MODULE 1

Fundamental Concept of CR Forms of CR Motives & Application of CR Mergers & Acquisitions Concept Process of MA

Change in the operational structures, investment structures and governance structures of a company is called Corporate Restructuring.

Corporate Restructuring Expansion Contraction Corporate Control Changes in Ownership Structure

Mergers & Acquisitions Tender Offers Asset Acquisitions Joint Venture

Spin Off Split Off Divestitures Equity Carved Out Split-up

Anti take-over defences Share Repurchase Exchange offers Proxy Contents

Leverages Buyout MLPs Going Private ESOPs

A. B. C. D.

Portfolio Restructuring Financial Restructuring Organisational Restructuring Technological Restructuring

Motives behind Motives behind Motives behind Motives behind Structure

Expansion Corporate Control Contraction Change in Ownership

1. 2. 3. 4. 5. 6. 7. 8.

Growth Technology Product Advantage and product differentiation Government policy Exchange Rates Political/Economic Stability Differential Labour costs, productivity Diversification

1. 2. 3. 4. 5.

Improving Leverage Ration Utilization of surplus cash Enhancement of voting power Preventing Undervaluation Anti takeover defense

1. 2. 3. 4. 5.

Improving Performance Booming Independence Effort to unlearn Strategic Adjustment Increasing Value

1. 2. 3. 4.

Manoeuvring leverage Alternation in the control structure Providing fairness to minority shareholders Changing the nature of firm

1. 2. 3. 4. 5.

Economies of scale Operating Economies Synergy Reduction in Tax Liability Managerial Effectiveness

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1. Tata Steel's acquisition of European steel major Corus for $12.2 billion. 2. Vodafone's purchase of 52% stake in Hutch Essar for about $10 billion. Essar group still
holds 32% in the Joint venture.

Some of the major transactions which took place before regulation of combination

3. Hindalcos (Aditya Birla group) acquisition of Novellis for $6 billion. 4. Ranbaxy's acquisition by Japan's Daiichi for $4.5 billion. 5. ONGCs acquisition of Russia based Imperial Energy for $2.8 billion. 6. NTT DoCoMo-Tata Tele services deal for $2.7 billion. 7. HDFC Banks acquisition of Centurion Bank of Punjab for $2.4 billion. 8. Tata Motorss acquisition of luxury car maker Jaguar Land Rover for $2.3 billion. 9. Suzlon Energy's acquisition of RePower for $1.7 billion. 10. Reliance Industries taking over Reliance Petroleum Limited (RPL) for 8,500 crore or $1.6 billion.

Merger It refers to a situation when two or more existing firms combine together and form a new entity. Merger through Absorption Merger through Consolidation

Merger Through Absorption Tata Fertilizers Ltd. by TCL Merger Through Consolidation Hindustan Computers Ltd., Hindustan Instruments Ltd., Indian Reprographics Ltd to entirely new company HCL Ltd.

Amalgamation Two or more companies are to be absorbed or blended with another. Amalgamating company loses its existence and its shareholders becomes shareholder of new company or Amalgamated co.

Amalgamation Amalgamation in the nature of merger Amalgamation in the nature of Purchase Amalgamation through the BIFR

Acquisition It refers to the acquiring of ownership right in the property and asset without any combination of companies.

Takeover Company acquires control over the assets of a company, either directly by becoming owner of those assets or indirectly by obtaining control of management of the company.

Horizontal Merger Vertical Merger Conglomerate Merger Triangular Merger Forward Triangular Merger Reverse Triangular Merger Purchase Merger

Merger between companies producing similar goods or services. Arcelor Mittal Coco-cola Group thumps up, goldspot Taligent, a one-time technological alliance of Apple, IBM, and Motorola. Reliance Infocomm acquired Flag telecom

Merger between two firms involved in the same business but on different levels. Ford Motors expanded by acquiring a glass co., rubber plantation, steel mill that supplied its automobile manufacturing business. ONGC acquired Sakhalin oil and gas field in Russia.

Merger between firms that are involved in totally unrelated business activities. Tata Titan Phillip Morris General Foods Paras Pharmaceutical taken by Reteser(Dettol)

Merger refers to the acquisition of a local company through a share swap with a local subsidiary that is wholly owned by a foreign buyer

ACQUIRER

TARGET

ACQUISITION SUBSIDIARY

ACQUIRER

TARGET

ACQUISITION SUBSIDIARY

1998
1999 2000 2001 2003

Anglogold Ltd. Formed by merger of all the gold mines of Anglo American
Acquired Acacia Resources Ltd. African Jewellery Manufacturer, Oro-Africa Was acquired AngloGold proposed acquisition of Australias Normandy but withdrew Proposed a merger with Ghana based Ashanti Goldfields Co. ltd.

1999 2001 2002 2003 2004

Buys Ispat Unimetal of France Beats French co. Usinor to acquire ISPAT sidex in Romania Strikes a strategic partnership with ISCOR South Africa Acquires Ispat Nova Hut in Czeech Republic Acquires Ispat Polska Stal in poland and announces a merger with International Steel group of the USA Acquired 2nd Largest steel producers Arcelor

2009

Mergers and Amalgamation Regulated under Companies Act, 1956 Substantial Acquisition and Takeover Regulated under SEBI

Top Managements Commitments Search for a Merger Partner Negotiations

1. 2. 3. 4. 5.

Approval of BOD for the scheme Approval by specialised financial institutions/bank/trustees Intimation to stock exchange Application to court High court directions

6. Approval of Registrar of HC for calling the meeting of members/creditors 7. Dispatch of Notices to members/Shareholders 8. Advertisement of the Notice of members meeting 9. Confirmation about service of the Notic

10. Holding the shareholders GM and passing the resolutions 11. Filling of Resolutions of General meeting 12. Submission of chairmans report to court 13. Submission of joint petition 14. Issue of notice to Company law board

15. Hearing of Petition and Confirmation of scheme 16. Filing of court order with ROC by both the companies 17. Transfer of Assets and liabilities 18. Allotment of Shares 19. Listing of the shares at Stock exchange

20. Court order to be Annexed to Memorandum of Transferee company 21. Preservation of books and papers of amalgamated co. 22. The post merger secretarial obligations 23. Withdrawal of the scheme not permissible 24.Cancellation of the scheme and order of winding-up