1 2020 Indus 2779.00 Bharti infratel 3600 Indus Towers 5045. (29%)
Towers 6
2 2020 Hindustan 6060 GSK 276.63 Hindustan 6,748 6.5%

Unilever Consumer Unilever
Limited Healthcare Limited
3 2020 L&T ship 6677 Larsen & 6948.33 Larsen & 6024. (55%)
Building Toubro Toubro 76
4 2020 Punjab (9.9) Oriented (5815.75) Punjab 0.33 100.0

National Bank Of National 5%
Bank Commerce Bank
5 2020 Punjab (9.9) United Bank (2315.93) Punjab 0.33 100.0

National Of India National 14%
Bank Bank
6 2020 Union Bank (8353.6 Andhra Bank 173.01 Union Bank (1129 (38.11
Of India 3) And Of India 7.98) %)
corporation
bank
7 2019 Bank Of (2431) Vijaya Bank 2001.88 Bank Of 433 200.8

Baroda Baroda 8%
8 2019 Bank Of (2431) Dena Bank (1923.15) Bank Of 433 109.9

Baroda Baroda 4%
9 2019 IndusInd 3301.10 Bharat 984.60 IndusInd 4417. 3.08%

Bank Financial Bank 91
Inclusion
(SKS
Microfinance)
10 2019 Allahabad (8,333. Indian Bank 321.95 Indian Bank 753.3 (45%)
Bank 96) 6
11 2018 Capital First 327.01 IDFC Bank 184.00 IDFC First 127.8 (63%)
9
12 2018 Vodafone (831.08 Idea Cellular (13,519 Vodafone (4458. 69%

India ) Idea Limited 30)
35
13 2017 Airtel (99.25) Telenor (12.12) Airtel 79.20 171%
14 2017 Housing.co (270) PropTiger.co 463.2 PropTiger.co 423.2 219.1

m m m 8 7%
15 2017 State Bank 9950.98 Bhartiya 540.20 State Bank 10484 (1%)
Of India Mahila Bank Of India .10
16 2017 Flipkart (540) Ebay India 483.33 Flipkart (240) (96%)
17 2017 State Bank 9950.98 SB of 850.60 State Bank 10,48 (3%)

Of India Bikaner and Of India 4.10
Jaipur
18 2017 State Bank 9,950.9 SB of Patiala 550.89 State Bank 10,48 (1%)
Of India 8 Of India 4.10
19 2017 State Bank 9,950.9 SB of 337.73 State Bank 10,48 1.91%

Of India 8 Travancore Of India 4.10
20 2017 CC Avenue 418.71 Infibeam 87.85 Infibeam 435.3 (15%)

Avenues 4
21 2016 Tata 75 Tata Metaliks 50.61 Tata Metaliks 116.0 (7.2%

Metaliks DI Ltd Ltd 5 )
Pipes Ltd
22 2016 Phoenix 1.41 Suprajit 49.97 Suprajit 85.67 66.73

Lamps Engineering Engineering %
23 2015 Natco 176.50 Natco 156.7 Natco 494.8 39.7%

Pharma Organics Pharma 0
24 2015 Indian (82.02) Lands End 150 Indian Hotels 201.0 195.5
Hotels Properties 4 8%
25 2015 Indian (82.02) International 43 Indian Hotels 201.0 515%

Hotels Hotel 4
Management
Services LLC.
26 2015 Torrent 762.34 Zyg Pharma 130 Torrent 623.1 (31%)
36
Pharmaceuti Pharmaceuti 8
cals cals
27 2015 Shriram
Equipment Shriram Shriram
Finance Transport Transport
Company Finance Co Ltd Finance Co 1237.8
(SEFC) -217 (STFC) 1264.21 Ltd (STFC) 1 18.14%
28 2015 -
PVR Ltd 57.87 Bijli Holdings -30 PVR Ltd 13.62 52.20%
29 2015 GMR GMR GMR

Holdings -650 Enterprises 165.9 Enterprises -352.65 28.50%
30 2015 Aarti 148.70 Gogri and 4.3 Aarti 187.8 22.7%

Industries Sons Industries 0
Investments
31 2015 Aarti 148.70 Alchemie 13.67 Aarti 187.8 15.67

Industries Leasing and Industries 0 %
Financing
32 2015 Aarti 148.70 Anushakti 7.4 Aarti 187.8 20%

Industries Holdings Industries 0
33 2015 Aarti 148.70 Anushakti 16.2 Aarti 187.8 13.33

Industries Chemical Industries 0 %
34 2014 Visa Steel (91.04) Kalinganagar (252.4) Visa Steel (152.5 44.31
Special Steel 0) %
35 2014 Hester 9.69 Diavetra 1.4 Hester 10.09 (9%)

India Biosciences
36 2014 Hester 9.69 Hester (2.5) Hester 10.09 40.33

India Mauritius Biosciences %
37 2014 Hester 9.69 GAFL (0.9) Hester 10.09 14.79

India Biosciences %
38 2014 Tata 643.32 Homefield (431) Tata 436.0 105.3

Chemicals International Chemicals 7 8
Pvt Ltd
39 2014 Reliance Jio (10) Infotel (15) Reliance Jio (23) 8%

Infocomm Infocomm
40 2014 Reliance (230) Reliance 4.17 Reliance (101.3 64%

Property Ports And Ports And 0)
37
Managemen Terminals Terminals

t Services
41 2014 Reliance 1.03 Reliance 1011.46 Reliance 1026. 1.58%

Clean Power Ltd. Power Ltd. 67
Power Pvt
Ltd (RCPL)
42 2014 Glenmark 386.11 Glenmark 43.28 Glenmark 433.8 1.64%

Pharmaceuti Generics and Pharmaceuti 2
cals Glenmark cals
Access
43 2013 State 41.84 National 54.06 National 38.84 (59%)

