Professional Documents
Culture Documents
Reorganisation
Realignment of Assets & liabilities of
Reorientation organisation
That Result in
Effective, Efficient & competitive manner so that
Increase in Market share
Increase in Brand Image
Synergies business unit
Corporate Restructuring objectives
Corporate Restructuring
Competition
Globalization Technology
Corporate Restructuring objectives
Globalization:
Market open for foreign players.
Competition:
Foreign companies are ready to offer same products
at a lesser price.
Technology:
Advanced technology from the outside or foreign
companies.
Introduction to mergers and acquisitions
Corporate restructuring includes mergers and
acquisitions (M&As), amalgamation, takeovers,
spin-offs, leveraged buy-outs, buyback of shares,
capital reorganisation etc.
M&As are the most popular means of corporate
restructuring or business combinations.
The Liberalization, Privatization and
Globalization process which was started in early
1990s has brought many changes in the
economic scene of the country.
Introduction to mergers and acquisitions..
Mergers and acquisition (M&A) have become the
principal tools for corporate restructuring.
There has been a sharp increase in both the number and
size of the M&A in the last two decades.
M&A and restructuring have become a major force in
the financial and economic environment all over the
world.
The use and intensity with which corporate
restructuring is practiced has grown at tremendous pace
since the beginning of the liberalization era, 1991,
thanks to greater competitive pressures and a more
liberal environment.
Mergers & Acquisition
The term merger is generally used to refer to
the consolidation of companies.
A merger differs from an acquisition in the
manner in which it is financed.
In a merger, a stock swap is involved while in an
acquisition, a cash deal is involved.
A combination of two or more firms into one
firm; it may involve absorption (acquisition) or
consolidation.
For Example for Mergers & Acquisition
Times Bank & HDFC Bank Ltd
New name as HDFC Bank Ltd
ICICI & ICICI Bank.
New name as ICICI Bank Ltd
Centurion Bank of Punjab & HDFC Bank Ltd
New name as HDFC Bank Ltd
ACC Ltd & Damodar cement
New name as ACC Ltd
ICICI Bank Ltd & Sangali Bank
New name as ICICI Bank Ltd
Some Examples M & A
Acquirer Target Deal Size Deal type % stake
( $ mn) bought
Aditya Idea 979 Stake 48.14
Birla Group Cellular increase
Essar Essar 850 State 28.75
Group Shipping & increase
Essar oil to 76%
Citi group HDFC ltd 671.3 State 9.27
increase
to
12.86%
Some Examples.
Acquirer Target Deal Size Deal type % stake
( $ mn) bought
Sterling Tata 300 Minority 8.0%
InfoTech Teleservices Stake
Reliance IPCL 2,638* Controlling -
Industries stake
Indian oil IBP 1,841* Stake -
increase
Grasim Ultratech 1,641* Stake -
cement increase
Deal size in Pounds
Top 10 M&As in 2010
Tata Chemicals buys British salt
Reliance Power and Reliance Natural Resources
Airtels acquisition of Zain in Africa
Abbotts acquisition of Piramal healthcare solutions
GTL Infrastructure acquisition of Aircel towers
ICICI Bank buys Bank of Rajasthan
Jindal Steel Works and Ispat Ki Kahani
Reckitt Benckiser goes shopping
Mahindra goes international
Fortis Healthcare acquisitions
Difference between Mergers & Acquisitions
Merger is considered to be a One company takes over the
process when two or more other and rules all its business
companies come together to operations, it is known as
expand their business acquisitions
operations
deal gets finalized on friendly one company overpowers the
terms and both the companies other company and the decision
share equal profits in the newly is mainly taken during
created entity. downturns in economy or
during declining profit margins.
in a merger two companies of acquisition usually two
same size combine to increase companies of different sizes
their strength and financial come together to combat the
gains along with breaking the challenges
trade barriers.
Absorption
In absorption is a financially strong company
rakes over the business of weak company which
loses its identity.
In absorption, one firm acquires one or more
other firms.
For Example:
The Ganesh Bank of Kurundwad Ltd merged The
Federal Bank Ltd
The Ganesh Bank of Kurundwad Ltd is weak bank
The Federal Bank Ltd is a financially strong bank
Amalgamation
Amalgamation or consolidation refers to a
situation where two or more existing companies
are combined into a new company formed for
news purpose.
The old companies cease to exist and their
shareholders are paid by the new company in
cash or in its shares or debenture.
For Example:
Amalgamation
R limited Li
q
ui
da
ti
Y limited RUBY
U limited o
n
Pr
oc
es
B limited s
EPS, Profit
& Networth
Types of mergers
Joint ventures
Strategic alliances
Equity partnership
Licensing
Franchising alliance
Network alliance
Collaboration