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MERGERS AND ACQUISITIONS

1.

INTRODUCTION TO MERGERS AND ACQUISITIONS


We have been learning about the companies coming together to from another company

and companies taking over the existing companies to expand their business. With recession taking toll of many Indian businesses and the feeling of insecurity surging over our businessmen, it is not surprising when we hear about the immense numbers of corporate restructurings taking place, especially in the last couple of years. Several companies have been taken over and several have undergone internal restructuring, whereas certain companies in the same field of business have found it beneficial to merge together into one company. In this context, it would be essential for us to understand what corporate restructuring and mergers and acquisitions are all about. 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.

Thus important issues both for business decision and public policy formulation have been raised. No firm is regarded safe from a takeover possibility. On the more positive side Mergers & Acquisitions may be critical for the healthy expansion and growth of the firm. Successful entry into new product and geographical markets may require Mergers & Acquisitions at some stage in the firm's development.

Successful competition in international markets may depend on capabilities obtained in a timely and efficient fashion through Mergers &Acquisition's. Many have argued that mergers increase value and efficiency and move resources to their highest and best uses, thereby increasing shareholder value. To opt for a merger or not is a complex affair, especially in terms of the technicalities involved. We have discussed almost all factors that the management may have to look into before going for merger.

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Businesses across the corporate world have only two options in hand to expand their operation and gain substantial profits. One way is to grow through internal expansion by means of introducing new technologies, altering the course of operations, enhancing work performance, and establishing new lines of products or services. Through this business grow gradually over time but the new strategy of external expansion has completely changed the business sector across the world. This external expansion takes place in the form of merger, acquisitions, takeovers, and amalgamations, dramatically supporting the globalization of businesses.

Merger, acquisitions, takeovers, and amalgamations have become essential components of business restructuring. The process brings separate companies together to form a larger enterprise and increase economies of sale. The increasing popularity of it is attributed to highend competition and breaking of trade barriers. This expansion is either done through absorption or consolidation. Absorption is a condition in which two or more companies come together to perform operations in an existing company whereas in case of consolidation, companies come together and create a completely new entity for their combined operations.

In the present day business world, the procedure is hugely being used across various industrial segments including telecommunication, hospitality, pharmaceuticals, and information technology. All the industrial progresses are based on external expansion and look ahead to expand their customer base, gain credibility, and break all barriers in the market segment.

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1.1 Merger
Merger is defined as combination of two or more companies into a single company where one survives and others loose their corporate existence. The survivor acquires all the assets and the liabilities of the merged company or companies. Generally, the surviving company is the buyer, which retains its identity and the extinguished company is the seller. Merger is also known as amalgamation. Merger is the fusion of two or more existing companies. All assets, liabilities and the stock of one company stand transfer to Transferee Company in consideration of payment in the form of: Equity shares in the transferee company Debentures in the transferee company Cash and A mix of the above modes.

In business or economics a merger is a combination of two companies into one large company. Such actions are commonly voluntary and involve stock swap or cash payment to the shareholders of the two companies to share the risk involve 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. Merger is a financial tool that is used for enhancing long-term profitability by expanding their operations. Mergers occur when the merging companies have their mutual consent as different from acquisitions, which can take the form of a hostile takeover. The business laws in US vary across states and hence the companies have limited options to protect themselves from hostile takeovers. One way a company can protect itself from hostile takeovers is by planning shareholders rights, which is alternatively known as poison pill.

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If we trace back to history, it is observed that very few mergers have actually added to the share value of the acquiring company and corporate mergers may promote monopolistic practices by reducing costs, taxes etc.

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.

TYPES OF MERGER
There are five commonly-referred to types of business combinations known as mergers: conglomerate merger, horizontal merger, market extension merger, vertical merger and product extension merger. The term chosen to describe the merger depends on the economic function, purpose of the business transaction and relationship between the merging companies.

Conglomerate A merger between firms that are involved in totally unrelated business activities. There are two types of conglomerate mergers: pure and mixed. Pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.

Example A leading manufacturer of athletic shoes, merges with a soft drink firm. The resulting company is faced with the same competition in each of its two markets after the merger as the individual firms were before the merger. One example of a conglomerate merger was the merger between the Walt Disney Company and the American Broadcasting Company.