Farms Seeds Seeds
Corporation Corporation Corporation
of India (NSC) (NSC)
(SFCI)
44 2013 Ambuja 151.63 Holcim 1.2 Holcim 166.0 9.2%

Cements Ambuja 1
cements
eastern
company
45 2013 Deepak 23.08 Aryan 1.03 Deepak 37.82 56.2%

Nitrate Pesticides Nitrate
46 2013 Birla 91.75 Kesoram (379.74) Kesoram (329.2 14%

Century Industries Ltd. Industries 3)
Finance Ltd.
47 2013 BHEL 6614.73 Bharat Heavy 1844.59 BHEL 3460. (60%)

Plate & 78
Vessels
48 2011 IPCA labs 255.37 Tonira (2.08) IPCA labs 280.1 10.67
Pharma 7 %
49 2011 GTL (370.83 Chennai (267.2) GTL (686.6 (7%)

Infrastructur ) Network Infrastructure 4)
e Infrastructure
Limited
(CNIL)
50 2010 Hindustan 2202.03 Bon Limited 92.43 Hindustan 0.47%

Unilever Unilever 2305.
Limited Limited 97
Source- Moneycontrol Website and Many more (mentioned in webliography)
38
Data of various Acquisitions in the market in the previous 10 years:

Sr. Year Entity 1 Profit Entity 2 Profit Profit Percentage
No Of (Acquired Before (Acquiring Before After Increase/
. Acqu- Company) Acquisi Company) Acquisit Acquis- Decrease in
isition tion ion ition Profit
(p.y) (in (p.y) (in
Rs. Cr.) Rs. Cr.)
1 2020 Uber Eats (2197) Zomato (2077) (2197.5) (9)%
2 2020 Aleris 88.5 Hindalco 1205.43 620 (46.81)%
3 2020 Yatra (36.4) Ebix 6381.75 16237.5 154.43%
4 2019 Enamor 320 Advent 5468 7423 35.75%

International
5 2019 LIc 2688 IDBI Bank (15116) (12887) 15.75%
6 2019 Droga5 460 Accenture 3584 3831 6.89%
7 2019 Hamleys 162 Reliance (60) (176) (193)%

Global Brands
Holdings
(HGHL)
8 2019 Arysta 128 India UPL Ltd. 555 409 (27)%

LifeScience Inc
9 2019 BetterButter 245 Silverpush 620 1524 145.80%
10 2019 Rural 5741.3 Power Finance 15537.5 18171 16.95%

Electrification 8 Corporation. 5
Corporation
Limited
11 2019 Europe's 18 OYO Rooms (197) (83) 42.21%
39
Leisure Group
12 2019 Roposo 20.57 InMobi 32.2 77 139.53%
13 2019 Epsilon 750 Publicis 2025 2250 11.11%

Groupe
14 2019 Famous (230) Three Bags 1012.5 960 (6.2)%

Innovations Full
15 2019 Showbiz 146 Havas Group 2250 2430 8%
16 2019 WhiteBalance 435 Martin Sorrell's 907.5 690 24%

S4 Capital
17 2019 Apollo Munich 15.2 Mortgage 3203 3052 (5.72)%

Health Lender HDFC
Insurance
18 2019 21st Century 35 Disney 83655 (27181) (132.49)%

Fox
19 2019 Desi Belle 1.2 Killer Jeans 9.5 11.5 21.05%
20 2019 Gruh Finance 446.67 Bandhan Bank 331 731 120.84%
21 2019 Intel's 480.34 Apple 13,048. 10,673. (19.21)%

Smartphone 71 crore 7
Modem
22 2018 Intelenet 625 Teleperforman 6837 45221 561.41%

Global ce
Services
23 2018 Liv.Ai 420 Flipkart 47370 22883 (52.70)
24 2018 Bhushan Steel (2481) Tata Steel 6638.25 16227.25 144.44%
25 2018 SPI (Sathyam, 231 PVR 714.65 979.40 37.04%

Escape,
Palazzo)
26 2018 Flipkart 216.57 Walmart 5807 6553 12.84%
27 2017 TitanX 19.01 Tata 57.61 99.31 72.38

AutoComp
Systems Ltd
40
28 2017 Tikona 242 Bharti Airtel (1) 695 696%
29 2017 Pipemonk 52 Freshdesk 73 146 200%
30 2017 Vidyartha 128 BYJU’S 2643 3245 22.77%
31 2017 HPCL(Hindust 6208.08 ONGC (Oil and 179000 199453 11.42%

an Petroleum Natural Gas
Corporation Corporation
Limited) Ltd)
32 2017 Denali 26 WNS Global 956 1153 20.60%

Sourcing Services
Services
33 2017 Part of 431 Aurobindo 876 1387 58.33%

business from Pharma
TL
Biopharmaceut
ical AG of
Switzerland
34 2017 InfoSERVER (358) WIPRO Ltd 3471 4378 26.13%

S.A.
35 2017 Telenor India 280 Bharti Airtel 37997 10990 (72)%
36 2017 mCarbon Tech 492 Nuance 732 1560 113%

Innovations Communicatio
ns
37 2017 Freecharge (235) Axis bank 25,847.1 27,445.7 6.82%

5 4
38 2017 Lloyd Electric’s (23) Havells India 145.58 121.38 (17.56)%

Consumer
Durable
Business
39 2017 Certon 3.51 Cyient 233.45 236.90 1.6%

Software
41
40 2017 Imperial Credit 213 Imperial Credit 852 763 (11.45)%

Private Ltd Private Ltd
41 2017 Brilliant 342.45 Cognizant 657.22 1050.23 59.79%

Service Co. Technology
Ltd: Solutions
42 2017 business from 121.5 Piramal 290.24 526.7 81.47%

