INTRODUCTION

The wave of liberalization and globalization has resulted in blurring of the National boundaries, elimination of barriers to marketplaces and as a consequence There has been free flow of technology. Capital and market forces across borders. In simpler terms it implies a more globally - aligned, volatile and responsive Economy. The momentum of change has been strong enough for many domestic Players. Working in a protected economy, to consider their competitive postures. The sudden shift from a protected environment to the stark reality of a globally competitive market place has hit them very hard. The thinning profit margins,

Privileges of size, technology and extremely deep pockets, have made survival the Key word for the domestic players. Indian corporate sector is no exception. Yet long before the corporate raiders Of west started infiltrating, Indian business had begun contemplating a counter Offensive. One such potent survival, as well as, growth strategy was found to be Mergers and Acquisitions. Particularly the last one-decade has been dedicated to Mergers and Acquisitions as vehicle of reducing the response time to competitors Moves and thus generating the much needed critical, mass, quickly.

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THE BASICS OF MERGERS AND ACQUISITIONS The Main Idea:

One plus one makes three: this equation is the special alchemy of a merger or Acquisition. The key principle behind buying a company is to create shareholder Value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies - at least, thats the reasoning behind Mergers and Acquisitions. This rationale is particularly alluring to companies when times are tough. Strong companies will act to buy other companies to create a more competitive, cost-Efficient company. The companies will come together hoping to gain a greater market Share or achieve greater efficiency. Because of these potential benefits, target Companies will often agree to be

purchased when they know cannot survive alone.

DEFINING MERGERS AND ACQUISITIONS

The phrase Mergers and Acquisitions or M & A refers to the aspect of corporate Finance strategy and management dealing with the merging and acquiring of different Companies as well as other assets. Usually mergers occur in a friendly setting where Executives from the respective companies participate in a due diligence process to Ensure a successful combination of all parts. On other occasions, acquisitions can happen through hostile take over by purchasing the majority of outstanding shares of a company in the open stock market. Merger can be defined as a process. This involves a transaction that combines two Firms into one new firm. An Acquisition is the purchase of one firm by another firm. Growth is an essential ingredient to the success. Growth can be either internal or external. Internal growth is when company acquires specific assets and finances them by the retention of earning. External growth involves the acquisition of another Company. In principle, growth by acquiring another company is little different from Growth by acquiring specific assets.

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A merger refers to a combination of two or more companies into one company. It may involve absorption or consolidation. In absorption, one company acquires another company. Example: Ashok Leyland Ltd absorbed Ductnon Castings Ltd. In a consolidation, two or more companies combine to form a new company. Example: Hindustan Co. Ltd and Indian Reprographics Ltd. Combined to form HCL Limited. In India, mergers called amalgamations in legal importance are usually of the Absorption variety. The acquiring company (also referred to as the amalgamated Company or the

merged company) acquires the assets and liabilities of the acquired Company (also referred to as the amalgamating company or the merging company or The target company). Typically, the shareholders of the amalgamating company in Exchange for their shares in the amalgamating company. A takeover generally involves the acquisitions of a certain block of equity capital Of a company which enables the acquires to exercise control over the affairs of the Company. In theory, the acquirer must buy more than 50 percent of the paid-up Equity of the acquired company to enjoy complete control. smaller holding, In practice, however, Effective control can be exercised with a between 20 and 40 percent, because the remaining

usually

shareholders, scattered and ill-organized. Are not likely to challenge the control of the acquirer.

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MERGERS AND ACQUISITIONS

The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. A merger is a tool used by companies for the purpose of expanding their operations often aiming at an increase of their long term profitability. There are 15 different types of actions that a company can take when deciding to move forward using M&A. Usually mergers occur in a consensual (occurring by mutual consent) setting where executives from the target company help those from the purchaser in a due diligence process to ensure that the deal is beneficial to both parties. Acquisitions can also happen through a hostile takeover by purchasing the majority of outstanding shares of a company in the open market against the wishes of the target's board. In the United States, business laws vary from state to state whereby some companies have limited protection against hostile takeovers. One form of protection against a hostile takeover is the shareholder rights plan, otherwise known as the "poison pill".

