Mergers and Acquisations

7/28/2019 Mergers and Acquisations

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Mergers And Acquisitions

By:Anisha Saraf

Anku Sharma

Anuja

Aparajita

Archana

Arjoo


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What is Merger?

It is the combining of two ormore companies , generally by

offering the stockholders of one

company securities in the

acquiring company in exchangefor the surrender of their stock.

Company A + Company B = Company C


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What is acquisition?

Acquisition, also knownas a

takeover , is the

buying of one company(the target) by another.

Acquisition usuallyrefers to a purchase of

a smaller firm by alarger one.

Company A + Company B = Company A


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Types of Mergers and Acquisition

Horizontal merger

Vertical merger

Conglomerate merger

Concentric mergers


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Differences


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Reasons for M & A

Staff Reductions

Economies of Scale

Improved market need and industry visibility

Overcoming entry barriers

Lower risks


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Problems of M & A

Inadequate evaluation of target

Large or extraordinary debt

Cultural Difference


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FOREIGN ACQUISITION ANDMERGER


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Foreign Acquisition

Advantages Access to targets local

knowledge

Control over foreignoperations

Control over owntechnology

Disadvantages

Uncertainty about targets

value

Difficulty in absorbingacquired assets

Infeasible if local market forcorporate control is

underdeveloped


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merits

Reducing costs

Enhancing quality

Accelerating speed

Creating business

agility


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demerit

Surrender of power risky because the political situation in some

countries can change in an instant the cultural differences between differentcountries lead to several disagreements,

and ultimately a failed business venture


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TOP 11

M&A DEALS

1 T t t l 12 2


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1.Tata steel- corus: 12.2billion

January 30, 2007

Largest Indian take-over

After the deal TATAS

became the 5th largest

STEEL co.

100 % stake in CORUS

paying Rs 428/- per shareImage: B Mutharaman, TataSteel MD; Ratan Tata, Tatachairman; J Leng, Corus chair;

and P Varin, Corus CEO.


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2. Vodafone-Hutchison Essar:$11.1 billion

TELECOM sector

11th February 2007

2nd largest takeoverdeal

67 % stake holding in

hutchImage: The then CEO of VodafoneArun Sarin visits HutchisonTelecommunications head office inMumbai.


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3. Hindalco-Novelis: $6 billion

June 2008

Aluminium and coppersector

Hindalco AcquiredNovelis

Hindalco entered theFortune-500 listing ofworld's largestcompanies by salesrevenuesImage: Kumar Mangalam Birla

(center), chairman of Aditya Birla

Group.


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4. Ranbaxy-Daiichi Sankyo: $4.5 b

Pharmaceuticals sector

June 2008

Acquisition deal

largest-ever deal in the Indianpharma industry

Daiichi Sankyo acquired themajority stake of more than 50% in Ranbaxy for Rs 15,000crore

15th

biggest drugmaker

Image: Malvinder Singh (left), ex-CEO ofRanbaxy, and Takashi Shoda, president

and CEO of Daiichi Sankyo.


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5. ONGC-ImperialEnergy:$2.8billion

January 2009

Acquisition deal

Imperial energy is abiggest chinese co.

ONGC paid 880 pershare to the shareholders

of imperial energy ONGC wanted to tap the

siberian marketImage: Imperial Oil

CEO Bruce March.


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6.Ntt docomo-Tata Tele: $2.7 b

November 2008

Telecom sector

Acquisition deal

Japanese telecom giantNTT DoCoMo acquired26 per cent equity stake

in Tata Teleservices forabout Rs 13,070 cr.

Image:A man walks past a signboard ofJapan's biggest mobile phone operator NTT

Docomo Inc. in Tokyo.

7 HDFC B k C t i B k


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7. HDFC Bank-Centurion Bankof Punjab: $2.4 billion

February, 2008

Banking sector

Acquisition deal CBoP shareholders got

one share of HDFC Bankfor every 29 shares held

by them.

9,510 croreImage: Rana Talwar (rear) CenturionBank of Punjab chairman, DeepakParekh, HDFC Bank chairman.