Mallinckrodt Enterprises
LLC
43 2017 CJS Solutions 365.6 Tech Mahindra 469.1 926.8 97.56%
44 2017 Canada’s 565.20 Taro Pharma 543.67 1391.45 155.93%

Thallion
Pharmaceutica
ls
45 2017 HealthHelp 243.12 WNS 655.34 456.98 (31.27)%
46 2016 JABONG (213.45 Myntra 652.55 875.42 34.20%

)
47 2015 Yahoo 213.5 Verizon 436.5 516.25 18.27%
48 2015 Starwood 904 Marriott 5676 6475 14.07%

Hotels and International
resorts
49 2015 Sentynl 431 Cadila 678 1122.65 65.58%

Therapeutics Healthcare Ltd
50 2013 TEN Sports 163.25 SONY 256.55 525.67 105.28%

from Zee Corporation
Source- Moneycontrol Website and Many more (mentioned in webliography)
42
3.7 Data analysis tools and techniques
Once the above data was collected, it needed to be analyzed. Data analysis is a very important
step in the entire research process. The entire research activity can be a failure if the data analysis
is not done properly so as to reach the objectives framed for the research. The process for
analyzing the data starts with data editing, coding and data entry and lastly data analysis (cooper
and Schindler, 2006).
The researcher collected all the secondary data regarding mergers of the companies involved in
the research and edited the data. Only those financial information and details which are
important to lead the objectives would be picked up. Secondly, the researcher had input all the
relevant data in the Excel sheet. This data is then analyzed at the user’s convenience by various
forms like charts, bars and diagrams. The data collected will now be tested as a parametric test
using ANOVA analysis. The tool used Microsoft excel.
3.8 List of Hypothesis

The two hypothesis which are tested in this research are:
● There is a positive correlation between companies merging and increase in the profits of
the mergers used.
● There is a positive correlation between companies acquiring an increase in the profits of
the acquiring company.
3.9 Limitations of the Study

The research is conducted on limited data available. The research does not take all the
factors into consideration which might affect the conclusions of the study. Other factors
like legal factors, environmental factors, political factors are not taken under
consideration.
43
4. Data Analysis and Interpretation
1) Analysis of variance in profits of companies after merger:
For this analysis,

Null hypothesis= there is no significant variance in profits before and after merger of companies
involved at α=0.05.
Alternative hypothesis= there is significant variance in profits before and after merger of
companies involved at α=0.05.
The ANOVA analysis for the same was done in excel. The two groups were the profits of the
companies. Group 1 is the sum of profits of merging companies before the merger. Group 2 is
the profit data of the merged company after the merger.
The result obtained is as under-

