Download - M&A PPT kk
-
8/2/2019 M&A PPT kk
1/37
Mergers and Acquisitions
-
8/2/2019 M&A PPT kk
2/37
MEMBERS
KARAN SHETHPALAK PATNI
PRATIK DOTIAASHWINI SHETTY
POOJA MEHTAKULDEEP MANDAIVYA
-
8/2/2019 M&A PPT kk
3/37
MEANING
MergerA transaction where two firms agree to integrate theiroperations on a relatively co-equal basis becausethey have resources and capabilities that togethermay create a stronger competitive advantage.
The combining of two or more companies, generallyby offering the stockholders of one company
securities in the acquiring company in exchange forthe surrender of their stock
Example: Company A+ Company B= Company C.
-
8/2/2019 M&A PPT kk
4/37
ACQUISITION
A transaction where one firms buys another firm withthe intent of more effectively using a corecompetence by making the acquired firm a
subsidiary within its portfolio of businessIt also known as a takeover or a buyout
It is the buying of one company by another.
In acquisition two companies are combine togetherto form a new company altogether.
Example: Company A+ Company B= Company A.
-
8/2/2019 M&A PPT kk
5/37
MERGER ACQUISITION
DIFFERENCE BETWEEN MERGER ANDACQUISITION:
i. Merging of two organization into one.
ii. It is the mutual decision.
iii. Merger is expensive thanacquisition(higher legal cost).
iv. Through merger shareholderscan increase their net worth.
v. It is time consuming and thecompany has to maintain somuch legal issues.
vi. Dilution of ownership occursin merger.
i. Buying one organization byanother.
ii. It can be friendly takeover or
hostile takeover.iii. Acquisition is less expensive
than merger.
iv. Buyers cannot raise their
enough capital.v. It is faster and easier
transaction.
vi. The acquirer does notexperience the dilution ofownership.
-
8/2/2019 M&A PPT kk
6/37
WHY IS IMPORTANT PROBLEM WITH MERGER
MERGER:WHY & WHY NOT
i. Increase Market Share.
ii. Economies of scale
iii. Profit for Research and
development.iv. Benefits on account of
tax shields like carriedforward losses or
unclaimed depreciation.
v. Reduction ofcompetition.
i. Clash of corporate cultures
ii. Increased business complexity
iii. Employees may be resistant tochange
6
-
8/2/2019 M&A PPT kk
7/37
WHY IS IMPORTANT PROBLEM WITH ACUIQISITION
ACQUISITION:WHY & WHY NOT
i. Increased marketshare.
ii. Increased speed to
marketiii. Lower risk comparingto develop newproducts.
iv. Increaseddiversification
v. Avoid excessivecompetition
i. Inadequatevaluation of target.
ii. Inability to achievesynergy.
iii. Finance by taking
huge debt.
7
-
8/2/2019 M&A PPT kk
8/37
TERMINOLOGIES
Asset Stripping
Demerger or Spin off
Black Knight
Carve - out
Poison Pill or Suicide Pill DefenseGreenmail
-
8/2/2019 M&A PPT kk
9/37
Terminologies contd
Dawn Raid
Grey KnightMacaroni Defense
Management Buy In
Hostile Takeover
Management Buy Out
-
8/2/2019 M&A PPT kk
10/37
EXPERIENCES IN M&A
Learn from mistakes of others
Define your objectives clearly
Complete strategy to achieve goal.SWOT analysis for the merged business - amust
Conservative attitude necessary at evaluationdeskstrong arguments to support project
Pick holes in strategy to get the bestWill merged units be able to work at efficient /ideal level?
Acquire expertise to interprete changes
-
8/2/2019 M&A PPT kk
11/37
M&A DEALS
-
8/2/2019 M&A PPT kk
12/37
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.
-
8/2/2019 M&A PPT kk
13/37
2. Vodafone-Hutchison Essar:$11.1 billion
TELECOM sector
11th February 2007
2nd largesttakeover deal
67 % stake holdingin hutch
Image: The then CEO of Vodafone
Arun Sarin visits Hutchison
Telecommunications head office inMumbai.
-
8/2/2019 M&A PPT kk
14/37
3. Hindalco-Novelis: $6 billion
June 2008Aluminium andcopper sector
Hindalco Acquired
Novelis
Hindalco entered theFortune-500 listing of
world's largestcompanies by salesrevenues
Image: Kumar Mangalam Birla
(center), chairman of Aditya BirlaGroup.
-
8/2/2019 M&A PPT kk
15/37
4. Ranbaxy-Daiichi Sankyo: $4.5 b
Pharmaceuticals sectorJune 2008
Acquisition deal
largest-ever deal in the
Indian pharma industryDaiichi Sankyoacquired the majoritystake of more than 50
% in Ranbaxy for Rs15,000 crore
15th biggest drugmakerImage: Malvinder Singh (left), ex-CEOof Ranbaxy, and Takashi Shoda,
president and CEO of Daiichi Sankyo.
-
8/2/2019 M&A PPT kk
16/37
5. ONGC-Imperial Energy:$2.8billion
January 2009
Acquisition deal
Imperial energy is abiggest chinese co.
ONGC paid 880 pershare to theshareholders of imperialenergy
ONGC wanted to tapthe siberian market
Image: Imperial Oil
CEO Bruce March.
-
8/2/2019 M&A PPT kk
17/37
6. NTT DoCoMo-Tata Tele: $2.7 b
November 2008
Telecom sector
Acquisition deal
Japanese telecom giant
NTT DoCoMo acquired26 per cent equitystake in TataTeleservices for aboutRs 13,070 cr.