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Horizontal Merger A merger occurring between companies in the same industry. Horizontal merger is a business consolidation that occurs between firms who operate in the same space, often as competitors offering the same good or service. Horizontal mergers are common in industries with fewer firms, as competition tends to be higher and the synergies and potential gains in market share are much greater for merging firms in such an industry.

Example A merger between Coca-Cola and the Pepsi beverage division, for example, would be horizontal in nature. The goal of a horizontal merger is to create a new, larger organization with more market share. Because the merging companies' business operations may be very similar, there may be opportunities to join certain operations, such as manufacturing, and reduce costs.

Market Extension Mergers A market extension merger takes place between two companies that deal in the same products but in separate markets. The main purpose of the market extension merger is to make sure that the merging companies can get access to a bigger market and that ensures a bigger client base.

Product Extension Mergers A product extension merger takes place between two business organizations that deal in products that are related to each other and operate in the same market. The product extension merger allows the merging companies to group together their products and get access to a bigger set of consumers. This ensures that they earn higher profits.

Vertical Merger A merger between two companies producing different goods or services for one specific finished product. A vertical merger occurs when two or more firms, operating at different levels
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within an industry's supply chain, merge operations. Most often the logic behind the merger is to increase synergies created by merging firms that would be more efficient operating as one.

Example A vertical merger joins two companies that may not compete with each other, but exist in the same supply chain. An automobile company joining with a parts supplier would be an example of a vertical merger. Such a deal would allow the automobile division to obtain better pricing on parts and have better control over the manufacturing process. The parts division, in turn, would be guaranteed a steady stream of business. Synergy, the idea that the value and performance of two companies combined will be greater than the sum of the separate individual parts is one of the reasons companies merger.

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1.2 ACQUISITION
An acquisition normally refers to a purchase of smaller firm by a larger firm. Acquisition also known as takeover or buyout is the buying of one company by another. Acquisitions or takeovers occur between the bidding and the target company. There may be either hostile or friendly takeovers. Acquisition in general sense is acquiring ownership in the property. In the context of business combinations, an acquisition is the purchase by one company of the controlling interest in the share capital of another existing company There's only one real way to achieve massive growth literally overnight, and that's by buying somebody else's company. Acquisition has become one of the most popular ways to grow today. Since 1990, the annual number of mergers and acquisitions has doubled, meaning that this is the most popular era ever for growth by acquisition. Companies choose to grow by acquiring others to increase market share, to gain access to promising new technologies, to achieve synergies in their operations, to tap well-developed distribution channels, to obtain control of undervalued assets, and a myriad of other reasons. But acquisition can be risky because many things can go wrong with even a well-laid plan to grow by acquiring: Cultures may clash, key employees may leave, synergies may fail to emerge, assets may be less valuable than perceived, and costs may skyrocket rather than fall. Still, perhaps because of the appeal of instant growth, acquisition is an increasingly common way to expand.

Methods of Acquisition:
An acquisition may be affected by a) Agreement with the persons holding majority interest in the company management like members of the board or major shareholders commanding majority of voting power;

b) Purchase of shares in open market;


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c) To make takeover offer to the general body of shareholder s;

d) Purchase of new shares by private treaty;

e) Acquisition of share capital through the following forms of c o n s i d e r a t i o n s v i z means of cash, issuance of loan capital, or insurance of share capital

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1.3 HISTORY OF MERGERS AND ACQUISITIONS


Most of the mergers and acquisitions are an outcome of the favourable economic factors like the macroeconomics setting, escalation in the GDP, higher interest rates and fiscal policies. These factors not only trigger the M & A process but also play an active role in laying the mergers and acquisition strategies between bidding and target firms. The history of mergers and acquisitions can be traced back to the 19 th century which has evolved in different phases mentioned as under:

From 1897 1904

During this period merger took place between the firms which were anti-competition and enjoyed their dominance in the market according to their productivity in sectors like electricity, railways, etc. Most of the mergers during this period were horizontal in nature and occurred between the steel, metal and construction industries.

From 1903 1905

Most of the mergers which took place during the first phase were considered as unsuccessful for not being efficient enough to attain the required competence. The crash was stimulated by the decelerating of the world's financial system in 1903, which was followed by a stock market collapse in 1904. During this phase the authorized structure was not encouraging either. Later the apex judiciary body issued its directive on the anti-competitive mergers stating that they could be de-merged by implementing the Sherman Act.

