NOW, THAT’S A DEAL MERGER AND ACQUISITION

Merger and acquisition is a strategy adopted by the corporate sector to consolidate it’s position and improves it’s competitive strength vis-a-versa its competitors. In India The M & A activities got a boost after the announcement of new economic policy in 1991.

In Indian industry, the pace for mergers and acquisitions activity picked up in response to various economic reforms introduced by the Government of India since 1991, in its move towards liberalization and globalization.

INTRODUCTION

Dynamic government policies Corporate investments in industry Economic stability “ready to experiment” attitude of Indian industrialists

Types of M&A:-Horizontal Merger Vertical MergerConglomerate MergerDe-merger MergerReverse merger.

Why Mergers and Acquisitions in India?

Tata Steel acquired 100% stake in Corus Group on January 30, 2007. It was an all cash deal which cumulatively amounted to $12.2 billion.

Vodafone purchased administering interest of 67% owned by Hutch-Essar for a total worth of $11.1 billion on February 11, 2007.

India Aluminium and copper giant Hindalco Industries purchased Canada-based firm Novelis Inc in February 2007. The total worth of the deal was $6-billion.

Indian pharma industry registered its first biggest in 2008 M&A deal through the acquisition of Japanese pharmaceutical company Daiichi Sankyo by Indian major Ranbaxy for $4.5 billion. 

The Oil and Natural Gas Corp purchased Imperial Energy Plc in January 2009. The deal amounted to $2.8 billion and was considered as one of the biggest takeovers after 96.8% of London based companies' shareholders acknowledged the buyout proposal.

Tops 10 Merger In India

In November 2008 NTT DoCoMo, the Japan based telecom firm acquired 26% stake in Tata Teleservices for USD 2.7 billion. 

India's financial industry saw the merging of two prominent banks - HDFC Bank and Centurion Bank of Punjab. The deal took place in February 2008 for $2.4 billion.

Tata Motors acquired Jaguar and Land Rover brands from Ford Motor in March 2008. The deal amounted to $2.3 billion.

2009 saw the acquisition Asarco LLC by Sterlite Industries Ltd's for $1.8 billion making it ninth biggest-ever M&A agreement involving an Indian company.

In May 2007, Suzlon Energy obtained the Germany-based wind turbine producer Repower. The 10th largest in India, the M&A deal amounted to $1.7 billion. 

MORGAN STANLEY;

23540

STANDARD CHARTERED,

21775

BARCLAY CAPITAL;

13993

ENAM SECU-RITIES, 11613

DEUTSCHE BANK; 5669 CITIGROUP, 3358

M&A DEALS IN 2010IN$MN

EARNST AND

YOUNG; 4917

CITIGROUP, 3536

ENAM SECU-RITIES, 2926

DEUTSCHE BANK; 255

MORGAN STANLEY;

2919

STANDARD CHARTERED, 568

M&A DEALS IN 2009IN$MN

Globally ,telecom, media, energy, pharma accounted for 6 of the top 10 deals in first half of this year-------

CARSO GLOBAL TELECOM-AMERICA MOVIL ($27.4BN)

QWEST COMMUNICATION-CENTURY LINK ($22.2BN)

BRITISH SKY-NEWS CORP($13.7BN)SMITH INTERNATIONAL-

SCHLUMBERGER($12.2BN)ALCON-NOVERTIS($11.1BN) BHARTI-ZAIN($10BN)

TOP DEALS IN YEAR 2010

MAJOR COMPANY PERFORMANCE IN POST RECESSION PERIOD

Bharti's ambitions of an African safari have been fulfilled, following the acquisition of Zain Telecom's 15-country Africa operations for a total enterprise value of $10.7 billion.

The acquisition is the second largest by an Indian company since Tata Steel's $13.6-billion acquisition of Anglo-Dutch steel maker Corus. It will catapult Bharti to the rank of the sixth-largest telecom service provider in the world by number of subscribers. And, in an ironic twist of fate, one of Bharti's major competitors in its new markets will be MTN.

BHARTI AIRTEL BAGS ZAIN AFRICA

Essar Energy, a holding company for the Essar group's energy business, it will raise $2.5 billion (around Rs 11,250 crore) on the London Stock Exchange (LSE), to finance the expansion of its power and oil verticals. This will be one of the largest overseas initial public offerings by an Indian company.

Post-listing, the firm is expected to have a market capitalization of $10 billion (around Rs 45,000 crore), given equity of around $2 billion (around Rs 9,000 crore) and a dilution of 20%-25% on the enlarged capital, vice-chairman Prashant Ruia said. Upon completion, promoters would hold at least 75% in Essar Energy, which would be listed on the LSE . The shares are likely to be listed in early May.

ESSAR ENERGY LIST ON LSE

IN RECESSION PERIODEquity markets were shutGlobal banks were being shy with their

balance sheetConcern over global economic fundamentals

meant M&A activity was muted

WHAT’S CHANGED

IN POST RECESSION PERIODFirm are eager to raise capital to fund

expansion The appetite for international acquisition

starts to increaseThe growth in India is attracting global

pharma’s interest

Indian promoters, too are willing to cash out, and enter high return realty and hospitals sectors

In banking, the entry of new players will have its impact on some of the older entities

Globally, telecom, media, energy and pharma accounted for six of the top ten deals in first half this year.

Continued……..

Recent M&A have significantly lower leverage to what was seen in the pre-crises era

Companies have become cautious and don’t want to take on very high debt

Off- shore funding, though fairly cheap, is not available easily

Indian banks nearly doubled their financing interest rates, particularly offshore lending from the UK and CANADA

Recent scenario in m&a

Wherever acquisition leverage was made available, the equity part from acquirer was increased to twice the level before the crises

Cont…

DEUTSCHE BANKSanjay Agarwal –MD and head, global

corporate finance IndiaTop deal- Essar energy’s $1.95 bn listing on

LSEHSBCSANJAY BAJAJ-DIRECTORTOP DEAL-ENGINEERS INDIA’S $210 MN

follow on public offer

WHO’S WHO IN DEAL MAKING

NM RothschildSanjay Bhandarkar- managing directorTop deal- conducted the 3G spectrum auctionBARCLAY CAPITALJaideep khanna-managing directorTop deal-bharti airtel’s $10 bn deal with zain

for the latter’s business in africa

Cont…….

RELIGARE CAPITALTarun kataria- CEOTOP DEAL- Fortis health care’s potential

buyout of parkwayJP MORGANRohit chatterji- head, invest bankingTop deal- Infrastructure company HDIL’s

$250mn QIP

Cont……

KOTAK MAHINDRA CAPITALFalguni nayar- MD and CEO Top deal- stanchart $518mn IDRMORGAN STANLEYAisha de sequiera- Head, investment bankingTop deal- Adani Enterprise’s $850mn QIP

CONT…..

After the recession indian company have become cautious and don’t want to take on a very high debt. We can see an increase in participation of Indian companies globally taking part in merger and acquisition which is a good sign as it represents that the indian companies are on a verge of progress in the global corporate world.

conclusion

Bysurya prakash tiwari(12)chintan jain(20)debashree das(33)abhijeet kumar(6)