Anova: Single
Factor
SUMMARY
Groups Count Sum Average Variance
Group 1 50 57894 1157.88 19036344.42
Group 2 50 61157.63 1223.1526 13521724.75
ANOVA
Source of
Variation SS df MS F P-value F crit
0.006542943 0.93569561 3.93811087
Between Groups 106512.8078 1 106512.8078 761 72 8
Within Groups 1595345389 98 16279034.58
44
Total 1595451902 99
Interpretation of the result-
The count of Group 1 is the same as Group 2 that is 50. The sum of all the profits of merging
companies pre merger is 57894. The sum of all the profits of merged companies post the merger
is 61157.63. The mean of group 1 is 1157.88 and the mean of group 2 is 1223.1526. The
variance in group 1 is 19036344.42 and the variance in group 2 is 13521724.75, which tells us the
amount by which the profits differ from one another among the groups.
SS means the sum of the squares of deviation. The sum of squares of deviation between the Group 1 and
the Group 2 is 106512.8078. And the sum of squares of deviation within Groups 1 and 2 is 1595345389.
DF stands for a degree of freedom. DF between groups is no. of groups minus 1 which in this case is 2-
1=1. DF within the groups is sum no. of observations minus no. of groups which is 100-2=98. MS stands
for mean squares of deviations. MS is equal to SS divided by DF. Here, MS between groups is equal to
106512.8078/1 which is 106512.8078. MS within the groups is 1595345389/98 which is 16279034.58.
The F statistic is the test statistic used in one way ANOVA test. F is calculated as MS between the groups
divided by MS within the groups. Thus, F found in this analysis is 0.006542943761. F critical value is
found out easily by the excel which is 3.938110878. Now, F value is compared with F critical value. F
value is less than the F critical value which suggests that the test is not significant.
Now, if the P value is less than or equal 0.05, we reject the null hypothesis and if the P value is more
than 0.05, we reject the alternative hypothesis. Our P is valued at 0.9356956172 which is more than 0.05
thus we reject the alternative hypothesis and accept the null hypothesis which says that there is no
significant variance in profits of the merged companies after the merger. This tells us that there were no
significant changes in the profits of the companies after the merger.
45
2) Analysis of variance in profits of companies after acquisitions:
For this analysis,
Null hypothesis= there is no significant variance in profits before and after acquiring companies
involved at α=0.05.
Alternative hypothesis= there is significant variance in profits before and after acquiring
companies involved at α=0.05.
The ANOVA analysis for the same was done in excel. The two groups were the profits of the
companies. Group 1 is the sum of profits of acquiring companies before the acquisition. Group 2
is the profit data of the acquiring company after the acquisition.
The result obtained is at under-
Anova: Single
Factor
SUMMARY
Groups Count Sum Average Variance
Column 1 50 452941 9058.82 820923835
Column 2 50 383970.33 7679.4066 864908146.3
ANOVA
Source of Variation SS df MS F P-value F crit
Between 0.812718750
Groups 47569533.2 1 47569533.2 0.056434489 4 3.938110878
Within Groups 82605767086 98 842915990.7
Total 82653336619 99
46
Interpretation of the result-
The count of Group 1 is the same as Group 2 that is 50. The sum of all the profits of acquiring
companies before acquisition is 452941. The sum of all the profits of acquiring companies post
the acquisition is 383970.33. The mean of group 1 is 9058.82 and the mean of group 2 is
7679.4066. The variance in group 1 is 820923835 and the variance in group 2 is 864908146.3, which
tells us the amount by which the profits differ from one another among the groups.
SS means the sum of the squares of deviation. The sum of squares of deviation between Group 1 and
Group 2 is 47569533.2. And the sum of squares of deviation within Groups 1 and 2 is 82605767086. DF
stands for a degree of freedom. DF between groups is no. of groups minus 1 which in this case is 2-1=1.
DF within the groups is sum no. of observations minus no. of groups which is 100-2=98. MS stands for
mean squares of deviations. MS is equal to SS divided by DF. Here, MS between groups is equal to
47569533.2/1 which is 47569533.2. MS within the groups is 82605767086/98 which is 842915990.7.
The F statistic is the test statistic used in one way ANOVA test. F is calculated as MS between the groups
divided by MS within the groups. Thus, F found in this analysis is 0.056434489. F critical value is found
out easily by the excel which is 3.938110878. Now, F value is compared with F critical value. F value is
less than the F critical value which suggests that the test is not significant.
Now, if the P value is less than or equal 0.05, we reject the null hypothesis and if the P value is more
than 0.05, we reject the alternative hypothesis. Our P is valued at 0.8127187504 which is more than 0.05
thus we reject the alternative hypothesis and accept the null hypothesis which says that there is no
significant variance in profits of the acquiring companies after the acquisition of new companies. This tells
us that there were no significant changes in the profits of the companies after the acquisitions.
47
3) Probability of increase in profits after merger and acquisitions:
The probability of increase in profit after mergers of companies involved
=( No. of cases in which there is increase in profits / Total No. of cases observed)
= (33/50)
=0.66
The probability of increase in profit after acquiring some company
= ( No. of cases in which there is increase in profits / Total No. of cases observed)
= (37/50)
=0.74
5. Findings, Conclusions, Suggestions And Recommendations
The results show that the mergers and acquisitions have not been able to bring varied changes in
profits and create wealth for shareholders. From the analysis done , the findings suggest that the
mergers as well as the acquisitions did not significantly change the profits , at least not in the
short run. However we can conclude that the approximate probability of increasing the profits of
a firm after the merger activity is 0.66 and the approximate probability of increasing the profits
after acquisition is 0.72. Thus acquisitions can be considered a safer and better option out of the
two from the findings.
The conclusions are interpreted in following charts to bring a better understanding of the
findings.
48
By studying the mergers of the past 10 years it was observed that the success rate of mergers in
increasing profits in the short run was 66%. Which means that 66 percent of mergers saw an
increase in profits in the next year after the merger. 18 percent firms saw an increase of more
than 100% . 8 percent of firms saw an increase of 50-100% in profits and 40% saw an increase
of less than 50 % in the profits. However, 22 percent of firms saw the loss of 22% and 12 percent
of firms saw the loss of 50-100%.
49
According to findings, the study of 50 acquisitions in the past 10 years, it is observed that the
success rate of the acquisitions is 74%. Thus it suggested that 74% of the acquisitions were able
to raise their profits after the acquisitions. 22 percent of firms were able to increase their profits
more than 100%. 12 percent firms were able to increase their profits from 50-100%. 40 percent
of the firms increased their profits by less than 50%. However, 18 percent of the firms saw
losses less than 50% and 8% of the firms saw losses more than 50%. Thus it can be seen that
acquisitions are safer than mergers.
Also, it was noticed that the number of mergers and acquisitions are increasing in all the sectors
from the past years. Especially in the baking industry which has seen the most successful
mergers and acquisitions.
Mergers have been the prime reason by which companies around the world have been
growing. The inorganic route has been adopted by companies forced by immense
competition, need to enter new markets, saturation in domestic markets, thrust to grow
big and maximize profits for shareholders. In the changing market scenario, it has
become very important for firms to maximise wealth for shareholders.
A number of studies have been done in various countries across the world to find out
whether mergers and acquisitions create wealth for shareholders. Empirical studies
were done by Surujit Kaur (2002) for a sample of 20 companies between the period
1997 and 2000 to study the financial performance of the acquiring firm 3 years before
and after the merger. The study shows that the acquiring firm was not able to create
enough wealth for shareholders post acquisition. Another study conducted by Beena
(2004) which studies 115 manufacturing companies in the period 1995 and 2000. The
study found out that the acquiring firms were not able to create significant wealth for its
shareholders post acquisition.
Mergers and acquisitions activities are pointed out as the key role in a company’s
50
growth. The benefits of M&A really improve and support the long term development
scheme. Perhaps the effectiveness of M&A depends on the strategies of the Board, the
flexibility of negotiation period and enthusiasm of parties, but they could reach the
target if they are well prepared and targeted to conduct mergers and acquisitions
successfully.
The achievement of certain corporate goals and objectives may involve the external
acquisition of assets and resources needed for growth, a step that may be more
efficient than internal expansion. If a buyer pays exactly what the business is worth on a
stand-alone basis, then any benefit obtained from the planned changes (i.e., synergy) is
profit to the buyer. Conversely, if a buyer adds no value to the seller’s operations, then
paying fair value does not provide the buyer with particular advantage and
disadvantage. Therefore, we should make careful consideration before conducting
M&A, avoiding the unfortunate consequence of capital and time. The Board of both
sides could use law consulting services of law firms or finance consulting services at
KPMG, PwC, and so on to improve the quality of preparation and negotiation periods.
In conclusion, I want to emphasize the importance of M&A to the development of