ACQUISITION An acquisition, also known as a takeover, is the buying of one company (the target) by another. An acquisition may be friendly or hostile. In the former case, the companies cooperate in negotiations; in the latter case, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover. The buyer buys the shares, and therefore control, of the target company being purchased. Ownership control of the company in turn conveys effective control over the assets of the company, but since the company is acquired intact as a going business, this form of

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transaction carries with it all of the liabilities accrued by that business over its past and all of the risks that company faces in its commercial environment. The buyer buys the assets of the target company. The cash the target receives from the selloff is paid back to its shareholders by dividend or through liquidation. This type of transaction leaves the target company as an empty shell, if the buyer buys out the entire assets. A buyer often structures the transaction as an asset purchase to "cherry-pick" the assets that it wants and leave out the assets and liabilities that it does not. This can be particularly important where foreseeable liabilities may include future, unquantified damage awards such as those that could arise from litigation over defective products, employee benefits or terminations, or environmental damage. A disadvantage of this structure is the tax that many jurisdictions, particularly outside the United States, impose on transfers of the individual assets, whereas stock transactions can frequently be structured as like-kind exchanges or other arrangements that are tax-free or tax-neutral, both to the buyer and to the seller's shareholders. The terms "demerger", "spin-off" and "spin-out" are sometimes used to indicate a situation where one company splits into two, generating a second company separately listed on a stock exchange.

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. Stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal. A merger can resemble a takeover but result in a new company name (often combining the names of the original companies) and in new branding; in some cases, terming the combination a "merger" rather than an acquisition is done purely for political or marketing reasons.

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CLASSIFICATIONS OF MERGERS
VERTICAL MERGERS occur when two firms, each working at different stages in the
production of the same good, combine.

CONGENERIC MERGERS occur where two merging firms are in the same general
industry, but they have no mutual buyer/customer or supplier relationship, such as a merger between a bank and a leasing company. Example: Prudential's acquisition of Bache & Company.

CONGLOMERATE MERGERS take place when the two firms operate in different
industries. A unique type of merger called a reverse merger is used as a way of going public without the expense and time required by an IPO. The contract vehicle for achieving a merger is a "merger sub". The occurrence of a merger often raises concerns in antitrust circles. Devices such as the Herfindahl index can analyze the impact of a merger on a market and what, if any, action could prevent it. Regulatory bodies such as the European Commission, the United States Department of Justice and the U.S. Federal Trade Commission may investigate anti-trust cases for monopolies dangers, and have the power to block mergers.

ACCRETIVE MERGERS are those in which an acquiring company's earnings per share
(EPS) increase. An alternative way of calculating this is if a company with a high price to earnings ratio (P/E) acquires one with a low P/E.

DILUTIVE MERGERS are the opposite of above, whereby a company's EPS decreases.
The company will be one with a low P/E acquiring one with a high P/E. The completion of a merger does not ensure the success of the resulting organization; indeed, many mergers (in some industries, the majority) result in a net loss of value due to problems. Correcting problems caused by incompatibilitywhether of technology, equipment, or corporate culture diverts resources away from new investment, and these problems may be exacerbated by inadequate research or by concealment of losses or liabilities by one of the partners.
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DISTINCTION BETWEEN MERGERS AND ACQUISITIONS

Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things. 1) When one company takes over another and clearly established 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 "swallows" the business and the buyer's stock continues to be traded. 2) In the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals".Both companies' stocks are surrendered and new company stock is issued in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created. 3) In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it is technically an acquisition. Being bought out often carries negative connotations, therefore, by describing the deal euphemistically as a merger, deal makers and top managers try to make the takeover more palatable. 4) 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. But when the deal is unfriendly - that is, when

the target company does not want to be purchased - it is always regarded as an acquisition.

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MOTIVES BEHIND M&A (MERGERS AND ACQUISITIONS) The dominant rationale used to explain M&A activity is that acquiring firms seek improved financial performance. The following motives are considered to improve financial performance: Synergies: This refers to the fact that the combined company can often reduce its fixed costs by removing duplicate departments or operations, lowering the costs of the company relative to the same revenue stream, thus increasing profit margins. Increased revenue/Increased Market Share: This assumes that the buyer will be absorbing a major competitor and thus increase its market power (by capturing increased market share) to set prices. Cross selling: For example, a bank buying a stock broker could then sell its banking products to the stock broker's customers, while the broker can sign up the bank's customers for brokerage accounts. Or, a manufacturer can acquire and sell complementary products. Economies of Scale: For example, managerial economies such as the increased opportunity of managerial specialization. Another example are purchasing economies due to increased order size and associated bulk-buying discounts.