Image: A man walks past a signboard ofJapan's biggest mobile phone operator
NTT Docomo Inc. in Tokyo.
-
8/2/2019 M&A PPT kk
18/37
7. HDFC Bank-Centurion Bankof Punjab: $2.4 billion
February, 2008
Banking sector
Acquisition deal
CBoP shareholdersgot one share of HDFCBank for every 29shares held by them.
9,510 crore
Image: Rana Talwar (rear) Centurion
Bank of Punjab chairman, Deepak
Parekh, HDFC Bank chairman.
-
8/2/2019 M&A PPT kk
19/37
8. Tata Motors-Jaguar LandRover: $2.3 billion
March 2008 (just ayear after acquiringCorus)
Automobile sector
Acquisition deal
Gave tuff competition toM&M after signing the
deal with ford
Image: A Union flag flies behind a
Jaguar car emblem outside a
dealership in Manchester, England.
-
8/2/2019 M&A PPT kk
20/37
9. Sterlite-Asarco: $1.8 billion
May 2008
Acquisition deal
Sector copper
Image: Vedanta Group chairman
Anil Agarwal.
-
8/2/2019 M&A PPT kk
21/37
10. Suzlon-RePower: $1.7 billion
May 2007
Acquisition deal
Energy sector
Suzlon is now thelargest wind turbinemaker in Asia
5th largest in theworld.
Image: Tulsi Tanti, chairman &
M.D of Suzlon Energy Ltd.
-
8/2/2019 M&A PPT kk
22/37
11. RIL-RPL merger: $1.68 billion
March 2009Merger deal
amalgamation of its
subsidiary ReliancePetroleum with theparent companyReliance industries
ltd.Rs 8,500 crore
RIL-RPL mergerswap ratio was at16:1
Image: Reliance Industries'
chairman Mukesh Ambani.
-
8/2/2019 M&A PPT kk
23/37
Why India?
Dynamic government policiesCorporate investments in industry
Economic stability
Ready to experiment attitude ofIndian industrialists
-
8/2/2019 M&A PPT kk
24/37
Deals in India for first financial
quarter 2010Sector No. of Deals
Value in USD
million
Share in per
cent
Telecom 3 22732.26 67.19
Pharmaceutical 4 3958.29 11.02
BFSI 6 2651.54 7.84
Metal and Mining 4 1483.15 4.38
Energy 4 1320 3.90
Other sectors 39 1919.00 5.67
-
8/2/2019 M&A PPT kk
25/37
PROCESS OF MERGER & ACQUISITION IN INDIA:
The process of merger and acquisition has the following steps:
i. Approval of Board of Directors
ii. Information to the stock exchange
iii. Application in the High Court
iv. Shareholders and Creditors meetingsv. Sanction by the High Court
vi. Filing of the court order
vii. Transfer of assets or liabilitiesviii.Payment by cash and securities
Maximum Waiting period:210 days from the filing of notice(or the order ofthe commission - whichever earlier).
-
8/2/2019 M&A PPT kk
26/37
Impact of Mergers and Acquisitions
ImpactEmployees
Competition
Management
Public
Shareholders
-
8/2/2019 M&A PPT kk
27/37
-
8/2/2019 M&A PPT kk
28/37
Why Mergers and Acquisitions Fail?
Cultural Difference
Flawed Intention
No guiding principles
No ground rules
No detailed investigating
Poor stake holder outreach
-
8/2/2019 M&A PPT kk
29/37
How to Prevent the Failure
Continuous communication employees,
stakeholders, customers, suppliers and
government leaders.
Transparency in managers operations
Capacity to meet new culture higher
management professionals must be ready to
greet a new or modified culture.
Talent management by the management
-
8/2/2019 M&A PPT kk
30/37
RECENT M&A HAPPENINGS
India Inc runs up an M&A bill of Rs 1.8 lakh cr inH1
M&A deals touch $14 billion in June
Value of telecom M&A deals touched USD 23billion in Q1: Assocham.
Godrej acquires Argentine firm
Oil India eyes shale gas acquisition overseasRIL acquires Pioneer stake for $1.32 bn
Indian hunger for new technology fuels foreignacquisitions
-
8/2/2019 M&A PPT kk
31/37
contd
Dabur completes merger of Fem Care
Ebay India ties up with Adidas for FIFA
World Cup.Abbott buys Piramal unit, tops table
Eurocopter signs two joint ventures with
Pawan HansMahindra to buy out Renaults stake in
India, revive Logan sales.
-
8/2/2019 M&A PPT kk
32/37
Amongst BRIC Nations, India second most targetedcountry for Mergers & Acquisitions(2010):
-
8/2/2019 M&A PPT kk
33/37
MERGER & ACQUISITION(2009-10) :
33
-
8/2/2019 M&A PPT kk
34/37
ICICI BANK & BANK OF RAJASTHAN(19th MAY,2010):
-
8/2/2019 M&A PPT kk
35/37
ADVANTAGES FROM THIS MERGER:
This amalgamation would substantially enhance
ICICI Bank's branch network (23 % increaseapprx).
Strengthen ICICI banks presence in northern and
western India. ICICI has now moved to a branch-led businessmodel.
The acquisition will help ICICI increase CASA
(current and savings account) flows, as also helpin cross-selling products.
Both banks working on the same platform,
integration will also be less taxing.
-
8/2/2019 M&A PPT kk
36/37
SUCCESS & FAILURE RATE(2009-10):
36
-
8/2/2019 M&A PPT kk
37/37