Mergers &

Acquisitions Presented By:Aprameya JoshiMourya BKishore SharmaMadhuriSephora

Merger:A transaction where two firms agree to integrate their operations on a relatively co-equal basis because they have resources and capabilities that together may create a stronger competitive advantage.

Example: Company A+ Company B= Company C

Acquisition :A transaction where one firms buys another firm with the intent of more effectively using a core competence by making the acquired firm a subsidiary within its portfolio of business

It also known as a takeover or a buyout

Example: Company A+ Company B= Company A.

Difference between merger and acquisition :

i. Merging of two organization in to one.

ii. It is the mutual decision.iii. Merger is expensive than

acquisition(higher legal cost).iv. Through merger shareholders

can increase their net worth.v. It is time consuming and the

company has to maintain so much legal issues.

vi. Dilution of ownership occurs in merger.

i. Buying one organization by another.

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 not experience the dilution of ownership.

MERGER ACQUISITION

Types of Mergers & Acquisitions

Mergers Horizontal merger Vertical merger Concentric merger (similar

products) Conglomerate merger Reverse merger

Acquisitions Friendly Hostile Full cash Partly cash and partly

shares Full in shares

Some Mergers and Acquisitions: Mergers: Tata and Docomo Hero and Honda Maruthi and Suzuki

Acquisition:Flipkart and MyntraMyntra and JabongBookMyShow and Masti Teckets

Why Merger or Acquisition:

Synergy(1+1>2)

Financial Operational Managerial

= It is pooling of complementing resources

PROCESS OF MERGER & ACQUISITION IN INDIA:The process of merger and acquisition has the following steps:i. Approval of Board of Directorsii. Information to the stock exchangeiii. Application in the High Court(competition commission of India: if

required)iv. Shareholders and Creditors meetingsv. Sanction by the High Courtvi. Filing of the court ordervii. Transfer of assets or liabilitiesviii. Payment by cash and securitiesMaximum Waiting period:210 days from the filing of notice(or the order of the commission - whichever earlier).

Process For Unlisted And Unregulated Sectors

Interested party will approach an investment bank for the deal Valuation of target company is done by the investment bank A one pager on no name basis is prepared and sent to

interested parties of acquisition. The interested parries will sign an NDA( non disclosure

agreement to get the information memorandum. After further negotiations the del is finalized for merger or

acquisition.

valuation

One pager &

NDA

Information Memorandum

Deal

Why Mergers and Acquisitions Fail?

Cultural Difference Flawed Intention No guiding principles No ground rules No detailed investigating Poor stake holder outreach

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

Merger Between Air India And Indian Airlines

The government of India on 1 march 2007 approved the merger of Air India and Indian airlines.

Consequent to the above a new company called National Aviation Company of India limited was incorporated under the companies act 1956 on 30 march 2007 with its registered office at New Delhi.

Aim of The Merger Create the largest airline in India and comparable to other airlines in Asia. Provide an Integrated international/ domestic footprint which will significantly

enhance customer proposition and allow easy entry into one of the three global airline alliances, mostly Star Alliance with global consortium of 21 airlines.

Enable optimal utilization of existing resources through improvement in load factors and yields on commonly serviced routes as well as deploy ‘freed up’ aircraft capacity on alternate routes.

The merger had created a mega company with combined revenue of Rs 150 billion ($3.7billion) and an estimated fleet size of 150. It had a diverse mix of aircraft for short and long haul resulting in better fleet utilization.

Provide an opportunity to fully leverage strong assets, capabilities and infrastructure. Provide an opportunity to leverage skilled and experienced manpower available with

both the Transferor Companies to the optimum potential. 12

Benefits of The Merger Potential to launch high growth & profitability businesses (Ground Handling Services,

Maintenance Repair and Overhaul etc.) Provide maximum flexibility to achieve financial and capital restructuring through

revaluation of assets. Economies of scale enabled routes rationalization and elimination of route duplication.

This resulted in a saving of Rs1.86 billion, ($0.04 billion) and the new airlines will be offering more competitive fares, flying seven different types of aircraft and thus being more versatile and utilizing assets like real estate, human resources and aircraft better. However the merger had also brought close to $10 billion (Rs 440 billion) of debt.

The new entity was in a better position to bargain while buying fuel, spares and other materials. There were also major operational benefits.

Traffic rights - The protectionism enjoyed by the national carriers with regard to the traffic right entitlements is likely to continue even after the merger. This will ensure that the merged Airlines will have enough scope for continued expansion, necessitated due to their combined fleet strength.

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Presented By:Aprameya JoshiMourya BKishore SharmaMadhuriSephora

Thank You