Corporate Restructuring

Company wants to grow / survive

Needs to restructure & focus on competitive advantage
Achieve economies of scale
Enjoy higher corporate status
Lower cost of capital
Higher profits
Cost reduction & improving efficiency
Restructuring is not an option but a conscious choice made by company
Eliminate disadvantage & combine advantage
Create Synergy - in form of increased revenue or cost savings
Increase in value of combined companies together

Increase in Market Share Idea & Vodafone Case 1

Reduced Competition HP & Compaq Case 2

Large Size Sun Pharma & Ranbaxy Pharma Case 3

Economies of scale

Tax Benefit Set off & Carry Fwd of loss Us 72A of Income Tax Act

New Technology Dell & EMC Case 4

Creation of strong brand Tata Motors & Jaguar Case 5

Domination Oracle & I-Flex Technologies

Diversification Reliance Industries & Network TV18

Revival of sick company IBBI

Aspects to consider
Valuation & Funding
Legal & Procedural issues
Taxation & Stamp duty
Accouting aspects
Competition Aspects
Human & Cultural synergy

Types
Merger Fusion of one company by another
Amalgamation two or more companies are joined together to form a new entity
Reconstruction act of construction again , repairing and restoring to former con
Takeover Acquisition of shares carrying voting rights with a view to gain c
Disinvestment Transfer of shares / assets from givernment to private sector
Joint Venture
Franchising
 Change in capital structure
change in working style
change in management
Nykaa - IPO
Objective
Deploying surplus cash to another profitable business
Development of core competence
orderly redirection of activity
Risk reduction

Merger Kinds of Restructuring

Dis-investment
buy out Financial restructuring re-arrangement of financial structure
cost restructuring
joint venture Technical
acquisition
debt rest Market
amalgmation
Organisation

me Tax Act

er to form a new entity

estoring to former condition
ts with a view to gain control
nt to private sector
Idea & vodafone

Vodafone company came from the UK based Vodafone Group plc

it is a multinational service provider of telecommunications in 22 different countries

At the beginning of the year, 1992 Vodafone started its company in India from Bombay

Vodafone is the third largest telecommunication provider in the country

Idea Cellular Limited is an Aditya Birla Group company.

Founded in 1995, the company was incorporated as Birla Communications Limited

had a license of GSM-based services in Gujarat and Maharashtra Circle.

the organization started to expand its business with Tata Group, Birla and AT&T group of the
US in joint venture form.

This merger was first announced in March 2017

in July 2018, the department of telecommunication gave the approval for the merger.

Finally, on 31st Aug 2018, the merger was completed.

it is announced as Vodafone Idea Limited

this merger was the largest telecom merger in India

Vodafone holds a 45.2% stake, Aditya Birla Group holds 26% and the remaining stakes were
held public

Reasons For Vodafone Idea Merger

Handel the rising dominance of Reliance Jio in the Telecom industry

free services from the Jio started the price war between the companies in the telecom sector

Combined entity of Vodafone and Idea was expected to hold a strong position in the industry

Vodafone Idea Integration

Airtel acquires the Telenor, it acquires the scope and business from other small
telecommunication companies like Augere Wireless, Videcon, Tikona(4G Spectrum) etc.
Reliance Communication (R Com) merged with Aircel and acquire MTC. Plus the Tata Telecom
also started the process of merging with R Com.

in a period of seven months telephone operators numbers went down to seven from twelve.

announcement of the merger creates a negative image in the public, when the Vodafone and
Idea merger was announced the Idea prices started to drop.

And the share price of Idea declines from Rs. 97.70 on 20th March 2017 to Rs. 81.81 on 6th Sep
2017.
the industry
Sheet 1
HP & Compaq

HP Hewlett-Packard - Calculator, Personal Computer & Laser Printer

Compaq Largest manufacturers of personal computing devices worldwide.

This merger was not planned

It started with a telephonic conversation between CEO

The merger was strongly opposed in the company

Company would never be able to have the loyalty of the Compaq customers

Merger would remove one serious competitor in the over-supplied PC market

As an aside: For the HP-COMPAQ merger, it took over three years after
the close for them to get everyone on the same e-mail system

New HP would be the #1 global player in servers, imaging & printing, and
access devices (PCs & hand-helds),

as well as Top 3 player in IT services, storage and management software.

Creates an $87 billion global technology leader, with the industry's most
complete set of IT products and services for both businesses and
consumers

The combination furthers each company's commitment to open, market-

unifying systems and architectures and aggressive direct and channel
distribution models

Combined company can create substantial shareowner value through

significant cost structure improvements and access to new growth
opportunities.

