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Mergers and
Acquisitions
4/23/11
MEANING 4/23/11
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.
•The combining of two or more companies, generally
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ACQUISITION:WHY & WHY4/23/11
NOT
§ WHY IS IMPORTANT § PROBLEM WITH ACUIQISITION
market
i. Inadequate
valuation of target.
iii. Lower risk comparing to
develop new products. ii. Inability to achieve
iv. Increased diversification synergy.
v. Avoid excessive iii. Finance by taking
competition huge debt.
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EXPERIENCES IN M&A 4/23/11
§ Learn from mistakes of others
§ Define your objectives clearly
§ Complete strategy to achieve goal.
§ SWOT analysis for the merged business - a must
level?
§ Acquire expertise to interprete changes
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TOP 11
M&A DEALS…
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§ Pharmaceuticals sector
§ June 2008
§ Acquisition deal
§ largest-ever deal in the
Indian pharma industry
§ Daiichi Sankyo acquired
the majority stake of more
than 50 % in Ranbaxy for
Rs 15,000 crore
§ 15th biggest drugmaker
Image: Malvinder Singh (left), ex-CEO
of Ranbaxy, and Takashi Shoda,
president and CEO of Daiichi Sankyo.
5. ONGC-Imperial Energy:
4/23/11
$2.8billion § January 2009
§ Acquisition deal
§ Imperial energy is a
biggest chinese co.
§ ONGC paid 880 per
share to the
shareholders of imperial
energy
§ ONGC wanted to tap the
siberian market
Image: Imperial Oil
CEO Bruce
March.
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§ November 2008
§ Telecom sector
§ Acquisition deal
Japanese telecom giant
§
NTT DoCoMo
6. NTT DoCoMo-Tata Tele:26 per cent
acquired
equity stake in Tata
$2.7 b Teleservices for about
Rs 13,070 cr.
§ Acquisition deal
§ Energy sector
§ Suzlon is now the
largest wind turbine
maker in Asia
§ 5th largest in the
world.
Why India?
Maximum Waiting period:210 days from the filing of notice(or the order of the
commission - whichever earlier).
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Why Mergers and Acquisitions
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Fails Fail?
§
Cultural Difference
§
Flawed Intention
§
No guiding principles
§
No ground rules
§
No detailed investigating
§
Poor stake holder outreach
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How to Prevent the Failure
§ Continuous communication – employees,
stakeholders, customers, suppliers and government
leaders.
HAPPENINGS…
§ India Inc runs up an M&A bill of Rs 1.8 lakh cr in H1
§ M&A deals touch $14 billion in June
§ Value of telecom M&A deals touched USD 23 billion in
Q1: Assocham.
§ Godrej acquires Argentine firm
§ Oil India eyes shale gas acquisition overseas
§ RIL acquires Pioneer stake for $1.32 bn
§ Indian hunger for new technology fuels foreign
acquisitions
contd… 4/23/11
2727
ICICI BANK & BANK OF RAJASTHAN(19th
4/23/11
MAY,2010):
ADVANTAGES FROM THIS MERGER:
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3030
4/23/11