corporations. M&A is really confirmed to be one of the most useful methods to
overcome current difficulties and improve the development of companies. M&A really
supports the growth of global economics, for it makes companies in crisis become
bigger in capitals, human resources. Therefore, the competitive advantages of
companies bring them to success and prosperity. Mergers and acquisitions are
extremely noticeable ways to tackle difficulties in the 21st century but they are not able
to affect the organisational profits significantly.
51
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approves-scheme-of-amalgamation/articleshow/45575992.cms
● https://economictimes.indiatimes.com/industry/telecom/rjil-to-amalgamate-telecom-
units-seeks-dot-nod-for-gateway/articleshow/35951498.cms
● https://economictimes.indiatimes.com/company/bharti-infratel-
limited/U64201DL2006PLC156038
● https://www.moneycontrol.com/financials/bhartiinfratel/profit-lossVI/bi14
● https://www.livemint.com/companies/company-results/bharti-infratel-posts-q4-profit-of-
rs-650-crore-11587647481359.html
● https://www.businesstoday.in/current/corporate/lt-reports-21pc-jump-profit-rs-8905-cr-
fy19-dividend-rs-18-per-share/story/345368.html
● https://investors.larsentoubro.com/upload/AnnualRep/FY2020AnnualRepL&T
%20Annual%20Report%202019-20.pdf
● https://www.pnbindia.in/downloadprocess.aspx?fid=s1d6Z2gyk/XHdtU0omsGsA==
● https://www.moneycontrol.com/financials/orientalbankcommerce/profit-
lossVI/OBC#OBC
59
● https://www.moneycontrol.com/financials/unitedbankindia/profit-lossVI/UBO#UBO
● https://economictimes.indiatimes.com/indus-towers-ltd/profitandlose/companyid-
22411.cms
● https://www.moneycontrol.com/financials/unionbankindia/profit-lossVI/ubi01#ubi01
● https://issuu.com/nimh.angoda/docs/nimh_annual_report_2019
● https://mines.gov.in/ViewData/index?mid=1385
● https://main.icmr.nic.in/sites/default/files/annual_repoorts/ICMR_AR_English_2017-
18_final.pdf
● https://www.bankofbaroda.in/writereaddata/Images/pdf/Full-Annual-Report-2018-19-06-
06-2019.pdf
● https://www.moneycontrol.com/financials/vijayabank/profit-lossVI/VB03#VB03
● https://www.moneycontrol.com/financials/denabank/profit-lossVI/DB#DB
● https://www.indusind.com/content/dam/indusind-corporate/investor-resource/latest-
annual-report/annual-report-2019-20.pdf
● https://www.moneycontrol.com/financials/bharatfinancialinclusion/profit-
lossVI/SM11#SM11
● https://www.moneycontrol.com/financials/allahabadbank/profit-lossVI/ab15#ab15
● https://www.moneycontrol.com/financials/indianbank/profit-lossVI/ib04#ib04
● https://www.moneycontrol.com/financials/capitalfirst/profit-lossVI/FCH
● https://www.moneycontrol.com/financials/idfc/profit-lossVI/IDF
● https://www.moneycontrol.com/financials/vodafoneidealimited/profit-lossVI/IC8
● https://www.vodafoneidea.com/investors/annual-reports
● https://www.bseindia.com/bseplus/AnnualReport/532822/5328220313.pdf
● https://www.vodafoneidea.com/content/dam/vodafone-
microsite/docs/pdf/investor-/actual-results/earlier-results/fy-2017-18/q3fy18/Quarterly
%20ReportQ3.pdf
● https://www.moneycontrol.com/financials/tatasteel/profit-lossVI/TIS
● https://www.thyssenkrupp.com/en/investors/reporting-and-publications
● https://finance.yahoo.com/quote/TKA.DE/financials/?
guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer
_sig=AQAAAAjU7r_V4h99gWcjEfxSwB6bIlgxQnwZlxHqSETJMiD3uI2Qr5MyIu_d8
60
ho6enVYAtU8PqpbzY8e6OcRhGyV6CJuf8S4_NoM09-
CKIREVvyQD5M3ocQQBgEqEdqZhUyZR8prJu_JZiFUCuIsijLKNaSdAetnwIkxbjkKb
FoT-a_i
● https://www.moneycontrol.com/financials/bhartiairtel/profit-lossVI/BA08
● https://in.investing.com/equities/telenor-income-statement
● https://www.telenor.com/wp-content/uploads/2018/04/PRINT-Annual-Report-2017-Q-
2c0cfabfa3feafcc0dfa502048ccd79f.pdf
● https://www.moneycontrol.com/financials/housingdevelopmentfinancecorporation/profit-
lossVI/HDF
● https://trak.in/tags/business/2016/01/05/housing-com-financials-loss-revenue-fy14-15/
● https://economictimes.indiatimes.com/housing-development-finance-corporation-
ltd/profitandlose/companyid-13640.cms
● https://economictimes.indiatimes.com/defaultinterstitial.cms
● https://www.livemint.com/Companies/Due33d5HoTZzRujoRZb5PI/Housingcom-posts-
FY16-losses-of-over-Rs400-crore.html
● https://www.businesstoday.in/top-story/360-realtors-fy19-revenue-up-46-sells-6000-
units-for-rs-4100-crore/story/339258.html
● https://www.tofler.in/proptiger-realty-private-
limited/company/U70102DL2006PTC325396/financials
● https://fliarbi.com/legalities/proptiger-realty-private-limited/u70102hr2006ptc038360/
● https://www.reportjunction.com/CompanyProfile/Bharatiya-Mahila-Bank-B0951.htm
● https://www.moneycontrol.com/financials/statebankbikanerjaipur/profit-lossVI/SBB02
● https://www.moneycontrol.com/financials/statebankofindia/profit-lossVI/SBI
● https://money.rediff.com/companies/state-bank-of-patiala/14030063/profit-and-loss
● https://www.moneycontrol.com/news/business/flipkart-india-losses-widen-to-rs-2063-8-
crore-in-fy18-3099431.html
● https://economictimes.indiatimes.com/ebay-inc/profitandlose/companyid-1734.cms
● https://investors.ebayinc.com/financial-information/annual-reports/default.aspx
● https://www.medianama.com/2018/02/223-infibeam-earnings-december-
2017/#:~:text=News-,Infibeam%20net%20profit%20at%20Rs%2030.83%20Cr
61
%20in,CCAvenue%20processed%20Rs%205%2C414%20Cr&text=E%2Dcommerce