New HP would have operations in more than 160 countries and over
145,000 employees
Sheet 1
Sun Pharma & Ranbaxy

Sun Pharma
Sun Pharma Laboratories Limited (SPLL) is a pharmaceutical company having
registered office in Mumbai.

The Company was incorporated on January 17, 1997 and it is manufactures and
markets pharmaceutical products in India

More than 72% of Sun Pharma sales are from export

Sun Pharma is the 1st biggest and the largely profitable pharmaceutical
company in India

During the 1997 to 2017 Sun Pharma made 17 acquisitions

starting with the buying in 1997 of Detroit-based Caraco Pharmaceutical

Laboratories

Sun Pharma acquired a mass stake in Israel-based Taro Pharmaceutical

Industries in 2010

Ranbaxy

Ranbaxy Laboratories was incorporated in 1961 and headquartered at Gurgaon

serves its customers in over 150 countries and has an expanding international
portfolio of affiliates, joint ventures, and alliances,

ground operations in 43 countries and 21 manufacturing facilities spread

across countries

Daiichi Sankyo acquired controlling in Ranbaxy in 2008

Regardless of satisfactory sales numbers the company was suffering loss since
2011
Ranbaxy after struggling to improve its financial position went under merger
with Sun Pharma at a critical time

on April 6, 2014 they released a press report

under which Sun Pharma would acquire 100% of Ranbaxy Laboratories for $4
billion to create world’s fifth largest generic pharma company

The merger has also improved Sun Pharma’s worldwide track in rising pharma
markets like Russia, Romania, South Africa, Malaysia and Brazil,
offering opportunities for cross selling and enhanced brand-building

The key objective of this merger is to get faster growth and generate opportunities for all stakeholders
The valuation of Ranbaxy is attractive at this time when US Food and Drug Administration (FDA) and regu
ies for all stakeholders
ministration (FDA) and regulatory issues are at a hit the highest point.

Sheet 1
Dell & EMC

DELL
DELL is an American multinational computer technology company based in
Round Rock, Texas, United States,

that develops, sells, repairs, and supports computers and related products and
services

company is one of the largest technological corporations in the world,

Dell sells personal computers (PCs), servers, data storage devices, network
switches, software, computer peripherals,

HDTVs, cameras, printers, MP3 players, and electronics built by other

manufacturers

EMC
EMC, founded in 1979 by Richard Egan, Roger Marino & John Curly.

Introduced its first 64-kilobyte (65,536 bytes) memory boards for the Prime
Computer in 1981

expanded beyond memory to other computer data storage types and networked
storage platforms

On October 12, 2015, Dell announced its intent to acquire the enterprise
software and storage company EMC Corporation

which includes EMC’s approximately 80% share ownership in VMware.

At $67 billion, it has been labeled the "highest-valued tech acquisition in history

The acquisition was finalized September 7, 2016

Dell announced their intention is to move the new company into high growth
areas, such as digital transformation, software-defined data center,
hybrid cloud, converged infrastructure, mobile and security

POTENTIAL SYNERGIES
Customer Base more extensive customer
Expanded Capabilities Strategic product rational
Privatization Advantages greater flexibility, more fr
Moving Toward Cloud Computing software-defined infrastru
EMC and VMware annou

POTENTIAL CHALLENGES
Due to the size of the merger, it is very likely that it will be a prolonged,
Estimates for completion of the merger range from mid-2016 to early 2017

Sheet 1
more extensive customer base will have sales opportunities and synergies
Strategic product rationalization and integration will play a huge role
greater flexibility, more freedom in action
software-defined infrastructure and software-defined data centers
EMC and VMware announced the creation of a new jointlyowned hybrid cloud company called Virtustream
Tata Motor’s Acquisition of Jaguar and Land Rover

Tata Motors is the largest multi-holding automobile company in India and it is the fourth
largest truck producer in the world.

Tata Motors is also the second largest bus producer in the world, with the revenues of
US$ 8.8 billion in the financial year 2008

passenger cars, commercial vehicles and utility vehicles

development and commercialization of the truly Indian cars and they are Tata Indica
(1998) and Tata Indigo (2002)

joint ventures with Daimler Benz, Cummis Engine Co. Inc., and Fiat. In the year 2008

Tata Nano, the world cheapest car and the acquisition of Jaguar and Land Rover, the two
iconic British brand have made Tata Motors well known to the people in the world

On June 02, 2008, India-based Tata Motors completed the acquisition of the Jaguar and Land Rover (J

from the US-based auto manufacturer Ford Motor Company (Ford) for US$ 2.3 billion,
on a cash free-debt free basis

