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MERGER AND ACQUISITION

CA Manish Jain
jainmanishk@rediffmail.com
9831657801
PDF processed with CutePDF evaluation edition www.CutePDF.com
SYLLABUS
Corporate Restructuring : An overview
Basic Structure of Merger and Acquisition
Takeover Process and SEBI Code
Valuation
Buy-out and Spin offs
Cross Broader Deals
Accounting for Merger
Ethical Issues of Merger and Take-over
Post Restructuring Issue
Case Study
Announced Mergers & Acquisitions:
Worldwide, 1985-2013
Source: Thomson Financial, Institute of Mergers, Acquisitions and Alliances (IMAA) analysis
(C) 2014 IMAA
0
1.000
2.000
3.000
4.000
5.000
6.000
0
10.000
20.000
30.000
40.000
50.000
60.000
1
9
8
5
1
9
8
6
1
9
8
7
1
9
8
8
1
9
8
9
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
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Year
Number of Deals Value
Announced Mergers & Acquisitions:
India, 1999-2013
Source: Thomson Financial, Institute of Mergers, Acquisitions and Alliances (IMAA) analysis
(C) 2014 IMAA
0
10
20
30
40
50
60
70
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
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2
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1
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0
1
1
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2
2
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1
3
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Year
Number Value

Worldwide : Top 10 deals of M & A in world
Rank Year Acquiror** Target**
Transaction Value
(bil. USD)
Transaction Value
(bil. EUR)
1 1999 VodafoneAirTouch PLC Mannesmann AG 202.8 204.8
2 2000 AmericaOnlineInc TimeWarner 164.7 160.7
3 2007 Shareholders Philip Morris Intl Inc 107.6 68.1
4 2007 RFS Holdings BV ABN-AMRO Holding NV 98.2 71.3
5 1999 Pfizer Inc Warner-Lambert Co 89.2 84.9
6 1998 Exxon Corp Mobil Corp 78.9 68.4
7 2000 Glaxo WellcomePLC SmithKlineBeechamPLC 76.0 74.9
8 2004 Royal Dutch PetroleumCo Shell Transport & Trading Co 74.6 58.5
9 2000 AT&T Inc BellSouth Corp 72.7 60.2
10 1998 Travelers Group Inc Citicorp 72.6 67.2

PwC
Section 1
India Economic Overview
Slide 2
PwC
Emerging markets will continue to enjoy the best growth
prospects
Slide 3
Source: PwC Global Economic Outlook, National statistical authorities, Thomson Datastream and IMF
Outlook
2013

2014
f
2015
f
GDP growth
UK
China
Key Australia
Japan
Italy
Ireland
Greece
-3.8 0.2 1.8
1.6 2.3 2.5
1.9 3.0 3.0
US
Brazil
Canada
1.6 3.2 3.7
Mexico
2.3 1.8 2.5
France
0.1 0.9 1.2 0.1 2.1 1.8
Spain
-1.2 0.6 0.9
1.9 2.6 3.2
South Africa
-1.8 0.4 1.0 2.4 2.7 3.0
India
4.8 5.4 6.4
7.7 7.5 7.2
1.6 1.5 1.1
1.6 2.0 2.9
Russia
1.7 2.6 2.4
Germany
0.5 1.7 1.9
Saudi Arabia
3.8 4.4 4.2
PwC
..and India is expected to touch new economic highs in the
coming decades
Slide 4
Source: U.S. Census Bureau, India Urbanization Econometric Model
Source: IMF (2012), World Bank (2012) PwC estimates for 2030
Market Exchange Rate
** Expected
2012 2030
Rank Country GDP
US$bn
Country Projected
GDP
US$bn
1 US 15,684 China 24,356
2 China 8,358 US 23,376
3 Japan 5,960 India 7,918
4 Germany 3,400 Japan 6,817
5 France 2,613 Brazil 4,883
6 UK 2,435 Germany 4,374
7 Brazil 2,252 Russia 4,024
8 Russia 2,014 France 3,805
9 Italy 2,013 UK 3,614
10 India 1,842 Mexico 2,830
1
Regulatory impetus on
infrastructure
Economic growth going forward would be
driven by
2
Economic Reforms
3
Increasing Foreign Trade
PwC
Indian rupee has improved in the recent past, on the back of
of improvement in the political climate
Slide 5
Source: Reserve Bank of India; Rates at the last day of each month, Bloomberg