%20and%20web%20services,crore%20in%20the%20preceding%20quarter.
● https://www.moneycontrol.com/bse_annualreports/5398070317.pdf
● https://www.annualreports.com/HostedData/AnnualReportArchive/f/NYSE_FMC_2016.
pdf
● https://www.sebi.gov.in/hindi/reports/annual-reports/aug-2018/annual-report-2017-
18_39868.html
● https://www.sebi.gov.in/reports/annual-reports/aug-2017/annual-report-2016-
17_35618.html
● https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doFmc=yes&type=2
● https://www.moneycontrol.com/financials/tatametaliks/profit-lossVI/TM
● https://www.moneycontrol.com/financials/phoenixlamps/profit-lossVI/h07
● https://www.moneycontrol.com/financials/suprajitengineering/profit-lossVI/SE15
● https://www.moneycontrol.com/financials/natcopharma/profit-lossVI/NP07%23NP07
● https://www.moneycontrol.com/financials/indianhotelscompany/profit-
lossVI/IHC/1#IHC
● https://investors.landsend.com/news-releases/news-release-details/lands-end-announces-
fourth-quarter-and-fiscal-2014-results
● https://www.moneycontrol.com/financials/torrentpharmaceuticals/profit-lossVI/TP06
● https://www.moneycontrol.com/financials/shriramtransportfinancecorporation/profit-
lossVI/STF
● https://www.moneycontrol.com/financials/pvr/profit-lossVI/PVR
● https://www.moneycontrol.com/financials/gmrinfrastructure/profit-lossVI/GI27
● https://holdinggepl.com/pdf/GEPL-Annual_Report-2018-19.pdf
● https://www.bseindia.com/bseplus/AnnualReport/532754/5327540317.pdf
● https://investor.gmrgroup.in/pdf/Annual%20Report%202019-20/Standalone
%20Financial%20Statement/4.%20Statement%20of%20Profit%20&%20Loss
%20Account.pdf
● https://www.zaubacorp.com/company/GOGRI-AND-SONS-INVESTMENTS-PVT-
LTD/U65990MH1981PTC025110
● https://www.moneycontrol.com/financials/aartiindustries/profit-lossVI/ai45
62
● https://www.moneycontrol.com/financials/visasteel/profit-lossVI/vs15
● https://www.business-standard.com/article/companies/phase-1-of-kalinga-nagar-plant-by-
2014-tata-steel-111071800060_1.html
● https://www.moneycontrol.com/financials/hesterbiosciences/profit-lossVI/hb01
● https://www.ndtv.com/business/stock/godrej-agrovet-ltd_godrejagro/reports-directors-
report
● https://www.moneycontrol.com/financials/tatachemicals/profit-lossVI/TC
● https://www.ril.com/getattachment/b795a267-92a5-469d-8c65-8baeb09efe81/Annual-
Report-for-the-year-2014-15.aspx
● https://sptl.co.in/pdf/AnnualReport2014-15.pdf
● https://economictimes.indiatimes.com/topic/Reliance-Property-Management-Services-
Pvt-Ltd
● https://economictimes.indiatimes.com/company/reliance-clean-power-private-
limited/U40105MH2010PTC209923
● https://www.moneycontrol.com/financials/glenmarkpharma/profit-lossVI/GP08/2#GP08
● https://www.indiaseeds.com/doc-file/Anl_Rept_2013-14.pdf
● https://agricoop.nic.in/sites/default/files/Annual%20Report%202013-14.pdf
● https://www.indiaseeds.com/doc-file/SFCI1314.pdf
● https://www.indiaseeds.com/annual-report.html
● https://www.indiaseeds.com/doc-file/NSC1415.pdf
● http://ambujacement.com/Upload/PDF/Annual-Repor-Annual-Report_2013.pdf
● https://fdocuments.in/document/ambuja-cement-annual-report-2014.html
● https://www.lafargeholcim.com/sites/default/files/atoms/files/04022014-
press_publication-2013_annual_report-uk.pdf
● https://www.moneycontrol.com/financials/deepaknitrite/profit-lossVI/DN
● https://www.moneycontrol.com/financials/aryanpesticides/profit-lossVI/AP20#AP20
● https://www.business-standard.com/article/companies/bharat-general-birla-century-
merger-with-kesoram-okayed-101062301006_1.html
● https://www.moneycontrol.com/financials/birlacenturyfinance/profit-lossVI/BCF
● https://www.kesocorp.com/DOCS/pdf/fin/annual/ar2013.pdf
63
● https://www.moneycontrol.com/india/stockpricequote/finance-
investments/birlacenturyfinance/BCF
● https://www.centurytextind.com/assets/pdf/annual-report/Centurytext_AR_2013-
2014.pdf
● https://www.moneycontrol.com/financials/kesoramindustries/profit-lossVI/ki08/2#ki08
● https://www.moneycontrol.com/financials/bharatheavyelectricals/profit-lossVI/BHE
● https://economictimes.indiatimes.com/industry/cons-products/food/gujarat-nre-coke-to-
amalgamate-with-bharat-nre-board-of-directors/articleshow/16590965.cms?from=mdr
● https://www.moneycontrol.com/financials/ipcalaboratories/results/yearly/IL
● https://www.moneycontrol.com/financials/tonirapharma/results/yearly/TP05
● https://mnacritique.mergersindia.com/gtl-infra-sdr-chennai-network-infra-merger/
● https://www.moneycontrol.com/financials/gtlinfrastructure/profit-lossVI/GTL02
● https://www.hul.co.in/Images/hul_annual_report_2010-11_tcm1255-436320_en.pdf
Sources of the above secondary data (Acquisitions):
● https://www.zomato.com/blog/wp-
content/uploads/2020/07/ZOMATO_AR_FY2020_Q1FY211.pdf?update=1
● https://docoh.com/filing/1518587/0001518587-20-000012/10K-
2019FY#s44459F54E27059BC9B1E5ECEFBD5C353
● https://www.moneycontrol.com/financials/hindalcoindustries/profit-lossVI/HI
● https://sec.report/Document/0001104659-19-041382/
● https://investors.yatra.com/financial-information/financial-
summary/default.aspx#:~:text=Revenue%20of%20INR%20309.1%20million,a
%20decrease%20of%2061.8%25%20YOY.
64
● https://www.ebix.com/press-release/ebix-q3-revenues-increase-39-percent-sequentially-
and-5-percent-year-over-year
● https://www.globenewswire.com/news-release/2020/05/11/2030997/0/en/Ebix-
Announces-First-Quarter-Fiscal-Year-2020-Financial-Results.html#:~:text=(NASDAQ
%3A%20EBIX)%2C%20today,currency%20revenues%20of
