ABSTRACT

THEME: CROSS BORDER V. DOMESTIC M&A

Mergers and acquisitions (M&As) are a common strategy that has been used by the U.S. and
European companies for many years. They began in the last century and are already recognized
as one of the economic tools for doing the business. M&As occur due to efficiency related
reasons that often involve economies of scale or other “synergies” for building market power.

In the past century, M&As were already in existence and creating a wave. The wave began
between 1893 – 1904(horizontal mergers), it then continued between 1919 – 1929
(manufacturing and transportation mergers), 1955 – 1969 (conglomerates), 1984 – 1989 (junk
bonds and hostile takeovers), with the end of the wave being documented between 1993 – 2000
(mega deals).

The last wave marked as the starting point of cross-border M&As. Cross-border M&As by
themselves have specific benefits, such as a tool to enter a new market and create new
opportunities by gaining new knowledge and new capabilities (Shimizu et al. 2004). Since cross-
border M&As function as one of the firm’s essential strategies for maintaining the business, they
are expected to produce added benefits for both the acquirer and the target firms. The pre- and
post-acquisition behaviours of both acquirers and target firms should be examined to evaluate the
degree to M&As affects them.

Even though a large proportion of M&As activity around the world involves companies from
developed countries rather than developing countries, it is interesting to discuss the performance
of cross-border M&As in emerging markets.

Merger and acquisition (M&A) is the path businesses take to achieve exponential and not just
linear growth and therefore continues to generate interest. The Indian M&A landscape is no
different. M&As have become an integral part of the Indian economy and daily headlines. Based
on macroeconomic indicators, India is on a growth trajectory, with the M&A trend likely
to continue. The catalysts for M&A could be varied, but, almost invariably, inorganic growth is
on top of the agenda. This is especially so since even with the government’s efforts to improve
ease of doing business in India, the gestation period for green-field projects continues to be long,
often rife with compliance with multiple regulations. Thus, for any business, inorganic growth
through M&A continues to be an attractive option.

The objective of this paper is to critically analyse the emerging trends in domestic as well as
cross border mergers and acquisitions.This paper also seeks to identify the legal implications that
arise out of such amalgamation.
THE LITERATURE REVIEW

Tax, Antitrust and Cross Border Mergers: An Interdisciplinary Perspective –

Citation: Saurav Agarwala; Navaneet Desai, Tax, Antitrust and Cross Border Mergers: An
Interdisciplinary Perspective, 12 NUALS L.J. 1 (2018)

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The article stresses the specific issue like taxation, anti trust regime in regards to cross board
mergers. The Ministry of Corporate Affairs through a notification dated April 13, 2017 validated
cross-border mergers. This breakthrough was followed by the RBI notifying the Foreign
Exchange Management (Cross Border Merger) Regulations, 2017 on 20 th March, 2018.
Through both these decisions, the Government's steps to relax the conditions in relation to
inbound mergers and sanction the creation of outbound mergers, have created a butterfly effect
that is no longer restricted to just mergers as a study, but will also affect the study of competition
policy and the tax scheme of the country.

This paper, firstly, attempts to discern the antitrust ramifications of such relaxations in cross
border mergers, and in particular, the outbound ones by highlighting certain nascent yet
potentially complex issues, such as extra-territorial jurisdiction, that these mergers might
encounter and endeavours to suggest certain remedies to overcome them. Secondly, on the
taxation front, this paper deals with the consequences that these cross-border mergers will have
on the tax liabilities of the merged company and the shareholders involved with it. Moreover, it
points out the other nemeses which would make outbound mergers a nightmare from the tax
perspective. Finally, it also suggests necessary amendments which would be required to make
outbound mergers tax neutral under this new regime.

Citation: Hortense Trendelenburg, Cross-Border Mergers: Problems and Solutions, 30

Int'l Bus. Law. 69 (2002)

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The article discusses the cross border mergers: Problems and Solution , the current scenerios and
developments

The number of cross-border transactions has been rising constantly in the Last few years, About
30 per cent of all mergers and acquisitions are now cross-border transactions. WeII-publicised
examples include Daimler/Chrysler, Hoechst/ Rhne-Poulunc and VIAG/Algroup.' In addition to
the usual problems connected with mergers, cross-border transactions present further problems
which arise from the differences between legal systems. National company laws differ, as do the
respective takeover code., Cross-border mergers are frequently straight forward acquisitions,
which can be structured as share deals or asset deals. A joint venture can be preferable to an
acquisition if both parties wish to hinefit from a cooperation while, at the sme tin, retaining their
independence. If parties wish to nehinve the effect of a 'merger of nqunis' while avoiding an
acquisition, it is possible to establish a structure under which both companies remain separate
legal entities, but co-operate so closely tiat the economic effect of a merger is achieved.

Citation: Mihaela Ion, National and Cross-Border Mergers - Conceptual Demarcations, 3

Persp. Bus. L.J. 198 (2014)

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Since any analysis of an complex institution as merger, and respectively of cross-border merger
implies, first of all, a conceptual delimitation, the present paper intends, starting from various
definitions and classifications provided by legal provisions and doctrine, to outline a complete
definition, specific for mergers and cross-border mergers that will include all their characteristic
elements and will also capture their complex character.

Taking into account that the definition of the merger and, respectively, cross-border merger
depends on the legal view through which a conceptual delimitation is sought, the program does
not stop only at the delimitation of cross-border merger from the view of general applicable
regulations, but also tries to delimitate this concept by reference to other special regulations. In
this respect, this paper makes a delimitation between the merger regulated by the New Civil
Code, the merger regulated by Law no. 31/1990 under its both forms (i.e. domestic merger and
cross-border merger) and Law no. 21/1996.