WHAT IS MERGER

Merger is an absorption of one or more companies

by a single existing company.
 MEANING OF MERGER
1. Acquiring company is a single existing
company that purchases the majority of
equity shares of one or more companies.

2. Acquired companies are those companies

that surrender the majority of their equity
shares to an acquiring company.
Recent examples of well-known mergers are

1. British Salt operating in UK merged with TATA

Chemicals based in India.
2. Zain Telecommunications operating in Africa
merged with Bharti Airtel Limited based in
India.
3. Bank of Rajasthan operating in India merged
with ICICI Bank (India).
 TYPES OF MERGERS
1.Horizontal Merger
2.Vertical Merger
3.Conglomerate Merger
4.Marketing Extension Merger
5.Product Extension Merger
 TYPES OF MERGERS
MERGER

Market-extension Product-extension Conglomerate

merger merger merger

Two companies that Two companies selling Two companies that

sell the same products different but related have no common
in different markets products in the same business areas
market
 1.Horizontal merger
A horizontal merger occurs when two or more
.firms in the same market, producing substitute
products, join together to form a single firm. An
example of a horizontal merger is that of two
soft drink companies. The firms are competitors
producing similar products.
 2.Vertical Merger
'Vertical Merger' A merger between two
companies producing different goods or
services for one specific finished product. A
vertical merger occurs when two or more
firms, operating at different levels within an
industry's supply chain, merge operations.
 3.Conglomerate Mergers
Conglomerate merger in which merging firms
are not competitors, but use common or
related production processes and/or
marketing and distribution channels.
 4.Market Extension Merger
Market extension merger takes place between
two companies that deal in the same products
but in separate markets.
 5.Product Extension Merger
Product extension merger takes place between
two business organizations that deal in
products that are related to each other and
operate in the same market.
TOP 7 EXAMPLES OF MERGERS
 1. Tata Steel-Corus: $12.2 billion
January 30, 2007
Largest Indian take-over
After the deal TATAS became
the 5th largest STEEL co.
100 % stake in CORUS paying
Rs 428/- per share

Image: B Mutharaman, Tata Steel MD; Ratan Tata,

Tata chairman; J Leng, Corus chair;
and P Varin, Corus CEO.
 2. Vodafone-Hutchison Essar: $11.1
billion
TELECOM sector
11th February 2007
2nd largest takeover
deal
67 % stake holding in
hutch

Image: The then CEO of Vodafone Arun

Sarin visits Hutchison Telecommunications
head office in Mumbai.
 3. Hindalco-Novelis: $6 billion
June 2008
Aluminium and copper
sector
Hindalco Acquired
Novelis
Hindalco entered the
Fortune-500 listing of
world's largest companies
by sales revenues
Image: Kumar Mangalam Birla
(center), chairman of Aditya Birla
Group.
 4. HDFC Bank-Centurion Bank of
Punjab: $2.4 billion
February, 2008
Banking sector
Acquisition deal
CBoP shareholders got
one share of HDFC Bank
for every 29 shares held
by them.
Image: Rana Talwar (rear) Centurion Bank9,510 crore
of Punjab chairman, Deepak Parekh,
HDFC Bank chairman
 5. Tata Motors-Jaguar Land Rover: $2.3
billion
March 2008 (just a year
after acquiring Corus)
Automobile sector
Acquisition deal
Gave tuff competition to
M&M after signing the
deal with ford
Image: A Union flag flies behind a Jaguar
car emblem outside a dealership in
Manchester, England.
 6.Suzlon-RePower: $1.7 billion

May 2007
Acquisition deal
Energy sector
Suzlon is now the largest
wind turbine maker in
Asia
5th largest in the world.

Image: Tulsi Tanti, chairman &

M.D of Suzlon Energy Ltd.
7.MERGER BETWEEN AIR INDIA AND
INDIAN AIRLINES
The government of India on
1 march 2007 approved the
merger of Air India and Indian
airlines.
Consequent to the above a
new company called National
Aviation Company of India
limited was incorporated
under the companies act
1956 on 30 march 2007 with
its registered office at New
Delhi.