ADVANCE

CORPORATE
FINANCE
RECENT MERGERS AND THEIR ADVANTAGES
Introduction
• Mergers And Acquisitions (M&A) Is A General Term Used To Describe The Consolidation Of
Companies Or Assets Through Various Types Of Financial Transactions, Including Mergers,
Acquisitions, Consolidations, Tender Offers, Purchase Of Assets And Management Acquisitions. The
Term M&A Also Refers To The Desks At Financial Institutions That Deal In Such Activity.
• The terms "mergers" and "acquisitions" are often used interchangeably, although in actuality, they hold
slightly different meanings. When one company takes over another entity, and establishes itself as the
new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases
to exist, the buyer absorbs the business, and the buyer's stock continues to be traded, while the target
company’s stock ceases to trade.
• On the other hand, a merger describes two firms of approximately the same size, who join forces to
move forward as a single new entity, rather than remain separately owned and operated. This action is
known as a "merger of equals." Both companies' stocks are surrendered and new company stock is
issued in its place. Case in point: both Daimler-Benz and Chrysler ceased to exist when the two firms
merged, and a new company, Daimler Chrysler, was created. A purchase deal will also be called a
merger when both CEOs agree that joining together is in the best interest of both of their companies .
HDFC and HDFC Bank Merger
• It would help in creating the second largest financial entity in terms of assets.
• The merger would help the company to meet many banking guidelines such as promoter
shareholding.
• The merger would benefit HDFC as the swap ratio is in the favor of HDFC
• The merger would help in reducing foreign holding in the company by 63%
• Would help in increasing fund raising from mortgages. And also is expected 22% return
on equity.
• Mortgages would made easier because of a healthy and strong balance sheet and would
home loan cheaper.
• Would significantly effect the profitability in a positive way
• The stock is expected to get a hike of 5% on the BSE
• About 80% of the individual loans would be eligible for the central exemption after the
merger.
ULTRATECH CEMENT-JAYPEE GROUP

UltraTech Cement completed the USD 2.54 billion acquisition of Jaiprakash

Associates' six integrated cement plants and five grinding units, having a capacity
of 21.2 million tones last year. Post-acquisition, UltraTech has become the fourth
largest cement player globally, excluding Chinese players. The deal has also
helped Jaypee Group, which can reduce its debt that runs into thousands of crores
of rupees.
ULTRATECH CEMENT-JAYPEE GROUP
MERGER ADVANTAGES
• Access to markets in central India, where it has no presence.
• Improve market share in the key northern, central and southern zones where its presence
is either weak or non-existent.
• Market share will expand from 17% to 22% after this transaction.
• The deal will help UT to accelerate its position further in Indian and global markets and
will ease off pressure on JP from the stakeholders and let it concentrate on other core
businesses.
• JP may also transfer some of their debt to Ultra-Tech which means that lenders now have
exposure to a business group that’s regarded as being financially sounder than many
others, thereby reducing the risk of defaults and also improving its capital adequacy
ratio.
ULTRATECH CEMENT-JAYPEE GROUP
MERGER ADVANTAGES (CONT.)
• The proposed amendment regarding transfer provisions in MMDR Act will also
allow mergers and acquisitions of companies. It will also help improve
profitability and decrease costs of those firms that are dependent on the supply
of mineral ore from captive leases.
• The transaction also highlights the growing trend of lenders putting pressure on
debt-laden business houses to sell assets and deleverage the balance sheet. Due
to rising non-performing assets in the banking sector, it is a purely buyers’
market where the seller does not have much choice other than agreeing on the
term sheet offered by the buyers.
ONGC-IMPERIAL ENERGY MERGER
Oil and Natural Gas Corporation Limited (ONGC), national oil company of India.
Imperial Energy Group is part of the India National Gas Company, ONGC Videsh
Ltd (OVL). Imperial Energy includes 5 independent enterprises operating in the
territory of Tomsk region, including 2 oil and gas producing enterprises. Oil and
Natural Gas Corp. Ltd (ONGC) took control of Imperial Energy UK Based firm
operating in Russia for the price of $1.9 billion in early 2009. This acquisition was
the second largest investment made by ONGC in Russia.
ONGC-IMPERIAL ENERGY MERGER
ADVANTAGES
• ONGC wants to increase their market share, spreads their costs and risks, become more
international and also for the need to transform their corporate identity.
• India’s explorers have been outbid by Chinese rivals as the two most populous nations compete
for energy assets globally.
• ONGC shares gained 1.35 Rupess, or 0.1 percent, to 1,015.9 Rupees at the close in Mumbai trading.
Imperial Energy declined 2 percent to 1,12 pence in London after reaching a 7 month high.
• Imperial Energy has 450 million barrels of Russian reserves according to company’s statement.
• The share price of ONGC had good volumes after this merger. For long term this was considered
as as good by at that period of time.
THANK YOU

Submitted By: Asutosh Patra

PGID: 1821057