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From 1916 1940

Unlike the preceding phase, this period concentrated on mergers between oligopolies, rather between anti-competitive firms. The mergers and acquisitions process was triggered by the financial boom which was seen after the World War I. The expansion further lead to developments in the fields of science and technology and the emergence of infrastructure firms which provided services for required growth in railroads and transportation by automobiles. The government strategies laid in 1920s made the corporate ambiance supportive enough for firms to work in harmony. Financial institutions like government and private banks also played a significant part in aiding the mergers and acquisitions process.

The mergers which occurred during 1916-1929 were horizontal or multinational in nature. Most of these industries were the manufacturers of metals, automobile tools, food commodities, chemicals, etc.

This phase ended in 1929 with a massive decline in stock market followed by great depression. However, the tax exemptions in 1940s encouraged the conglomerates to involve themselves in M & A activities. From 1965 1970

Most of the mergers from 1965-70 were horizontal mergers and were triggered by elevating stock and interest rates, and stern implementation of anti-trust rules and regulations. During this phase the bidding companies were small in size and fiscal strength than the target companies. These kinds of mergers were sponsored by equities, thereby eliminating the roles of banks which they actively played in investment activities earlier.

In 1968, the Attorney General decided to break the multinationals which resulted in the end of merging activities after than. The decision was triggered by the inefficient performance of the multinationals. But 1970s saw the emergence of mergers which made their mark by performing
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effectively. Some of them were INCO merging with ESB, OTIS Elevator with United Technologies and Colt Industries with Garlock Industries.

From 1981 1989

This phase saw the acquisition of the companies which were much bigger in size as compared to the firms in previous phases. Industries like oil and gas, pharmaceuticals, banking, aviation combined their business with their national and international counterparts. Cross border buyouts became regular with most of them being unfriendly in nature. This phase came to an end with the introduction of anti acquisition laws, restructuring of fiscal organizations and the Gulf War.

From 1992 till present

This period was stimulated by globalization, upsurge in stock market boom and deregulation policies. Major mergers were seen taking place between telecom and banking giants out of which most were sponsored by equities.

There was a change in the attitude of the industrialists, who opted for mergers and acquisitions for long term profitability rather than short lived benefits. Promising economic trends, investments by corporate and revised government policies motivated the participation of many conglomerates to contribute in the acquisition trend.

Therefore, we can conclude that as long as business entities exist and the economic factors are favorable, the trend of mergers and acquisitions will continue.

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1.4 DIFFERENCE BETWEEN MERGERS AND ACQUISITIONS


Merger and acquisition is often known to be a single terminology defined as a process of combining two or more companies together. The fact remains that the so-called single terminologies are different terms used under different situations. Though there is a thin line difference between the two but the impact of the kind of completely different in both the cases.

Merger is considered to be a process when two or more companies come together to expand their business operations. In such a case the deal gets finalized on friendly terms and both the companies share equal profits in the newly created entity.

When one company takes over the other and rules all its business operations, it is known as acquisitions. In this process of restructuring, one company overpowers the other company and the decision is mainly taken during downturns in economy or during declining profit margins. Among the two, the one that is financially stronger and bigger in all ways establishes it power. The combined operations then run under the name of the powerful entity who also takes over the existing stocks of the other company.

Another difference is, in an acquisition usually two companies of different sizes come together to combat the challenges of downturn and in a merger two companies of same size combine to increase their strength and financial gains along with breaking the trade barriers. A deal in case of an acquisition is often done in an unfriendly manner, it is more or less a forceful or a helpless association where the powerful company either swallows the operation or a company in loss is forced to sell its entity. In case of a merger there is a friendly association where both the partners hold the same percentage of ownership and equal profit share.

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2.

MERGER AND ACQUISITION STRATEGY PROCESS


Strategies play an integral role when it comes to merger and acquisition. A sound

strategic decision and procedure is very important to ensure success and fulfilling of expected desires. Every company has different cultures and follows different strategies to define their merger. Some take experience from the past associations, some take lessons from the associations of their known businesses, and some hear their own voice and move ahead without wise evaluation and examination. Following are some of the most essential strategies of merger and acquisition that can work wonders in the process:

The first and foremost thing is to determine business plan drivers. It is very important to convert business strategies to set of drivers or a source of motivation to help the merger succeed in all possible ways.

There should be a strong understanding of the intended business market, market share, and the technological requirements and geographic location of the business. The company should also understand and evaluate all the risks involved and the relative impact on the business.