%20%24%20141.6%20million
● https://www.financialexpress.com/industry/advent-international-acquires-enamor-for-rs-
320-crore/1727034/#:~:text=the%20same%20period.-,Enamor%2C%20which%20was
%20founded%20in%202001%20as%20a%20joint%20venture,Rs%20200%20crore
%20in%20FY19.
● https://www.macrotrends.net/stocks/charts/ACN/accenture/net-income
● https://www.ril.com/DownloadFiles/FinancialStatementOfSubsidiaries19-20/Hamleys
%20Global%20Holdings%20Limited.pdf
● https://www.ril.com/DownloadFiles/FinancialStatementOfSubsidiaries19-20/Reliance
%20Brands%20Limited.pdf
● https://investors.arista.com/Communications/Press-Releases-and-Events/Press-Release-
Detail/2019/Arista-Networks-Inc-Reports-Fourth-Quarter-and-Full-Year-2018-Financial-
Results/
● https://economictimes.indiatimes.com/upl-ltd/yearly/companyid-6114.cms
● https://www.instafinancials.com/company/better-butter-internet-private-
limited/U74140DL2015PTC280698
● https://www.exchange4media.com/marketing-news/silverpush-sees-100-yoy-
growth-after-apac-expansion-94382.html
● https://www.compass-group.com/content/dam/compass-
group/corporate/Investors/Annual-reports/CompassGroup_Annual
%20Report2019.pdf
● https://www.oyorooms.com/officialoyoblog/2020/02/17/annual-report-card-fy-
2019#:~:text=Our%20consolidated%20revenue%20for%20FY19,revenues
%20were%20from%20outside%20India.
● https://www.campaignindia.in/article/agency-report-card-2017-famous-
innovations/445834
65
● https://www.mediapost.com/publications/article/347168/havas-group-organic-
revenue-down-1-in-2019.html
● https://www.zaubacorp.com/company/WHITE-BALANCE-PHOTOGRAPHY-
PRIVATE-LIMITED/U74999MH2014PTC256396
● https://www.apollomunichinsurance.com/getattachment/026c643d-0d21-406f-
89a8-8e6b2c81256f/AMHIAnnual-Report-2017-18.aspx
● https://www.statista.com/statistics/264602/21st-century-foxs-annual-net-income/
● https://markets.businessinsider.com/news/stocks/teleperformance-2018-annual-
results-1027994439
● http://www.bhushan-group.org/ViewerJS/Annual%20Report%202017-2018.pdf
● https://www.business-standard.com/company/tata-steel-566/financials-profit-loss
● https://tataautocomp.com/wp-content/uploads/Web-pdf/Annual-Report/TACO-
Annual%20Report%20FY%202017-18.pdf
● https://www.airtel.in/about-bharti/equity/results
● https://www.ongcindia.com/wps/wcm/connect/e2f479b0-e765-405c-ae20-
9dcb45ec2175/AR201617.pdf?
MOD=AJPERES&CONVERT_TO=url&CACHEID=ROOTWORKSPACE-
e2f479b0-e765-405c-ae20-9dcb45ec2175-lZnkGyu
● https://www.hindustanpetroleum.com/65th%20AGM.pdf
● https://www.telenor.com/wp-content/uploads/2017/03/Annual-Report-2016-Q-
960dfcfa007ceee404c193b48ad20cff-1.pdf
● https://www.airtel.in/airtel-annual-report-2018-19/download-center.php
● https://www.moneycontrol.com/financials/axisbank/profit-lossVI/AB16
● https://www.livemint.com/Companies/l7UpXIfrNR1d2FnC1aEkYJ/Havells-India-
Q1-profit-falls-16-to-Rs121-crore.html
● https://www.moneycontrol.com/financials/cyient/profit-lossVI/IE07
● https://www.zaubacorp.com/company/IMPERIAL-CREDIT-PVT-
LTD/U06519TG1991PTC126383
● https://www.crunchbase.com/organization/brilliant-service
66
● https://www.businesswire.com/news/home/20150210005350/en/Starwood-
Reports-Fourth-Quarter-2014-Results-and-Declares-First-Quarter-Dividend-of-
0.375-Per-Share
● https://www.medianama.com/2018/02/223-infibeam-earnings-december-
2017/#:~:text=News-,Infibeam%20net%20profit%20at%20Rs%2030.83%20Cr
%20in,CCAvenue%20processed%20Rs%205%2C414%20Cr&text=E%2Dcommerce
%20and%20web%20services,crore%20in%20the%20preceding%20quarter.
● https://www.annualreports.com/HostedData/AnnualReportArchive/f/NYSE_FMC_2016.
pdf
● https://www.sebi.gov.in/hindi/reports/annual-reports/aug-2018/annual-report-2017-
18_39868.html
● https://www.sebi.gov.in/reports/annual-reports/aug-2017/annual-report-2016-
17_35618.html
● https://marriott.gcs-web.com/static-files/6e94bd56-7bf0-46d8-be16-9ee79234e0ff
● https://affairscloud.com/mergers-and-acquisitions-of-indian-companies-in-2015/
● https://www.moneycontrol.com/stocks/marketinfo/mergers/index.php
● https://www.letsstudytogether.co/important-mergers-and-acquisitions-in-india/
● https://online.csp.edu/blog/business/5-biggest-mergers-of-all-time/
● https://www.mca.gov.in/MinistryV2/mergers+and+acquisitions.html
● https://www.investopedia.com/2020-mergers-and-acquisitions-a-year-in-review-5093751
● https://www.moneycontrol.com/news/business/companies/top-7-ma-deals-in-india-who-
joined-hands-with-whom-and-for-how-much-2538437.html
● https://www.livemint.com/companies/company-results/jabong-reports-19-rise-in-fy19-
revenues-at-rs204-6-crore-11574263496883.html
● https://www.livemint.com/Companies/9Je6XkP4oCN6KWDzBESDoN/Myntra-revenue-
shrunk-by-80-to-427-crore-in-FY18.html
● https://www.businesstoday.in/current/corporate/myntra-designs-loss-reaches-rs-7444-
crore-in-fy20/story/426003.html
● https://www.moneycontrol.com/financials/bosch/profit-lossVI/B05
● https://www.wsj.com/market-data/quotes/VZ/financials/annual/income-statement
● https://finance.yahoo.com/q/is?s=vz
67
● https://www.thehindubusinessline.com/companies/zee-entertainment-completes-sale-of-
ten-sports-to-sony/article9863353.ece
● https://www.hindustantimes.com/business-news/zee-entertainment-q4-net-grows-6-fold-
to-rs-1-514-crore-ten-sports-sale-boosts-profit/story-vVOLHKkKtumDty7yamchWM.ht
● https://www.statista.com/statistics/279271/net-income-of-sony-since-2008/
68