Taxes: A profitable company can buy a loss maker to use the target's loss as their advantage by reducing their tax liability. In the United States and many other countries, rules are in place to limit the ability of profitable companies to "shop" for loss making companies, limiting the tax motive of an acquiring company.

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. However, this does not always deliver value to shareholders. Resource transfer: Resources are unevenly distributed across firms (Barney, 1991) and the interaction of target and acquiring firm resources can create value through either overcoming information asymmetry or by combining scarce resources.
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Vertical integration: Vertical Integration occurs when an upstream and downstream firm merges (or one acquires the other). There are several reasons for this to occur. One reason is to internalize an externality problem. A common example is of such an externality is double marginalization. Double marginalization occurs when both the upstream and downstream firms have monopoly power; each firm reduces output from the competitive level to the monopoly level, creating two deadweight losses. By merging the vertically integrated firm can collect one deadweight loss by setting the upstream firm's output to the competitive level. This increases profits and consumer surplus. A merger that creates a vertically integrated firm can be profitable. However, on average and across the most commonly studied variables, acquiring firms financial performance does not positively change as a function of their acquisition activity. Therefore, additional motives for merger and acquisition that may not add shareholder value include:

Diversification: While this may hedge a company against a downturn in an individual industry it fails to deliver value, since it is possible for individual shareholders to achieve the same hedge by diversifying their portfolios at a much lower cost than those associated with a merger.

Empire building: Managers have larger companies to manage and hence more power.

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EFFECTS ON MANAGEMENT A study published in the July/August 2008 issue of the Journal of Business Strategy suggests that mergers and acquisitions destroy leadership continuity in target companies top management teams for at least a decade following a deal. The study found that target companies lose 21 percent of their executives each year for at least 10 years following an acquisition - more than double the turnover experienced in non-merged firms.

Major M&A (MERGER AND ACQUISITION) in the 2005 to 2014

Recently the Indian companies have undertaken some important acquisitions. Some of those are as follows: Hindalco Acquired Canada Based Novelis. The Deal Involved Transaction Million. Tata Steel Acquired Corus Group Plc. The Acquisition Deal Amounted To $12,000 Million. Dr. Reddy's Labs Acquired Betapharm Through A Deal Worth Of $597 Ranbaxy Labs Acquired Terapia SA. The Deal Amounted To $324 Million. Suzlon Energy Acquired Hansen Group Through A Deal Of $565 Million. The Acquisition Of Daewoo Electronics Corp. By Videocon Involved Transaction Of $729 Million. HPCL Acquired Kenya Petroleum Refinery Ltd. The Deal Amounted To VSNL Acquired Teleglobe Through A Deal Of $239 Million. $500 Million. Million. Of $5,982

When it comes to mergers and acquisitions deals in India, the total number was 287 from the month of January to May in 2007. It has involved monetary transaction of US $47.37 billion. Out of
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these 287 merger and acquisition deals, there have been 102 cross country deals with a total valuation of US $28.19 billion.

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The course content of a Certified Merger and Acquisition Advisory Program deals with various regulatory and legal features of mergers and acquisitions and usually includes the following: 1. Forms of transactions/deals 2. The procedure of merger and acquisition 3. Principal matters that should be taken into account 4. Negotiation of contract 5. Warranties and representations 6. Consideration or compensations 7. Regulatory matters- acquisition performed by a public company 8. Enquiries and searches 9. Due diligence 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Due diligence- post acquisition Title to international properties Cross-border deals Coordinating/organizing cross-border transactions Taking over distressed firms Analyzing the parties to merger or acquisition Valuation of the probable acquisition Designing the funding for acquisition Regulatory and legal matters associated with acquisition of a public company Code for mergers and acquisitions

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20. 21. 22. 23. 24.

Comprehending the ideas of merger and acquisition code Formation of a takeover deal Blueprinting the documentation The areas of difficulty that should be on the lookout Workshops on mergers and acquisitions and case studies.

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ADVANTAGES OF ACQUISITION
Acquisition provides the following advantages to the companies which are merged:
1) Economies of scope the notion of economies of scope resemble that of economies of scale. Economies of scale principally denote effectiveness related to alterations in the supply side, for example, growing or reducing production scale of an individual form of commodity. On the other hand, economies of scope denote effectiveness principally related to alterations in the demand side, for example growing or reducing the range of marketing and supply of various forms of products. Economies of scope are one of the principal causes for marketing plans like product lining, product bundling, as well as family branding.