Then there is an important need to assess the market by deciding the growth factors through future market opportunities, recent trends, and customer's feedback.

The integration process should be taken in line with consent of the management from both the companies venturing into the merger.

Restructuring plans and future parameters should be decided with exchange of information and knowledge from both ends. This involves considering the work culture, employee selection, and the working environment as well.
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At the end, ensure that all those involved in the merger including management of the merger companies, stakeholders, board members, and investors agree on the defined strategies. Once approved, the merger can be taken forward to finalizing a deal.

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2.1 Why Corporate Mergers and Acquisitions?


The key objective of corporate mergers and acquisitions is to increase market competition. This can be done in various ways using different methods of merger like horizontal merger, conglomeration merger, market extension merger, and product extension merger. All the types work towards a common goal but behold different characteristics suited to get the best outcome in terms of growth, expansion, and financial performance.

In many significant ways, this kind of restructuring a business proves to be beneficial to the corporate world. It greatly helps to share all resources, skills, talents, and knowledge that eventually increases the wisdom bar within the company. This can further help to combat the competitive challenges existing in the market.

There are several reasons why corporates go for mergers and acquisitions. The main goal is to increase the business and market share as well as to improve the financial performance of the corporation. Following are some of the reasons why corporates go for mergers and acquisitions.

Through corporate mergers and acquisitions, duplicate departments can be eliminated in the combined company, which would help to reduce its fixed costs. As a result, the profit margins would go up.

It helps the organization to increase revenue and market share.

Cross-selling of products/services is possible.

A profitable corporation also buys a loss-making company in order to use the losses of the target company to lessen its tax liability.

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Mergers and acquisitions also let the companies to transfer resources. By this way, one company may use the specialized skills of the others.

Companies also go for mergers/acquisitions for vertical integration, where the vertically integrated company can gather one deadweight loss by setting the output of the upstream company to the competitive level.

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2.2 MERGERS AND ACQUISITIONS IN INDIA


The practice of mergers and acquisitions has attained considerable significance in the contemporary corporate scenario which is broadly used for reorganizing the business entities. Indian industries were exposed to plethora of challenges both nationally and internationally, since the introduction of Indian economic reform in 1991. The cut-throat competition in international market compelled the Indian firms to opt for mergers and acquisitions strategies, making it a vital premeditated option.

The factors responsible for making the merger and acquisition deals favorable in India are:

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

Sectors like pharmaceuticals, IT, ITES, telecommunications, steel, construction, etc, have proved their worth in the international scenario and the rising participation of Indian firms in signing M&A deals has further triggered the acquisition activities in India.

In spite of the massive downturn in 2009, the future of M&A deals in India looks promising. Indian telecom major Bharti Airtel is all set to merge with its South African counterpart MTN, with a deal worth USD 23 billion. According to the agreement Bharti Airtel would obtain 49% of stake in MTN and the South African telecom major would acquire 36% of stake in Bharti Airtel.

India in the recent years has showed tremendous growth in the M&A deal. It has been actively playing in all industrial sectors. It is widely spreading far across the stretches of all industrial verticals and on all business platforms. The increasing volume is witnessed in various sectors
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like that of finance, pharmaceuticals, telecom, FMCG, industrial development, automotives and metals. The volume of M&A transactions in India has apparently increased to about 67.2 billion USD in 2010 from 21.3 billion USD in 2009. At present the industry is witnessing a whopping 270% increase in M&A deal in the first quarter of the financial year. This increasing percentage is mainly attributed to the increasing cross-border M&A transactions. Over that increasing interest of foreign companies in Indian companies has given a tremendous push to such transactions.

Large Indian companies are going through a phase of growth as all are exploring growth potential in foreign markets and on the other end even international companies is targeting Indian companies for growth and expansion. Some of the major factors resulting in this sudden growth of merger and acquisition deal in India are favorable government policies, excess of capital flow, economic stability, corporate investments, and dynamic attitude of Indian companies.

The recent merger and acquisition 2011 made by Indian companies worldwide are those of Tata Steel acquiring Corus Group plc, UK based company with a deal of US $12,000 million and Hindalco acquiring Novelis from Canada for US $6,000 million.

With these major mergers and many more on the annual chart, M&A services India is taking a revolutionary form. Creating a niche on all platforms of corporate businesses, merger and acquisition in India is constantly rising with edge over competition.

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TEN BIGGEST MERGERS AND ACQUISITIONS DEALS 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.

