Mergers and Acquisitions

Group Members:
Suddhata Arnab
Subham Shaw
Anshika Jain
Aakash Gupta
Prakhar Singh
Piya Saha
Shikha Mishra
 Introduction

1 Synergy and Diversification

MERGER & ACQUISITION

2 Increase in Supply Chain Pricing Power

3 Growth and Eliminating Competition

 INDUSTRY
OVERVIEWS
BANKING INDUSTRY SOCIAL MEDIA/COMMUNICATIONS INDUSTRY

The Indian Banking Industry-governed by

Broadly defined, the business of conveying
the Banking Regulation Act of India
information.
Broadly classified into two major categories,
Departments at this industry include:
non scheduled banks and scheduled banks.
business development, content creation,
Further bifurcated into Public sector banks corporate communications, customer service
(Vijaya Bank, UCO, PNB) and Private sector support, data analytics.
banks (ING Vyasa, IDBI)
The Indian banking system consists of 26
public sector banks, 20 private sector banks,
43 foreign banks, 56 regional rural banks,
1,589 urban cooperative banks and 93,550
rural cooperative banks, in addition to
cooperative credit institutions.
 PHARMACEUTICAL INDUSTRY STEEL INDUSTRY

Indian pharmaceutical sector accounts for

about 2.4 per cent of the global
pharmaceutical industry in value terms and
10 per cent in volume terms
With 71 per cent market share, generic drugs
form the largest segment of the Indian
pharmaceutical sector
TYRE INDUSTRY
India is the third-largest steel producer in the
world. In 2015, India produced 91.46 million
tonnes (MT) of finished steel.
Driven by rising infrastructure development
and growing demand for automotive, steel
consumption is expected to reach 104 MT by
2017

Dates back to 1926 since the inception of Dunlop

Rubber Limited
Dominated by organised sector
Unorganised sector predominant with bicycle tyres
 FACTORS POLITICAL ECONOMIC SOCIAL TECHNOLOGICA LEGAL ENVIRONMENT
L AL
INDUSTRY

BANKING Susceptible to Easily influenced Affect how Smartphone Strict Guidelines Reduced
government by recessions people see and came to the footprints (use
use banking rescue of paper)
options
PHARMACEUTIC Pressure on Strategic buying Patients New business Patients Eco
AL Pricing and groups forcing becoming more prospects like demanding opportunities
availability of down prices, informed, therapy and more rights and CSR
drugs more of M&A expectations service
rising
COMMUNICATI Pay per Click Unlock new Huge impact on Digital Digital Awareness
ONS opportunities people Marketing Preservation

STEEL Pvt ownership Infrastructure by Employment New methods of Work according Target for
and foreign government manufacturing to law environmental
invst. by govt. activists

TYRE Trade restriction Foreign Changing trend New methods of Work according Target for
and Tariffs Investment in buying manufacturing to law environmental
activists
 Financial Synergies
SunPharma merger and subsequent acquisition of Taro Pharma:
There was a increase in profit by 59% and the net revenues increased by 27%
There was a significant decrease in the cost component and the market share
of both raised by 8 % and 6% respectively.
Incurred huge legal expenses.
Hindalco acquisition of Novalis:
Novelis received a huge investment for building additional facilities worth $ 12
B.
Combined revenue increased by 12% .
Though there was a increase in the revenue PBIT fall by 17%
For Hindalco free cash flow increased by $164 M.
 Merger of global trust bank and oriental bank of India

The combined balance sheet became 10,000 cr stronger and improve in

overall profitability.
3rd largest ATM operator.
Improvement in 8.34 Lakh retail investors of OBC
Net profit increased by 6% but there was a decrease in ROCE by 2%

Merger of HDFC bank with centurion Bank of Punjab

Net profit margin decreased by 18.74%

ROCE decreased by 16 % and ROE increased by 80% due to change in DE
ratio from 222 to 342
Overal there was a positive impact in the future profits.
 Merger of Kotak Mahindra Bank and ING Vysya:

ING became the largest non promoter shareholder of the merged entity.
Increase in cash inflow by 122 cr.
Stock price increase by 7.18% and the increase in the net profit by 8%
Total business ranking went up to the 4th .(213261 cr)

Facebook acquisition of WhatsApp:

Increase in the user base of the entity.

The revenues increased by 12% .
The main focus of the acquisition was diversification of the revenue
Increase the presence in new markets
 Apollo- Cooper Merger:

Post the Deal, India would have accounted for about 22% of Apollos sales,
compared to 65% at present, decreasing Apollos reliance on a single market
for cash flows.
Increase in replacement tyre by 12%
Shares plunged by 22% and sales by $ 16 B
Huge legal and termination expenses due to termination of the deal
accounted for $ 112.5 M
Reasons Behind Mergers & Acquisitions

Oriental Bank of Commerce and Global Trust Bank

Bad Assets of GTB
Forced By RBI
Expansion in Southern Region

Sun Pharma and Taro Israel

Geographical Expansion
Product Extension
Overcome Competition
 Apollo and Cooper
Market Penetration
Higher Margin through Alteration of Sales-Mix
Improved Distribution Network and Economies of Scale
Long-term Growth Objectives

Kotak Mahindra and ING Vysya

Wider Geographical Presence
Broader Product and Expertise Base
ING Group Exit from India
RBI Directive to Uday Kotak
 HDFC and Centurion Bank of Punjab
Add Scale Geographical Reach and Experienced Staf
Wide-line of Products
Face Competition
Strong Foot-hold in Various Sectors

Facebook and WhatsApp

Facebook Mission
User Growth
Monthly Active User
Facebook to Diversify its Revenue Sources
WhatsApp Strong Presence Internationally
 Hindalco and Novelis

Hindalco was a upstream player before it acquired Novelis. It decided to add

downstream operations for few good reasons :-
Company Wanted to Steady the Profit Stream
Overcome Global Competition at Home
Move Away From Commodity Business
To Gain Competencies
Post-Merger
Merger/Acquisition
Results
 The The
The price of a share of Apollo's
stock plunged 25 percent to
US$ 1.17 (Rupees 68.55) in
trading the day after it
announced its intention to buy
Cooper
 Sun Parma Acquisition of Taro Israel

SunPharma acquired 65.8% controlling power in Taro.

Taro became a leader in dermatology in US market and it helped to improve its
cash flow and stock performance. Profit rose by 59%
Until 2016 both the companies benefited from each other.
But in the 3RD quarter, 2017 there was a 14% drop in sun pharmas profits due to
the losses of Taro.
 Merger of Global Trust Bank and Oriental Bank of Commerce

GTB being a south-based bank gave OBC the much-needed edge in the region
apart from tax relief because of the merger.
GTB had no choice as the merger was forced on it, dated 14th August 2004, by an
RBI ruling, following its bankruptcy.
OBC gained from the 104 branches and 276 ATMs of GTB, a workforce of 1400
employees and one million customers. Both banks also had a common IT
platform.
On Friday 25 July 2014, the Bank of Uganda, revoked the banking license of
Global Trust Bank and closed down the institution with immediate efect.
 Merger of HDFC bank with Centurion Bank of Punjab

The banks achieved significant growth in their operations, minimized their

expenses to a considerable extent and also competition is reduced.
After merger, Gross Profit Margin, Net Profit Margin, Return on Capital
Employed, Return on Equity and Debit-Equity Ratio shows an increasing trend.
The merger has been advantageous to HDFC Bank in terms of increased branch
network, geographic reach, and customer base, and a bigger pool of skilled
manpower.
HINDALCO AND NOVELIS