In 2006, Left Parties and Opposition together Prevented Congress to Pass Banking ,Insurance and Pension fund

reforms in Parliament.

As a result companies like AIG, Citi Group, Merrill lynch, Lehman Brothers, Bear Sterns, Bank of America, Wachovia, RBS and many others were restrained to acquire stakes in Indian banks and Insurance Companies.

If foreign banks had been allowed to take over 74 per cent interest in Indian banks, our banks would have collapsed. If pension funds had been privatized, crores of employees would have been ruined. Similarly, if the insurance cap had gone up to 49 per cent, the collapse of American Insurance Group (AIG) would have made Tata-AIG far more vulnerable.

Bank Collapse

Now, we will Analysis the various reasons why Mergers and Acquisition fails big time.

1. Bullish Stock Market.

Leads to Over Valuation.

High Valuation

On 30 January 2007, Tata Steel, part of India's Tata Group, purchased a 100% stake in the Corus Group at 608 pence per share in an all cash deal, cumulatively valued at (USD 12.04 Billion).

Around the Same Period. Hindalco acquired Canada based Novelis. The deal involved transaction of $5,982 million.

Studies reveal that approximately 40% to 80% of mergers and acquisitions prove to be disappointing. The reason is that their value on the stock market deteriorates afterwards.

2. Difference in Working Culture. One thing that can tear a merger apart is the attitude of "us versus them". This attitude is the reason of failure for most of the mergers

Quaker Oats

Snapple Beverage Co

Cultural Difference

In the year 1994, Quaker Oats purchased Snapple Beverage Co. for a total cost of $1.7 billion but the Snapple business was sold off after a period of three years for a loss of $1.4 billion.

The main reason of this failure was the conflict between the corporate cultures. Quaker had an extremely focused, mass-market working approach and on the other hand Snapple's style was eccentric, commercial and tilted towards its distributors.


The merger of Daimler-Benz and Chrysler became a straight out clash between the business cultures of the two firms. The differentiation in corporate culture of the firms involved was the main reason for the non success of this alliance.

While the management style of Daimler-Benz¶s was more of a formal and planned out sort, Chrysler¶s management was more tilted towards a stress-free, unrestrictive style As a result the company's shareholders had to bear the burden of the collision.