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.

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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.

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2.3 TOP MERGERS AND ACQUISITIONS IN INDIA IN 2012

1. In its biggest acquisition ever, State-owned Oil & Natural Gas Corp (ONGC) agreed to buy US energy giant ConocoPhillips 8.4 per cent stake in the Kashagan oilfield in Kazakhstan for about $5 billion. ONGC Videsh Ltd, the overseas arm of the State explorer, would pay a base price of $4.25 billion plus a share of working capital and other cash calls together with interest for the 8.4 per cent stake in the field that produces 370,000 barrels per day (18.5 million tons a year) of crude oil. This was the biggest acquisition by OVL, surpassing its $2.2 billion buyout of Russia-focused Imperial Energy in January 2009. It was the biggest acquisition by an Indian companies this year, and the sixth largest in the history.

2. Hinduja Group firm Gulf Oil acquired US-based Houghton International for $1.045 billion (about over Rs5,747 crore) after conclusion of necessary regulatory approvals. The acquisition of this specialty chemical maker would make Gulf Oil the worlds 9th largest lubricant company, without affecting its financials as the purchase has been made through a step-down subsidiary structure in the US and UK. 3. Mumbai-based Piramal Healthcare acquired Decision Resources Group, a US-based company in the healthcare information segment for about Rs3,400 crore.

Decision Resources Group provides web-enabled research, predictive analytics via proprietary databases and consulting services to the global healthcare industry, and 48 of the top 50 global pharma companies are its customers, Piramal said on Wednesday. Piramal Healthcare sold its domestic medicines business in 2010 to Abbott for Rs17,000 crore and later streamlined its business, foraying into the financial services sector. 4. Worlds largest spirits maker Diageo Plc acquired 53.4 per cent stake in United Spirits for Rs11,166.5 crore in a multi-structured deal, which has provided Vijay Mallya a breather from troubles emanating from the grounded Kingfisher Airlines.

Mallya would continue to remain chairman of USL, and another UB Group executive will be
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named president. Currently, Ashok Capoor of UB Group is the managing director (MD) of the company. Diageo would nominate the MD and the chief financial officer (CFO). 5. A Singapore-based fibre and pulp maker agreed to pay 13 times its market cap to buy an Indonesian coal major, and help GMR and the SinarMas group get a listing in the island state for its coal assets. Bangalore-based GMR group, which buys coal from Indonesia, and a company owned by Indonesias Sinar Mas, have agreed to transfer their joint stakes in Golden Energy to Singapores United Fiber System (UFS) for about 2.6 billion Singapore dollars ($2.05 billion). UFS is a pulp producer with interests in construction. Golden Energy owns coal mines in Indonesia and is jointly owned by GMR Infrastructure (30 percent) and PT Dian Swastatika Sentosa (66.99percent), a subsidiary of Sinar Mas group. United Fiber will pay the shareholders of Golden Energy- GMR and DSS - in shares for this transaction, giving the two stakeholders near complete control of the company which has a market cap of 200 million Singapore dollars

6 . The UK-based Vedanta Resources Plc will merge its Indian firms - Sesa Goa and Sterlite Industries - into a single entity Sesa Sterlite and also offload debt of $9 billion (Rs45,000 crore) on it. Under the merger, three Sesa Goa shares will be issued for five Sterlite shares. Vedanta will also transfer to the new entity its share holding of 38.8 per cent in Cairn India along with a debt of $5.9 billion. Sesa Goa will pay a nominal consideration of $1 for Cairn India acquisition. After the transfer, Sesa Sterlite will have a 58.9 per cent shareholding in Cairn India. There will not be an open offer for Cairn India shareholders as there is no change in promoters.

7. State-run Oil and Natural Gas Corporation Videsh Limited (OVL) recently announced that it had bought US energy company Hess Corps stake in Azeri, Chirag and Guneshli (AGC) group of oil fields for $1 billion making its debut in Azerbaijan.

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2.4 BENEFITS OF MERGERS AND ACQUISITIONS


Merger and acquisition has become the most prominent process in the corporate world. The key factor contributing to the explosion of this innovative form of restructuring is the massive number of advantages it offers to the business world.

Following are some of the known advantages of merger and acquisition:

The very first advantage of M&A is synergy that offers a surplus power that enables

enhanced performance and cost efficiency. When two or more companies get together and are supported by each other, the resulting business is sure to gain tremendous profit in terms of financial gains and work performance.