Jaguar was involved in the manufacture of high-end luxury cars, while Land Rover
manufactured high-end SUVs

part of the purchase consideration were JLR’s manufacturing plants, two advanced
design centers in the UK,
national sales companies spanning across the world, and also licenses of all necessary
intellectual property rights
Tata Motors long-term strategy included consolidating its position in the domestic Indian
market and expanding its international footprint

by leveraging on in-house capabilities and products and also through acquisitions and
strategic collaborations

Ford had bought Jaguar for US$ 2.5 billion in 1989 and Land Rover for US$ 2.7 billion in
2000

Ford Motors Company (Ford) is a leading automaker and the third largest multinational
corporation in the automobile industry
acquired Jaguar from British Leyland Limited in 1989 for US$ 2.5 billion

sales of Jaguar in many markets declined, but in some markets like Japan, Germany, and
Italy, it still recorded high sales

In March 1999, Ford established the PAG with Aston Martin, Jaguar, and Lincoln

Volvo was acquired for US$ 6.45 billion, and it also became a part of the PAG.

Land Rover is a British car manufacturer that specializes in four wheel drive vehicles

Discovery, Defender, Range Rover and Freelander

In 1967 Leyland Motor Corporation absorbed the Rover Company

Leyland then formed a merger with the British Motor Holdings and formed British
Leyland

The new company broke up in the 1980s but in 1988 the Land Rover (Rover Group) was
purchased by British Aerospace

The Rover Group was acquired by BMW in the year 1994 but the merger broke down in
2000

It was in the year 2008 that Land Rover was sold to Tata Motors together with Jaguar
cars.

Jaguar Cars Ltd or Jaguar is a British luxury car manufacturer whose headquarters are
located in Coventry UK

In 1922 the company was founded as Swallow Sidecar Company that used to make
motorcycle sidecars and later passenger cars

After the Second World War, the SS connotations were unfavourable and then the name
changed to Jaguar

The name changed to Leyland and eventually British Leyland in 1984

In the year 2007, the Ford Motor Company, a widely respected company which also happened to be th
history of establishment of the company since 1903. The Company reported a loss of $12.8 billion. I
(Mulally) assumed charge as the President and CEO of Ford, he decided to dismantle the PAG. In Ma
that it was considering selling JLR. Ford stated that weak economy is the primary reason to sell J
manufacturing plants and heavy cut in workforce

On March 26, 2008, Tata Motors entered into an agreement with Ford for the purchase of Jaguar and
JLR. As part of the acquisition, Tata Motors did not inherit any of the debt liabilities of JLR – the acqui

Tata also got

01. Two advance design studios and technology as part of the deal.
02. This would provide Tata Motors access to latest technology which would also allow Tata to improve
03. This deal provided Tata an instant recognition and credibility across globe which would otherwise w
04. The cost competitive advantage as Corus was the main supplier of automotive high grade steel to J
on a whole.
05. In the long run TATA Motors will surely diversify its present dependence on Indian markets (whi
help JLR do diversify its geographic dependence from US (30% of volumes) and Western Europe (55%
h also happened to be the world’s third largest automaker based on vehicle sales worldwide, reported the largest annual loss
loss of $12.8 billion. It also stated that it would not return to profitability until 2009. In September 2006, after Allan M
mantle the PAG. In March 2007, Ford sold the Aston Martin sports car unit for US$ 931 million. In June 2007, Ford anno
rimary reason to sell Jaguar and Land Rover. The two brands were however suffering losses often resulting in closure

purchase of Jaguar and Land Rover. Tata Motors agreed to pay US$ 2.3 billion in cash for a 100% acquisition of the busine
lities of JLR – the acquisition was totally debt free

o allow Tata to improve their core products in India, for eg, Indica and Safari suffered from internal noise and vibration prob
which would otherwise would have taken years.
ive high grade steel to JLR and other automobile industry in US and Europe. This would have provided a synergy for TATA

on Indian markets (which contributed to 90% of TATA’s revenue). Along with it due to TATA’s footprints in South East As
d Western Europe (55% of volumes).
Sheet 1
d the largest annual loss in the
mber 2006, after Allan Mulally
n June 2007, Ford announced
en resulting in closure of few

cquisition of the businesses of

noise and vibration problems.

ded a synergy for TATA Group

tprints in South East Asia will

 Old Old New
Amalgamation Company A + Company B = Company C
They amalgamated in each other
Identity Identity Formed New
Vanished Vanished
IDEA VODAFONE VI

Merger Old Old New

Company A + Company B = Company A
SBI SBBJ SBI

Identity
Vanished

Aquisition Old Old

Company A + Company B = Company A +
Parent Co
Holding Co
Merger of Banks

Company B

subsidiary