Presented by:Shweta Asutkar Bharat Jadhav

Meaning & Definition

Meaning: Is a process wherein an acquirer takes over the control of the target company Another aspect to takeover is where an acquirer acquires substantial quantity of shares or voting rights of the target company. Definition: A takeover is an acquisition, by one company of controlling interest of the other, usually by buying all or majority of shares.

KINDS OF TAKEOVER
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Bailout
Involves takeover of a financially sick company by a financially rich company as per the provisions of the Sick Industrial Companies (Special provisions) Act, 1985
Objective behind this takeover is to bail out the sick unit from losses

Friendly Takeover
Is one where the acquirer acquires the shares of the

target by informing the board of directors his intention to purchase the shares of the target company
If board feels the offer is worth accepting, it

recommends to the shareholders that the offer be accepted

The acquirer may either acquire the assets or

purchase the stock of the target

Hostile takeover
A hostile takeover occurs when the acquirer makes a direct

offer to shareholders of a company without the prior consent of the existing promoters and management.
Example: Mittals bid for Arcelor.

Reverse Takeover
Is a takeover strategy where a private company

acquires a public company

Makes the company less susceptible to market

conditions

Horizontal Takeover
Is a process where a company takes over another

company from the same industry

Basic objective is to attain economies of scale and

increase market share by entering into the market segments of the company taken over

Vertical Takeover
Is one where a company is taken over by

any of its vendors or customers Can be of two types: backward and Forward
Backward is one where the business of the

vendor is taken over in order to reduce costs

Forward is one where the business of the

customer is taken over in order to access market directly

Conglomerate Takeover
Is one where a company takes over another

company from a totally different industry

Is pursued with the objective of attaining

diversification.

MODES OF TAKEOVER
STAGED ACQUISITION. MULTIPLE ACQUISITIONS. INDIRECT ACQUISITIONS. BROWNFIELD ACQUISITION.

TAKEOVER THEORIES

Inefficient management. Operating synergy. Financial synergy. Strategic realignment. Undervaluation. Information & signaling. Agency problem & managerialism. Realignment of managerial incentives. Winners curse. Market power. Tax consideration. Redistribution.

TAKEOVER BIDS
TYPES OF TAKEOVER BIDS Partial Bid Competitive Bid

Takeover Strategies
Buying before a takeover bid.

Buying after the first takeover bid and then selling into a higher bid. Buying below the existing takeover price & making a guaranteed return.

ANTI TAKEOVER DEFENSES

TYPES:

Pre-offer defenses.
Post-offer defenses

Bankmail.
Crown jewel defenses

 Greenmail

Killer bees
Poison pill Safe harbor

Scorched earth
Targeted repurchase White knight

Whitemail

Takeover code in India

Post - 1994
Apr-2007 SEBI amended Code Oct - 2002 Few amendments as per Bhagwati Committees reco. Feb - 1997 New Takeover Code (Bhagwati Committee) Nov - 1994 SEBI Takeover Code

Nov 1990 Clause 40(A) & 40(B) of Listing Agreement

Pre - 1990 Clause 40 of Listing Agreement

Pre - 1990

Procedure for Takeover

Acquirer Any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company, or acquires or agrees to acquire control over the target company, either by himself or with any person acting in concert with the acquirer Shares Means shares in the share capital of a company carrying voting rights and includes any security which would entitle the holder to receive shares with voting rights. Control Right to appoint majority of directors or Right to control management decisions or Right to take policy decisions exercisable by PAC, directly or indirectly, by virtue of their shareholding or management rights or SHA or voting agreements or in any other manner.

Persons Acting in Concert (PAC)

PACs - persons who for a common objective of substantial acquisition of shares or voting rights or gaining control over the target company, directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in or control over the target company.

MOU Within 4 days DATE OF PUBLIC ANNOUNCEMENT Within 14 days Filing of Letter of Offer with the SEBI

Within 45 days Offer to reach the shareholders Within 55 days

Within 7 days

Within 15 days of Offer Closure

SEBI may permit extension on payment of interest for delay Open a Special A/c for Payment Dispatch consideration to shareholders

Offer to open
Offer to close Within 20 days

ECONOMIC ASPECT OF TAKEOVER

Disciplining the capital market.
Consolidation of efforts and capacities. Concentrating on core competencies.

CONSIDERATION FOR TAKEOVER

Consideration in the form of cash. Consideration in the form of shares. Acquisition through a new company. Acquisition of minority held shares of a subsidiary.

ACCOUNTING ASPECTS OF TAKEOVER

Holding company's books of account.
Subsidiary companies books of account.

FINANCING A TAKEOVER
Cash.
Loan note alternatives. All share deals.

PUBLIC POLICY ISSUES IN TAKEOVER

Transfer of shares.
Powers of financial institutions. Proxy wars.

About

SATYAM

Satyam Computer Services Ltd founded in 1987 by B.Ramalinga Raju

September 16, 1954 (195409-16) (age 54) Bhimavaram, Andhra Pradesh, India

Born

Residence
Nationality Occupation

Hyderabad, India
Indian former Chairman, Managing Director of Satyam Computers

Net worth
Spouse(s)

US$495 million (2004)

Nandini

Controversies involving Satyam

Satyam plunged into a crisis in January 2009 after its

founder, B Ramalinga Raju, stated that the company's profits had been overstated.
07 Jan - Company chairman declared that the

companys profits had been overstated for several years.

On January 7, 2009, Chairman Raju resigned after

publicly announcing his involvement in an accounting fraud.

Raju confessed that Satyam's balance sheet of 30 September 2008 contained: Inflated figures for cash and bank balances of Rs 5,040 crore as against Rs 5,361 crore reflected in the books.
An accrued interest of Rs. 376 crore which was nonexistent. An understated liability of Rs. 1,230 crore on account of funds was arranged by himself. An overstated debtors' position of Rs. 490 crore as against Rs. 2,651 crore in the books.

Satyam Takeover:
In March 2009 the company announced it would begin

soliciting bids from potential buyers.

Companies involved in Bids:

Tech Mahindra (Mahindra Group) Larsen & Tourbro.

RESULTS:
In April 2009, Tech Mahindra emerged as the highest

bidder to acquire a controlling stake in Satyam. 13 April - Tech Mahindra acquired majority stake in Satyam.

Tech Mahindra Satyam takeover approves:

Company Law Board(CLB) approves Tech

Mahindra take over of The Rs.58/ share on Satyam Computers. Tech Mahindra, sixth largest software exporter. Tech Mahindra acquiring the 31% in Satyam Computer Services Ltd for Rs.1756 crore.

Satyam Becomes Its New Brand Identity Mahindra Satyam

21 June - New brand, Mahindra Satyam launched

(CEO of Mahindra Satyam)