Cost efficiency is another beneficial aspect of merger and acquisition. This is because any

kind of merger actually improves the purchasing power as there is more negotiation with bulk orders. Apart from that staff reduction also helps a great deal in cutting cost and increasing profit margins of the company. Apart from this increase in volume of production results in reduced cost of production per unit that eventually leads to raised economies of scale.

With a merger it is easy to maintain the competitive edge because there are many issues

and strategies that can e well understood and acquired by combining the resources and talents of two or more companies.

A combination of two companies or two businesses certainly enhances and strengthens

the business network by improving market reach. This offers new sales opportunities and new areas to explore the possibility of their business.

With all these benefits, a merger and acquisition deal increases the market power of the

company which in turn limits the severity of the tough market competition. This enables the merged firm to take advantage of hi-tech technological advancement against obsolescence and price wars.

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2.5 SUCCESS OF MERGERS AND ACQUISITIONS


Mergers & Acquisitions have become a common strategy to consolidate business. The basic aim is to reduce cost, reap the benefits of economies of scale and at the same time expand market share. For many people, mergers simply mean sharing resources and costs to increase bottomlines. However, it is not as simple as it sounds. According to statistical reports, more than 64% of the times the mergers fail to accomplish the promised results. They suffer from a decline in the shareholders' wealth and conflicts in management. Therefore, a success of any merger initiative primarily depends upon the objective behind the need for a merger.

Following globalization, many small organizations hastily got into mergers to stand against highly-competitive, large scale multinational corporations. They took mergers as a protective strategy to save their business from being perished in the newly created dynamic environment. Unfortunately, in many cases, it did not work due to lack of proper planning and implementation of the planned merger. Moreover, the high costs of business consolidation (professional fees of bankers, lawyers, advisors, paperwork, etc.) could not be covered by the combined revenue of the merged organization leading to its failure.

Another reason for an unsuccessful merger is the lack of efficient management to unite different organizational cultures. The most challenging task is to bring together people and make them work as a team. Establishing a new organizational structure that fits all the employees is also difficult. Hence, many fearing retrenchment resign leading to a complete break-down at the operational level.

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2.6 IMPACT OF MERGAER AND ACQUISITION


Mergers and acquisitions bring a number of changes within the organization. The size of the organizations change, its stocks, shares and assets also change, even the ownership may also change due to the mergers and acquisitions. The mergers and acquisitions play a major role on the activities of the organizations. However, the impact of mergers and acquisitions varies from entity to entity; it depends upon the group of people who are being discussed here. The impact of mergers and acquisitions also depend on the structure of the deal.

Possible Impact of Mergers and Acquisitions

Have a look at the impact of Mergers and Acquisitions on different segments of business.

Impacts on Employees

Mergers and acquisitions may have great economic impact on the employees of the organization. In fact, mergers and acquisitions could be pretty difficult for the employees as there could always be the possibility of layoffs after any merger or acquisition. If the merged company is pretty sufficient in terms of business capabilities, it doesn't need the same amount of employees that it previously had to do the same amount of business. As a result, layoffs are quite inevitable. Besides, those who are working, would also see some changes in the corporate culture. Due to the changes in the operating environment and business procedures, employees may also suffer from emotional and physical problems.

Impact on Management

The percentage of job loss may be higher in the management level than the general employees. The reason behind this is the corporate culture clash. Due to change in corporate culture of the organization, many managerial level professionals, on behalf of their superiors, need to implement the corporate policies that they might not agree with. It involves high level of stress.

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Impact on Shareholders

Impact of mergers and acquisitions also include some economic impact on the shareholders. If it is a purchase, the shareholders of the acquired company get highly benefited from the acquisition as the acquiring company pays a hefty amount for the acquisition. On the other hand, the shareholders of the acquiring company suffer some losses after the acquisition due to the acquisition premium and augmented debt load.

Impact on Competition

Mergers and acquisitions have different impact as far as market competitions are concerned. Different industry has different level of competitions after the mergers and acquisitions. For example, the competition in the financial services industry is relatively constant. On the other hand, change of powers can also be observed among the market players.

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3.

RESEARCH METHODOLOGY
The system of collecting data for research projects is known as research methodology.