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Aṣ

“Mergers And Acquisitions

Under the Guidance Of

MSU BBA, Academic Year 2020-21

MSU BBA, Academic Year 2020-21

4 Data Analysis And Interpretation 44

5 Findings, Conclusions, Suggestions And 48

MSU BBA, Academic Year 2020-21

MSU BBA, Academic Year 2020-21

List of Tables and Charts used

● Table 1: Acquiring company’s Change in Stock

MSU BBA, Academic Year 2020-21

MSU BBA, Academic Year 2020-21

MSU BBA, Academic Year 2020-21

Acquiring Company Target Company Movement in Price of Stock

Daimler-Benz Chrysler +8%

Time Warner AOL +9%

Vodafone Mannesmann +6%

Air France KLM +4%

1.2 Large Mergers And Acquisitions in the world

MSU BBA, Academic Year 2020-21

1.3 Large Mergers and Acquisitions of Indian Companies.

MSU BBA, Academic Year 2020-21

1.4 Merger and Acquisition Strategy

1.4.1 Firm Diversification

1.4.2 Cross-Border Mergers and Acquisitions

An acquisition could be explained as an event where a company takes a controlling ownership

MSU BBA, Academic Year 2020-21

2.2 Mergers And Amalgamations

Thus, mergers or amalgamations may take two forms:-

● Merger through Absorption: - An absorption is a combination of two or more companies into an

A fundamental characteristic of merger (either through absorption or consolidation) is that the

Besides, there are following types of mergers:

2. Vertical merger:- is a combination of two or more firms involved in different stages of

MSU BBA, Academic Year 2020-21

3. Conglomerate merger:- is a combination of firms engaged in unrelated lines of business activity.

6. Downstream Merger:- A merger in which a partially-owned subsidiary takes over its

2.3 Acquisitions And Takeovers

MSU BBA, Academic Year 2020-21

Acquisitions are also divided into following types:

MSU BBA, Academic Year 2020-21

3. Conglomerate Acquisition:- This is when a company acquires a company in a completely

2.4 Difference between Merger And Acquisition

Sr No. Point Of Difference Merger Acquisition

MSU BBA, Academic Year 2020-21

comes forward to work as one. control of another company.

2. Terms Considered to be friendly and Considered to be hostile and

3. Title A new name is given. The acquired company

4. Scenario Two or more companies that Acquiring company is

5 Power The power-difference is The Acquiring company gets

6 Stocks The merger leads to new In acquisition, there are no

7 Example Merging of Glaxo Wellcome Tata Motors acquiring Jaguar

2.5 Motives for Mergers And Acquisitions

MSU BBA, Academic Year 2020-21

MSU BBA, Academic Year 2020-21

Operational synergy can be explained as a combination of economies of scale, which

MSU BBA, Academic Year 2020-21

Managerial synergy refers to the increased efficiency as a result of management teams of

3. Diversification and Risk Management:

MSU BBA, Academic Year 2020-21

6. Increased Managerial Compensation and rewards:

MSU BBA, Academic Year 2020-21

7. Improved Market Standing: