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Mergers & Acquisitions

And
IHRM

Inorganic growth
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Contents
Meanings
Types of M&A
Ways of M&A
Reasons
IHRM and M&A
Case studies
Sector wise M&A

Meaning
Merger :-

Merger is defined as a combination


of
two
or
more
independent
business
corporations into a single enterprise. Like RNRL
was merged in Rpower, hence jointly created
market capitalization of 50k crores.

Acquisition:In acquisition, One company acquires another


company.
Like
GOOGLE
acquired
MOTOROLA. So, GOOGLE became the owner
of MOTOROLA

Types of M & A
Horizontal

Vertical

Firms
operating
in same
kind of
business
Exxon - Mobil

Firms in
different
stages of
production
operation.
RNRL and RPOWER

Conglomerate
3
Firms
engaged in
unrelated
types of
business
activity.
Sesa goa and Crain India

Ways of M&A

HOSTILE

Target firms management


resists the merger.

FRIENDLY

Supported by the
managements of
both firms.

Reasons for M & A


To increase market power
To overcome barriers to entry
To lower cost and risk of new product
development
To diversify business
To increase the financial strength
To access in new markets and technologies

M&A
REGULATORY FRAMEWORK

TRANSACTION STRUCTURE
Companies Act
Income Tax Act
Competition Act

FOR LISTED COMPANIES


SEBI Regulations
Stock Exchange Listing Agreement

FOR FOREIGN- M&A ACTIVITY


Foreign Exchange Management Act
Government plays very important role during
international M&A activity.

Case study Unsuccessful Merger


In 1998 Mercedes Benz(German) and
Chrysler(American) companies got merged
Soon in early 2001 the losses occurred heavily, the
reason was the cultural differences between both the
companies
Benz focused heavily on quality while Chrysler on cost
effectiveness
Finally in 2007 the deal was called off and Chrysler was
sold

Case study of successful company in


Acquisition
Suzlon - A leading wind turbine manufacturer
Suzlon acquired 91% stake in REpower, a Germany-based
company in May 2007 for 1200 million Euros
Suzlon became 5rd largest wind turbine manufacturer after
REpower acquisition
It got significant market share in Europe and US
Sales of Suzlon Grew by 2.5 times after REpower
acquisition

Why Merger Fails???


Inability to integrate people into a new cohesive new entity
Inability to make cultural integration
Attitudinal problem
Lack of commitment and trust and moral

Implications in M&A

Employee Concern Matters

How to make M&A Successful


Creating synergy between cultures such that employee at
every level get satisfied
By calling meeting sharing ideas of the employees of both
the companies
Using MBO
Organizing Pre-merger meeting
Communicating that why merger is necessary
Communicate creative, open, frequent upcoming changes

Sector wise M&A activity


FMCG: TATA Tea acquired Tetley
KRAFT foods acquired Cadbury

IT : Facebook acquired Whats App


Hp acquired Mphasis
Google acquired YouTube.

METALs: Hindalco acquired Novelis


Vedanta resources acquired Hindustan zinc and BALCO.

Sector wise M&A activity


Telecom: Vodafone acquired Hutchison-essar
IDEA acquired Spice telecom

Pharma:

Reckitt Benckiser acquired Paras pharma( moov )


EMAMI acquired Zandu pharma
Sun Pharma Acquired Controlling Stake in Taro
Daiichi - Sankyo acquired Ranbaxy

Sector wise M&A activity


Automobiles: TATA motors acquired jaguar and land rover
M&M acquired Ssang yong

Airlines: Kingfisher took over Deccan airlines

Prepared by

Abdul Hadi Sultani


Aakash Parekh
Jasmeen Changani

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