The data may be collected for either theoretical or practical research for example management research may be strategically conceptualized along with operational planning methods and change management Some important factors in research methodology include validity of research data, Ethics and the reliability of measures most of your work is finished by the time you finish the analysis of your data. Formulating of research questions along with sampling weather probable or non probable is followed by measurement that includes surveys and scaling. This is followed by research design, which may be either experimental or quasi-experimental. The last two stages are data analysis and finally writing the research paper, which is organized carefully into graphs and tables so that only important relevant data is shown. Research can be classified by purpose or by method. If we categorize it by purpose, it would fall into two major categories: Basic Research and Applied Research, while in case of method, it would be deductive research and inductive research.

1. BASIC RESEARCH Also called Pure or fundamental Research, it is undertaken for increase in knowledge. There is no direct benefit as it is a research for the sake of research. It is conducted to satisfy any curiosity such as: (a) what makes things happen, (b) why society changes and (c) why social relations are in a certain way. In fact, it is the source of most new theories, principles and ideas. Basic research rarely helps anyone directly. It only stimulates new ways of thinking. The main motivation is to expand man's knowledge. There is absolutely no commercial value to the discoveries resulting from such research.

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2. APPLIED RESEARCH It is use of basic research or past theories, knowledge and methods for solving an existing problem. It deals with practical problems. It is opposed to pure research which is not problemoriented but for the increase in knowledge which may or may not be used in future. In the present world situation, more emphasis is being given to applied research to solve problems arising out of overpopulation and scarcity of natural resources. Applied research should not be treated the same as Research & Development(R&D) which is involved in developing products demanded by the existing clients. Applied Research, on the other hand, focuses on uncovering what needs are not being met and use that information in designing products or services that would create their own demand. TYPES OF RESEARCH The basic types of research are as follows:

1. DESCRIPTIVE vs ANALYTICAL: Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. The main characteristic of this method is that the researcher has no control over the variables. In Analytical research, on the other hand, the researcher has to use facts or information already available, and analysis these to make a critical evaluation of the materials.

2. APPLIED vs FUNDAMENTAL: Applied research aims at finding a solution for an immediate problem facing a society or an industrial/business organization, whereas fundamental research is mainly concerned with generalizations and with the formulation of a theory. Applied research is to discover a solution for some pressing practical problem. Whereas fundamental research is directed towards finding information that has a broad base of applications.
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3. QUANTITATIVE vs QUALITATIVE: Quantitative research is based on the measurement of quantity or amount. It is applicable to phenomena that can be expressed in terms of quantity. Qualitative research is concerned with quantitative phenomena. It is especially important in the behavioral sciences where the aim is to discover the underlying motives of human behavior.

4. CONCEPTUAL vs EMPERICAL Conceptual research is that related to some abstract ideas or theory. It is generally used by philosophers and thinkers to develop new concepts or to reinterpret existing ones. On the other hand, empirical research relies on experience or observation alone, often without due regard for system and theory. It is data based research, coming up with conclusions which are capable of being verified by observation or experiment.

CRITERIA OF GOOD RESEARCH The purpose of the research should be clearly defined and common concepts be used. The research procedure used should be described in sufficient detail to permit another researcher to repeat the research for further advancement, keeping the continuity of what has already been attained. The procedural design of the research should be carefully planned to yield results that areas objective as possible. The researcher should report with complete frankness, flaws in procedural design and estimate their effects upon the findings. The analysis of data should be sufficiently adequate to reveal its significance and the methods of analysis used should be appropriate. The validity and reliability of the data should be checked carefully. Conclusions should be confined to those justified by the data of the research and limited to those for which the data provides an adequate basis.
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SIGNIFICANCE OF RESEARCH Research inculcates scientific and inductive thinking and it promotes the development of logical habits of thinking and organization The role of research in several fields of applied economics, whether related to business or to the economy as a whole, has greatly increased in modern times. Research provides the basis for nearly all government policies in our economic system. Through research we can devise alternative policies and can as well examine the consequences of each of these alternatives. Research has its special significance in solving various operational and planning problems of business and industry. Research is equally important for social scientists in studying social relationships and in seeking answers to various social problems. To those students who are to write a masters or PH.D thesis, research may mean careerism or a way to attain a high position in the social structure. To professional in research methodology, research may mean a source of livelihood. To philosophers and thinkers, research may mean the outlet for new ideas and insights. To literary men and women, research may mean the development of new styles and creative work. To analysts and intellectuals, research may mean the generalizations of new theories

DATA COLLECTION Facts, information systematically collected and formally presented for the purpose of drawing inferences may be called data. Statistical information collected, compiled and preserved for the purpose of establishing appropriate relationship between variables may also be included in the data, whether statistically processed or not, play a vital role in the research and analysis of various problems in all types of area of investigations. This is the rational of data collection in research.