53.28
53.77
54.38 54.21
56.49
59.69
61.11
66.57
62.78
61.63
62.9
62.18
61.48
61.88
61.2
60.3
59.4 59.3
40
45
50
55
60
65
70
Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14
Rupee Vs USD
17000
20000
23000
26000
23-May-13 23-Jul-13 23-Sep-13 23-Nov-13 23-Jan-14 23-Mar-14 23-May-14
BSE Index
PwC
Section 2
M&A Activity in India
Slide 6
PwC
Economic uncertainty in last few years have affected the deal
market sentiment
Slide 7
Source: Deal Tracker
Decrease in M & A deal
volume in 2013 Vs 2012
Reduction in Total Deal
value in 2013 Vs 2012
20.3% 16.4%
5.0
6.1 5.7
10.3 8.6 9.2
28.7
6.0
8.6
14.8
4.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
2011 2012 2013
M & A Value (US$ bn)
Domestic Outbound Inbound Mergers & Internal Restructuring
35.4
28.2
44.1
216
234
220
146
122
82
142
140
139
140
102
59
0
100
200
300
400
500
600
700
2011 2012 2013
M & A Volume
Domestic Outbound Inbound Mergers & Internal Restructuring
598
500
644
PwC
The deals in the last few years have got smaller
Slide 8
Source: Deal Tracker
Quarterly M&A Deal Trends
48
183
178
147
113
160
131
126
120
7.4 7.3
18.4
4.4
5.4
7.2
4.6
9.3
10.0
0
2
4
6
8
10
12
14
16
18
20
0
20
40
60
80
100
120
140
160
180
200
Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Number of deals Value in USD billion
192 184
182
119
Average Deal Size USD mn
2010 2011 2012 2013
PwC
Deal activity in 2013 has been led largely by Pharma & Oil &
Gas Transactions
Slide 9
Source: Deal Tracker
Outbound M&A Top 5 Sectors
(USD mn)
0
1,000
2,000
3,000
4,000
5,000
6,000
Oil & Gas Automotive Pharma Real Estate Telecom
2012 2013
Inbound M&A Top 5 Sectors
(USD mn)
0
500
1,000
1,500
2,000
2,500
3,000
Pharma Telecom Manufacturing IT & ITES Power
2012 2013
PwC
...however with Modi Effect we expect it to improve
Slide 10
Pharma
Technology
Aviation
Telecom
Sectors to watch for
Modi factor helps stock
market cap cross $1.5 trln
Source: Reuters

Banking on Modi, foreign
investors to pour $60 bn
into India
Source: The Hindu
Business Community Pins
Hope on Modi
Source: Indian Express
PwC
Section 3
Key considerations for M&A in India
Slide 11
PwC
Key considerations for M&A
Slide 12
Family run businesses
High value expectations
Tax and regulatory complications
Inadequate investments in controls, systems and people
Reliability of financial statements
Availability of adequate information during the diligence process
Longer deal cycle
Issues relating to post closing integration
PwC
In Summary
Slide 13
Difficulty understanding financial information prevents necessary
disclosure
Risks are not given enough weight
Large gaps in expectation between buyer and seller
Difference between expected performance and actual performance.
Tax compliance
Labour practices & Compliances
Third party claim against the asset
Enforceability of agreements
Local negotiating practices
Conflicting views over strategy
Conflict of interest outside the venture
Cultural differences
Source: Getting on the right side of the delta January 2012
Lack of transparent
financial
information
2
Justifying
valuations 1
Non compliant
business practices 4
Negotiating and
Contracting 3
Partnering conflicts
5
PwC Slide 14
Thank you
KNOWLEDGE OF AREA FOR
UNDERSTANDING M& A
Companies Act
Contract Act
Competition Act
SEBI Take Over Code
Income Tax Act
Valuation
Accounting Standard
FEMA

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