MERGER AND ACQUISITION OF VODAFONE WITH HUTCH

BY : HETAL VISARIA ROLLNO:- 156 T.Y.B.M.S-B

The announcement is a clear evidence of how we are executing our strategy of developing our presence in the emerging markets. Hutch Essar is an impressive, well-run company that will fit well into the Vodafone Group. Arun Sarin, CEO, Vodafone Ltd., in February 2007 "We exit the Indian market as one of the best capitalized telecom companies in the region which will enable us to react swiftly to new opportunities and to accelerate growth in our existing markets. Canning Fok, Chairman, HTIL, in May 2007

WHAT IS MERGER?
In business or economics a merger is a combination of two companies into one larger company. ´ Such actions are commonly voluntary and involve stock swap or cash payment to the target.
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WHAT IS ACQUISITION?
An acquisition, also known as a takeover, is the buying of one company by another. ´ An acquisition may be friendly or hostil Company
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TYPES OF MERGER
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Horizontal mergerTwo companies that are in direct competition and share the same product lines and markets. Vertical merger ² A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker. Market-extension merger ² Two companies that sell the same products in different markets.

MOTIVE BEHIND MERGER AND ACQUISITION
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Taxes: A profitable company can buy a loss maker to use the target's loss as their advantage by reducing their tax liability. Geographical or other diversification: This is designed to Smooth the earnings results of a company, which over the long term smoothens the stock price of a company, giving conservative investors more confidence in investing in the company. Resource transfer: Resources are unevenly distributed across firms and the interaction of target and acquiring firm resources can create value through either overcoming information asymmetry or by combining scarce resources

NEED FOR MERGER AND ACQUISITION
1. 2. 3. 4. 5. 6. 7.

Gain market share Economies of scale Enter new markets Acquire technology Utilization of surplus funds Managerial Effectiveness Strategic Objective

VODAFONE PURCHASED HUTCH AT USD BILLION

HISTORY OF HUTCH
2000: Acquisition of Delhi operations Entered Calcutta and Gujarat markets through ESSAR acquisition ´ 2001: Won auction for licenses to operate GSM services in Karnataka, Andhra Pradesh and Chennai. ´ 2003: Acquired AirCel Digilink (ADIL - Essar Subsidiary) which operated in Rajasthan, Uttar Pradesh East andHaryana telecom circles and renamed it under Hutchbrand
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HISTORY OF HUTCH
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2004: Launched in three additional telecom circles of India namely Punjab, Uttar Pradesh and West Bengal. 2005: Acquired BPL, another mobile service provider in India 2007: Vodafone acquired HTIL stake in HutchisonEssar 2008: Vodafone acquired Dishnet Wireless, a service provider in Orissa and has successfully launched its services in the following circle. 2008: Vodafone launched the Apple iPhone 3G to be used on its 17 circle 2G network

BENEFITS OF VODAFONE
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Accelerates Vodafone·s move to a controlling position in a leading operator in the attractive and fast growing Indian mobile market India is the fastest growing major mobile market in the world, with around 6.5 million monthly net adds in the last quarter India benefits from strong economic fundamentals with expected real GDP growth in high single digits Potential for Hutch Essar to bring Vodafone·s innovative products and services to the Indian market, including Vodafone·s focus on total communication solutions for customers Vodafone and Hutch Essar both expected to benefit from increased purchasing power and the sharing of best practice

HISTORY OF VODAFONE
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Founded : Group: Headquarters : Key People : Industry: Presence: Partner in 42 Strength: Revenue: Net Income: EPS:

1983 as Racal Telecom, independent 1991 Vodafone Plc Berkshire, UK Vittorio Colao, CEO & Sir John Bond, Chairman Mobile Telecommunications. Equity Interest in 25 Countries & Network 2,30,000 (Employees) £ 35,478 Million(14.1% Growth) £ 10,047 Million(10.1% Growth) 7.51 Pence Dividend Per Share(11.1% Growth)

REASONS FOR HUCHISON EXIT
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Urban markets in the country had become saturated. Future expansion would have had to be only in the rural areas, which would lead to falling average revenue per user (ARPU) and consequently lower returns on its investments The sale of its interests in India will enable Hutchison Telecom to become one of Asias best capitalized companies Relations between Hutchison Telecom and the Essar group of India will be key to the sale of Hutch's 67% stake in Hutch-Essa

WHY AND HOW THE DEAL«..
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None of its recent global acquisitions, including those of the German business of Mannesmann, telecom businesses in Japan and Belgium, were performing up to the mark Markets, including the US, were maturing and were not growing in a big way Stiff competition among almost all major players in the industry, including global telecom majors like BT,O2 of UK, Verizon from the US, the Hinduja group, Reliance and Bharti Airtel from India deal sizeFourth largest deal of the year 2007 (to date) at $13.3bn ($11.1 bn plus $2 bn debt). Hutchison Essar valued at $18.8 bn.

CONCLUSION
Taken steps to make a positive difference, by supporting recycling campaigns ´ Win-win-win situation for shareholders, employees & the environment ´ Improved relationships between stakeholders & has helped to ensure future growth
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THANK YOU