MERGER

Guided by: presented by:

HARDIK BAXI SHAH ANERI
SHAH DISHITA
SALOT DISHA
SANGHAVI DHARMI
MEGHANI DIVYA
 Introduction

A merger takes place when two companies of approximately the same size
decide to join together to form a new, joint company, with both companies’
stock being surrendered and new stock being issued under the joint
Company’s name.
 Meaning of Merger

A merger is an agreement that unites two existing companies into one new
company. Merger and acquisition are commonly done to expand a company’s
reach, expand into new segments, or gain market share. All of these are done
to increase shareholder value.
Advantages of merger
 synergy
 tax purpose
 cost efficiency
 competitive edge
 new market
Disadvantages of merger
 bad for consumer
 decrease in job
 sometimes dis-economies of scale
 loss in productivity
Transaction characteristics
 stock purchase
 asset purchase
 cash offering
 security offering
Characteristic of merger
 defined goals
 transparency
 qualified transaction team
 experience legal representation
Case study of failure of merger
HDFC & MAX LIFE
Shareholding pattern
 max life LTD India’s fourth largest private insurance
Company .
 joint venture between Max Financial services &
Mitsui Sumitomo insurance company, a Japanese
Insurance company.
 HDFC standard life insurance was a formerly unlisted
Company and a joint venture between Housing
Development financial corporation limited holding
61.5% shares and standard life ABERDEEN PLC, holding
35% merger of standard life and ABERDEEN asset
management rest by others.
Merger structure & advantage:
 HBFC was a private company and wanted to get listed.
The merger would list it automatically without going
through the process of IPO. Not only the merger was an
advantage with regards to avoiding the issues of an IPO
but would cut down the cost.
 it was a reverse merger as a listed company was to be
merged with non-listed, ( HDFC standard Life was going to
merge in Max Life Limited)
 as per scheme, Max Life Limited would first merge with its
parent company Max Financial Services, and subsequently,
the Life insurance business would demerge from Max
Financial and merged into HDFC life.
Reasons for failure
 not approved by the sectoral authorities ,insurance
Regulatory and Development Board.
Section 35 of insurance Act bars the merger of the
insurance company with non-insurance company.
Conclusion
A merger is a financial activity that is undertaken in a
large variety of industries: healthcare, financial
Institutions, private investments, industrials and many
more. A merger is the combination of two companies
into one by either closing the old entities into one new
entity or by one company absorbing the other. In other
words, two or more companies are consolidated into
one company.