2) Economies of scale Economies of scale refer to the cost benefits received by a company as the result of a horizontal merger. The merged company is able to have bigger production volume in comparison to the companies operating separately. Therefore, the merged company can derive the benefits of economies of scale. The maximum use of plant facilities can be done by the merged company, which will lead to a decrease in the average expenses of the production.

3) Growth or expansion: Expansion of business, firm, capital and increase in sale in acquisition. The business in increase and company gets more profit. By gaining more profit the business can research for new product and make the organization more profitable.

4) Risk diversification: Risk is divided into on both the companies which are merged. he risk of loss is divided. If business face loss then the amount of loss is divided in all companies which are merged.

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5) Greater market capability and lesser competition: If one acquired the company who is direct competitor that company, then the business face less competition in the market. The both companies are now one companies and that why the marker cannot get.

5) Financial synergy (Improved creditworthiness, enhancement of borrowing power, and decrease in the cost of capital, growth of value per share and price earnings ratio, capital raising, smaller flotation expenses): Financial condition of business is good or better, after acquisition the company find more sources. The get more finance from internal and external sources.

7) Increased fixed cost and static marginal cost: Fixed cost is increased due to expansion of business, now the companys production is increase to that extent where the fixed cost is increased. The fixed cost fixed at all the level of production but after acquisition the business. 8) A larger firm may be able to operate more efficiently than two smaller firms, there by reducing costs. Acquisition may generate economies of scale. This means that the average production cost will fall as production volume increases. A acqusition may allow a firm to decrease costs by more closely coordinating production and distribution. Finally, economies may be achieved when firms have complementary sources for example, when one firm has excess production capacity and another has insufficient capacity. 9) Tax gains in mergers may arise because of unused tax losses, unused debt capacity, surplus funds, and the write-up of depreciable assets. The tax losses of target corporations can be used to offset the acquiring corporation's future income. These tax losses can be used to offset income for a maximum of 15 years or until the tax loss is exhausted. Only tax losses for the previous three years can be used to offset future income.

10)

A company that has earned profits may find value in the tax losses of a target

corporation that can be used to offset the income it plans to earn. A merger may not, however,
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be structured solely for tax purposes. In addition, the acquirer must continue to operate the pre-acquisition business of the company in a net loss position.

The tax benefits may be less than their "face value," not only because of the time value of money, but also because the tax loss carry-forwards might expire without being fully utilized.

11)

Tax advantages can also arise in an acquisition when a target firm carries assets on its

books with basis, for tax purposes, below their market value. These assets could be more valuable, for tax purposes, if they were owned by another corporation that could increase their tax basis following the acquisition. The acquirer would then depreciate the assets based on the higher market values, in turn, gaining additional depreciation benefits.

12) Interest payments on debt are a tax-deductible expense, whereas dividend payments from equity ownership are not. The existence of a tax advantage for debt is an incentive to have greater use of debt, as opposed to equity, as the means of financing merger and acquisition transactions. Also, a firm that borrows much less than it could may be an acquisition target because of its unused debt capacity. While the use of financial leverage produces tax benefits, debt also increases the likelihood of financial distress in the event that the acquiring firm cannot meet its interest payments on the acquisition debt.

13) A firm with surplus funds may wish to acquire another firm. The reason is that istributing the money as a dividend or using it to repurchase shares will increase income taxes for shareholders. With an acquisition, no income taxes are paid by shareholders.

14) Acquiring firms may be able to more efficiently utilize working capital and fixed assets in the target firm, thereby reducing capital requirements and enhancing profitability. This is particularly true if the target firm has redundant assets that may be divested.
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15)

The cost of debt can often be reduced when two firms merge. The combined firm will

generally have reduced variability in its cash flows. Therefore, there may be circumstances under which one or the other of the firms would have defaulted on its debt,but the combined firm will not. This makes the debt safer, and the cost of borrowing may decline as a result. This is termed the coinsurance effect. 16) Diversification is often cited as a benefit in mergers. Diversification by itself,however, does not create any value because stockholders can accomplish the same thing as the merger by buying stock in both firms. 17) Obtaining quality staff or additional skills, knowledge of your industry or sector and

other business intelligence. For instance, a business with good management and process systems will be useful to a buyer who wants to improve their own. Ideally, the business you choose should have systems that complement your own and that will adapt larger business. 18) Accessing funds or valuable assets for new development. Better production or distribution facilities are often less expensive to buy than to build. Look for target businesses that are only marginally profitable and have large unused capacity which can be bought at a small premium to net asset value. 19)Business underperforming. For example, if you are struggling with regional or national growth it may well be less expensive to buy an existing business than to expand internally. to running a

20) Accessing a wider customer base and increasing your market share. Your target business may have distribution channels and systems you can use for your own offers.