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SOURCESOF DATA COLLECTION 1. PRIMARY SOURCE 2. SECONDARY SOURCE

1. PRIMARYSOURCE Primary source means first hand sources or original source at the hand of the researcher that is not collected previously. For example, the various replies by the teacher from the students as regards their assessment of teaching method constitute primary source of data. Primary data is collected through principles sources of observation, surveys. Using primary sources, researcher can collect precisely the information he wants. Primary data consist of Qualitative Data and Quantitative Data.

METHODS OF COLLECTING PRIMARY DATA Primary data are the information generated to meet the specific requirements of the investigation to be had. Hence, the investigator is required to collect data separately for the study taken by him. A method refers to the way of gathering data. Some of the methods are as follows: (i)Observation: It involves gathering of data pertaining to a given research either by viewing or listening or both. (ii)Interviewing : It means conversation between the researcher and the respondent directly.

(iii)Mailing: It involves collecting data by getting questionnaires completed by respondents. (iv) Experimentation: involves study of independent variables under controlledconditions for evaluating their effect on a dependent variable. (v)Simulation: means creation of an artificial condition similar to the real life situation

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(vi) Projective: methods aim at drawing inferences on the characteristics of respondents by presenting to them stimuli.

2. SECONDARY SOURCES Secondary data refers to information generally collected by persons other than researcher for other purpose and not for the purpose involved in the given research project at work. As an example, the annual accounts of a company form a primary data for that company for purpose of presenting the companys financial status and performance. But to a researcher, it may form a secondary data as it is used, perhaps in part, for some other purpose and is independent of research investigation. The sources of secondary data consist of reports such as census reports, annual reports and accounts of company reports of various government departments. Reserve bank of India various reports, national sample survey report, UNO, UNICEF, WHOM, ILO, or World Bank various reports compiled. In fact, books, journals, diaries, manuscripts, letter, etc. also form secondary source of data. The main characteristics associated with such a data are that the data is readily available. Also, the researcher does not have any control over this collection. The forms and contents are shaped by those other than a particular researcher.

SECONDARY DATA, CLASSIFICATION OF SOURCES They are further classified as (i) Personal sources and (ii) Public sources

(I)PERSONAL SOURCES These include several ways of collection of data, prominent among them is through: 1. Autobiographies
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2. Diaries 3. Letters 4. Memoirs Such data proves very useful to get a better account of things such as pre-independence life in India, history of a person or a particular society, social life problems such as love, death, marriage, and divorce-revealing important information. It also throws light on different social phenomenon.

(II)PUBLIC SOURCES There are varieties of sources and are easily available to a researcher. They include: 1. Books, 2. Journals or periodicals 3. Newspapers, 4. Reports of Government Departments In this project only secondary data is included. Secondary data is taken from the internet and books.

RESEARCH PERIOD: Research work is only carried for 1 to 2 weeks.

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4. CONCLUSION
Post- liberalization, most Indian business houses are undergoing major structural changes, the level of restructuring activity is increasing rapidly and the consolidations through M&A have reached every corporate boardroom. Most of the mergers that took place in India during the last decade seemed to have followed the consequence of mergers in India corroborate the conclusions of research work in U.S. with most of the M&A are taking place in India to improve the size to withstand international competition which they have been exposed to in the Post-liberalization regime.

The M&A activity is undertaken with the objective of financial restructuring and to avail of the benefits of financial restructuring. Nowadays, before financial restructuring, it has become a pre-requisite that companies need to merge or acquire. Moreover, financial restructuring becomes easier because of M&A. the small companies cannot approach international markets without becoming big i.e. without merging or acquiring. Market capitalization of a company sometimes is found to be going up or down without any corresponding change in the EVA and MVA since the stock may be strong because of the general bullish scenario in the market, sis observed in most of the cases in our study.

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ANNEXURE BIBLIOGRAPHY
Mergers and Acquisitions - Rajinder Aurora, Kavita Shetty and Sharad Kale

WEBLIOGRAPHY
Business.mapsofindia.com www.mergersandacquisitions.in dailypioneer.com

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