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. a a mo ors- aguar anRover: $2.3 billion

March 2008 (just a yearafter acquiring Corus)

Automobile sector

Acquisition deal

Gave tuff competition toM&M after signing the

deal with ford

Image:A Union flag flies behind aJaguar car emblem outside adealership in Manchester, England.


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9. Sterlite-Asarco: $1.8 billion

May 2008

Acquisition deal

Sector copper

Image: Vedanta Group chairmanAnil Agarwal.


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. .billion

May 2007Acquisition deal

Energy sectorSuzlon is now thelargest wind turbine

maker in Asia5th largest in theworld.

Image: Tulsi Tanti, chairman &

M.D of Suzlon Energy Ltd.


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Legal aspect of M & A

The Companies Act , 1956

The Competition Act ,2002

Foreign Exchange Management Act,1999


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Legal aspects of M & A

SEBI Take over Code 1994

Mandatory permission by the courts

Indian Income Tax Act (ITA), 1961Mandatory permission by

the courts

Stamp Duty

RANBAXYs acquisition


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RANBAXYs acquisition

by DAIICHI- SANKYO


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RANBAXY LABORATORIES

LIMITED

Ranbaxy Laboratories Limited, India's largest

pharmaceutical company.

It was incorporated in 1961,but went public in 1973.

Ranbaxy today has a presence in 23 of the top 25

pharmaceutical of the world. It has a global footprint in 49

countries, manufacturing facilities in 11 countries and servescustomers in over 125 countries.

Mr. Atul Sobtiis the present CEO & MD of Ranbaxy

Laboratories.


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DAIICHI SANKYO COMPANY,

LIMITED

Daiichi Sankyo was established in 2005 through the merger

ofSankyo Co., Ltd. and Daiichi Pharmaceutical Co.,

Ltd. which were century-old pharmaceutical

companies based in Japan.

Daiichi Sankyo Co., Ltd. is a global pharmaceutical

company and the second largest pharmaceutical

company in Japan.

It has its presence in 21 countries.

Daiichi Sankyo makes prescription drugs, diagnostics,

radiopharmaceuticals and over-the-counter drugs.

RANBAXY DAIICHI
http://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Pharmaceutical_companyhttp://en.wikipedia.org/wiki/Pharmaceutical_company


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RANBAXY-DAIICHI

SANKYO DEAL


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On 12th June 2008, Ranbaxy entered into an alliance with,

Daiichi Sankyo Company Ltd.

Under the deal, Daiichi Sankyo agreed to acquire 34.8 per

cent stake for around Rs. 10,000 crore ($2.4 billion) at

Rs. 737 ($17) per share, from the promoters Mr Malvinder

Singh and family.


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Continued..

The deal made Daiichi-Ranbaxy, the 15th largestpharmaceutical company in the world with a marketcapitalization of around US$30 billion..

After the acquisition, Ranbaxy will operate as DaiichiSankyos subsidiary but will be managed independentlyunder the leadership of its current CEO & Managing

Director Malvinder Singh.

Advantage To


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Advantage ToDaiichi Sankyo And Ranbaxy

With This DealConsidering that Ranbaxy is a generics company and DaiichiSankyo an innovator company, both the businesses complement

each other with negligible overlap..

Unlike Daiichi Sankyo, Ranbaxy has a geographically diversifiedpresence across US, Europe and emerging markets thus it will be

able to provide a wider reach to Daiichi Sankyo' product portfolio,

including in India.

Ranbaxys debt will be significantly reduced and will impart moreflexibility to pursue growth opportunities.

Ranbaxy has a small presence in the Japanese market where the

generics market holds good opportunities. This deal will help Ranbaxy

tap this opportunity.


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Conclusion

Daiichi Sankyos move to acquire Ranbaxy will enablethe company to gain the best of both worlds withoutinvesting heavily into the generic business. The patentperspective of the merger clearly indicates theintentions of both companies in filling the respectivevoid spaces of the other and emerge as a global leaderin the pharmaceutical industry.

Ranbaxy has become part of a Japanese corporate

framework, which is extremely reputed in the corporateworld. As a generics player, Ranbaxy is very well placedin both India and abroad although its shareperformance belies its true potential

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Mergers and Acquisations