21) Diversification of the products, services and long-term prospects of your business. A target business may be able to offer you products or services which you can sell through your own distribution channels.

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22)

Reducing costs and overheads: through shared marketing budgets, increased

purchasing power and lower costs. 23) Reducing competition. Buying up new intellectual property, products or servicesmay

be cheaper than developing the business. 24) Organic growth, i.e. the existing business plan for growth, needs to be

accelerated. Businesses in the same sector or location can combine resources to reduce costs, eliminate duplicated facilities or departments and increase revenue.

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SWOT ANALYSIS
(STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS) analysis to
assess your business. Analysing your results carefully will show you how to build on strengths, resolve weaknesses, exploit opportunities and avoid threats. A SWOT analysis on the Assess external factors, especially the impact of the economic climate on the price of a deal.

WHAT CAN GO WRONG WITH A MERGER OR ACQUISITION?

The extent and quality of the planning and research you do before a merger or acquisition deal will largely determine the outcome. Sometimes situations will arise outside your control and you may find it useful to consider and prepare for these risks. An acquisition could become expensive if you end up in a bidding war where other parties are equally determined to buy the target business. A merger could become expensive if you cannot agree terms such as who will run the combined business or how long the other owner will remain involved in the business. Both mergers and acquisitions can damage business performance because of time spent on the deal and a mood of uncertainty.

Face pitfalls following a deal such as: 1) The target business does not do as well as expected. 2) The costs you expected to save do not materialize. 3) Key people leave. 4) The business cultures are not compatible.

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Management accountants and solicitors, with experience in similar deals to help forecast potential pitfalls and to address any that arise. Read about making mergers work in our guide on joint ventures and partnering. Different legal issues can arise at different stages of the acquisition process and require separate and sequential treatment. Diligence is the process of uncovering all liabilities associated with the purchase. It is also the process of verifying that claims made by the vendors are correct. Directors of companies are answerable to their shareholders for ensuring that this process is properly carried out.

For legal purposes, make sure:

1. Obtain proof that the target business owns key assets such as property, equipment,

intellectual property, copyright and patents. 2. Obtain details of past, current or pending legal cases 3. look at the detail in the business' current and possible future contractual obligations with its employees (including pension obligations), customers and suppliers. 4. CONSIDER the impact of a change in the business' ownership on existing contracts.

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Advantages of mergers and takeovers

Mergers and takeovers are permanent form of combinations which vest in management complete control and provide centralized administration which are not available in combinations of holding company and its partly owned subsidiary. Shareholders in the selling company gain from the merger and takeovers as the premium offered to induce acceptance of the merger or takeover offers much more price than the book value of shares. Shareholders in the buying company gain in the long run with the growth of the company not only due to synergy but also due to boots trapping earnings.

Motivations For Mergers And Acquisitions

Mergers and acquisitions are caused with the support of shareholders, managers ad promoters of the combing companies. The factors, which motivate the shareholders and managers to lend support to these combinations and the resultant consequences they have to bear, are briefly noted below based on the research work by various scholars globally. (1) From the standpoint of shareholders:Investment made by shareholders in the companies subject to merger should enhance in value. The sale of shares from one companys shareholders to another and holding investment in shares should give rise to greater values i.e. the opportunity gains in alternative

