A PRESENTATION

ON
“MERGER AND ACQUISITION IN
CIVIL AVIATION SECTOR”.

PRESENTED BY
PRESENTED TO
Nitin Agarwal (BM- 09274)
Azim Mirza (BM- 09262)
Dr. S. Dash
Ankit Chaturvedi (BM- 09252)
Strategic Management.
Sahar Alam (BM- 09281)
IMS Ghaziabad.
Jishan Sami (BM- 09266)
What is merger and Acquisition?
mergers and acquisitions (abbreviated M&A) refers to
the aspect of corporate strategy, corporate finance
and management dealing with the buying, selling and
combining of different companies that can aid,
finance, or help a growing company in a given
industry grow rapidly without having to create
another business entity.

In simple:
when two companies combine together to form a new
company altogether is called Merger. And
When one company buys the by another(the ‘target’)
is called Acquisition.
Characteristics of Acquisition:

An acquisition may be private or public,
depending on whether the acquiree or
merging company is or isn't listed in public
markets.

An acquisition may be friendly or hostile.
Whether a purchase is perceived as a
friendly or hostile depends on how it is
communicated to and received by the
target company's board of directors,
employees and shareholders.
Horizontal merger

A horizontal merger is a business merger in

which the two companies are involved in the
production of the same types of goods and
services this type takes place as part of a
strategy to command a larger share of the
available consumer market by combining the
strengths of each company into one central
entity
VERTICAL MERGER

Vertical merger any mergers that involve the

union of a customer with a vendor. Generally,
the two companies involved in the merger will
produce different but complimentary products.
The vertical merger may take place as a
means of combining assets to capture a
sector of the market that neither company
could manage on their own.
Conglomerate merger

A conglomerate merger is a type of merger

whereby the two companies that merge
with each other are involved in different
sorts of businesss

Reverse merger

It is a deal that enables a private company to

get publicly listed in a short time period.
RECENT EXAMPLES OF MERGER AND
ACQUISITION


Merger of Kingfisher Airlines and Deccan
Aviation( on 19 Dec, 2007).


Merger of Air India and Indian Airlines
( 01 April, 2007).


Merger of Air Sahara and Jet Airlines
(2005)
Detailed study on Merger of
Kingfisher Airlines and Deccan
Aviation
Mission of Merger between KF AND DA

As the Indian market is growing day by
day so providing them the best service is
the main goal of the airlines industries. For
that the airline companies are either
merging or acquiring the other small or the
big airlines company for having higher
impact on the market. As the market is
going competitive day by day so merger
and acquisition is an important thing.

To demystify air travel in India by
providing reliable low cost and safe travel
to the common man by constantly driving
down the air fares.
Vision of Merger between KF and DA.


To become dominant carrier in the
country.


To become dominant low cost carrier in the
country. (as the motive of the kingfisher
was that only when they merged with the
Deccan airlines, as Deccan airlines were
the low cost carrier in the country.)

To empower every Indian to Fly.
The Merger/Acquisition Summary


Style: Friendly

Company Status: Public

Intention: Opportunistic

Purpose: Defensive

Predictability of Value: Calculative

Strategic Mode: Development

Management Change: Incremental
evolution.

The Deal: Vijay Mallya paid Rs 550 Cr to acquire
26% equity in Deccan. Subsequently,he paid an
additional Rs 418 Cr for a further 20% stake through
an open offer.
Enterprise value: Rs 2,115 Cr when Mallya acquired
26%

 Market Share of Air Deccan:18 %

 Fleet with Air Deccan:4


Combined market share:2 9%,Share bought at 2007
was RS.155/share
CMP=Rs48/share (2009)
METHODS ADAPTING
As we have taken the example of merger
between between Kingfisher and Deccan
airlines, which comes under the reverse
merger ,as they belong from the same field
i.e., Airlines.

1. Financial Sharing:- Before merger the UV

group was having 46% of share in Deccan
aviation but after the merger they are holding
more than 51% of the stake in the company.
Employee sharing:

After merger the chairman and CEO of

Kingfisher airlines is Mr. Vijay Mallaya and
Vice chairperson is Mr. Capt G.R. Gopinath.
They have not downsized the employee
strength.
Kingfisher & Air Deccan- Merger Advantage


The fresh equity capital will allow the Deccan
to pay the loans & to fund variousinfrastructure
projects.


Reduction of cost by sharing infrastructure
The merger ensures that Kingfisher does not
need to invest more in infrastructure or in
spare planes, thereby reducing costs and
increasing profitability.

The combined share of the two carriers will
increase the Market share.


As per the existing laws Kingfisher Airlines
would not be able to operate on international
routes until 2010. However Air Deccan would
be eligible from the second half of next year
as its five-year ceiling is coming to an end.
RECOMMENDATIONS& SUGGESTIONS


As after this merger the Kingfisher can fly
out internationally ,so it is a good news for the
customers because customer prefers
Kingfisher for its class service. So this type of
merger should be encouraged.