investments. Shareholders may gain from merger in different ways viz. from the gains and achievements of the company i.e. through (a) Realization Of Monopoly Profits (b) Economies Of Scales (c) Diversification Of Product Line (d) Acquisition Of Human Assets And Other Resources Not Available Otherwise (e) Better Investment Opportunity In Combinations
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One or more features would generally be available in each merger where shareholders may have attraction and favour merger. From the standpoint of managers Managers are concerned with improving operations of the company, managing the affairs of the company effectively for all round gains and growth of the company which will provide them better deals in raising their status, perks and fringe benefits. Mergers where all these things are the guaranteed outcome get support from the managers. At the same time, where managers have fear of displacement at the hands of new management in amalgamated company and also resultant depreciation from the merger then support from them becomes difficult. Promoters gains Mergers do offer to company promoters the advantage of increasing the size of their company and the financial structure and strength. They can convert a closely held and private limited company into a public company without contributing much wealth and without losing control. Benefits to general public Impact of mergers on general public could be viewed as aspect of benefits and costs to. (a) Consumer of the product or services; (b) Workers of the companies under combination; (c) General public affected in general having not been user or consumer or the worker in the companies under merger plan. (a) Consumers The economic gains realized from mergers are passed on to consumers in the form of lower prices and better quality of the product which directly raise their standard of living and quality of life. The balance of benefits in favour of consumers will depend upon the fact whether or not the mergers increase or decrease competitive economic and productive activity which directly affects the degree of welfare of the consumers through changes in price level, quality of products, after sales service, etc.

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(b) Workers community The merger or acquisition of a company by a conglomerate or other acquiring company may have the effect on both the sides of increasing the welfare in the form of purchasing power and other miseries of life. Two sides of the impact as discussed by the researchers and academicians are:

1. Mergers with cash payment to shareholders provide opportunities for them to invest this money in other companies which will generate further employment and growth to uplift of the economy in general.

2. Any restrictions placed on such mergers will decrease the growth and investment activity with corresponding decrease in employment. Both workers and communities will suffer on lessening job opportunities, preventing the distribution of benefits resulting from diversification of production activity.

(c) General public

Mergers result into centralized concentration of power. Economic power is to be understood as the ability to control prices and industries output as monopolists. Such monopolists affect social and political environment to tilt everything in their favour to maintain their power ad expand their business empire. These advances result into economic exploitation. But in a free economy a monopolist does not stay for a longer period as other companies enter into the field to reap the benefits of higher prices set in by the monopolist. This enforces competition in the market as consumers are free to substitute the alternative products. Therefore, it is difficult to generalize that mergers affect the welfare of general public

adversely or favorably. Every merger of two or more companies has to be viewed from different angles in the business practices which protects the interest of the shareholders in the merging company and also serves the national purpose to add to the welfare of the employees, consumers and does not create hindrance in administration of the Government polices.

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MERGERS AND ACQUISITIONS IN INDIA

The process of mergers and acquisitions has gained substantial importance in today's corporate world. This process is extensively used for restructuring the business organizations.

In India, the concept of mergers and acquisitions was initiated by the government bodies. Some well known financial organizations also took the necessary initiatives to restructure the corporate sector of India by adopting the mergers and acquisitions policies. The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. The increased competition in the global market has

prompted the Indian companies to go for mergers and acquisitions as an important strategic choice.

The trends of mergers and acquisitions in India have changed over the years. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy.

India has emerged as one of the top countries with respect to merger and acquisition deals. In 2007, the first two months alone accounted for merger and acquisition deals worth $40 billion in India.

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MERGERS AND ACQUISITIONS ACROSS INDIAN SECTORS

Among the different Indian sectors that have resorted to mergers and acquisitions in recent times, telecom, finance, FMCG, construction materials, automobile industry and steel

industry are worth mentioning. With the increasing number of Indian companies opting for mergers and acquisitions, India is now one of the leading nations in the world in terms of mergers and acquisitions. The merger and acquisition business deals in India amounted to $40 billion during the initial 2 months in the year 2007. The total estimated value of mergers and acquisitions in India for 2007 was greater than $100 billion. It is twice the amount of mergers and acquisitions in 2006. Mergers and Acquisitions in India: The Latest Trends Till recent past, the incidence of Indian entrepreneurs acquiring foreign enterprises was not so common. The situation has undergone a sea change in the last couple of years. Acquisition of foreign companies by the Indian businesses has been the latest trend in the Indian corporate sector. There are different factors that played their parts in facilitating the mergers and acquisitions in India. Favorable government policies, buoyancy in economy, additional liquidity in the corporate sector, and dynamic attitudes of the Indian entrepreneurs are the key factors behind the changing trends of mergers and acquisitions in India. The Indian IT and ITES sectors have already proved their potential in the global market. The other Indian sectors are also following the same trend. The increased participation of the Indian companies in the global corporate sector has further facilitated the merger and acquisition activities in India.

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