Dr.

Dayananda Murthy C P
Dr. Dayananda Murthy C P
Dr. Dayananda Murthy C P
Merger & Acquistions

Dr. Dayananda Murthy C P

Dr. Dayananda Murthy C P
 Mergers & Acquisitions
• Peter Druker

“Chief Strategic Resource Will Be

Neither Capital Nor Knowledge
But Ability To Form
Powerful Partnerships”
(2000)
Dr. Dayananda Murthy C P
Hindustan Lever Employees’ Union v Hindustan Lever Ltd.,
(1994) 4 Comp. L.J. 267 (SC)
“In this era of hyper competitive
capitalism & technological change -
Industrialists have realized that M&A
are perhaps the best route to reach a size
comparable to global Co’s - So as to
effectively compete with them.
The harsh reality of globalization has
dawned that Co’s which cannot compete
globally must sell out as an inevitable
alternative.” Dr. Dayananda Murthy C P
 Ion Exchange (India) Ltd., v In re,
(2001) 105 Comp Cases 115 (Bom)
Justice Dhananjaya Y. Chandrachud
 “Corporate restructuring is one of the means
that can be employed to meet the challenges &
problems which confront business.
 Law should be slow to retard / impede the
discretion of corporate enterprise to adapt itself
to the needs of changing times & to meet the
demands of increasing competition.
 Law as evolved in the area of M&A has
recognised the importance of the Court not
sitting as an appellate authority over the
commercial wisdom of those who seek to
restructure business.”
Proverbs!!!

Dr. Dayananda Murthy C P

 M&A
Growth

• Company grows

Organic Inorganic
Growth Growth

Dr. Dayananda Murthy C P

 Illustrations?

Siemens – growing 100 %

with corning Dr. Dayananda Murthy C P
 M&A
Worst

AT&T - NCR
MICROSOFT - YAHOO!!! ?
Dr. Dayananda Murthy C P
 “Winner’s Curse”
“Hubris Hypothesis”

Dr. Dayananda Murthy C P

 Biggest deal
 Daimler Benz & Chrysler (those times) (a 17
minutes meeting) Zetsche.
 “It’s fair to say that we overestimated the potential of
passing leading-edge technology from Mercedes-Benz
to Chrysler. Unlike premium brand customers,
American volume brand customers are far too price-
sensitive to absorb its cost…In the final analysis, we
learned a practical lesson about the limits of
globalization,”
 Illustrations!!!
Vodafone-Hutch & Essar
Tata- Corus
Mittal’s - Arcelor
Barclays-ABN Ambro
 Mahindra’s Acquisition of Satyam

Dr. Dayananda Murthy C P

 Top 5 - M&A in India in 2017
 Flipkart’s - eBay India  Google’s - Halli
Labs

 Axis Bank’s - FreeCharge

 Airtel - Telenor
Merger

 Vodafone - Idea merger

Dr. Dayananda Murthy C P

Dr. Dayananda Murthy C P
 Best M&A of All Time
 Anheuser Busch Inbev SA buys SABMiller plc ($104 billion)

Dell Inc. &  EMC Corporation ($67  billion)

Vodafone Acquires Mannesman ($180.95 billion)
AOL Purchases Time Warner ($164 billion)
Verizon Takes Control Of Wireless Unit of Vodafone Group
plc
($130 billion)
Pfizer's takeover of Warner-Lambert ($90 billion)
One of the most hostile in history.
Paid $1.8 billion - Largest break-up fees to American Home
Products Corp.
JP Morgan Chase Buys Bank One ($58 billion)
Dr. Dayananda Murthy C P
Best M&A of All Time
 AT&T Buys BellSouth ($86 billion)
Exxon Corp & Mobil Corp merger ($81 billion)
Glaxo Wellcome PLC and SmithKline Beecham 
merger ($75.7 billion)
British Royal Dutch Petroleum Corporation and
Dutch Shell Transport & Trading  ($74.5 billion)
Comcast Buys AT&T Broadband ($72 billion)
Travelers Group Inc and Citicorp (Combined to
create a $140 billion Co. - Citigroup Inc)
Pfizer  Wyeth ($68 billion)
Dr. Dayananda Murthy C P
Best Business Mergers of All Time

Pfizer & $ 89.2 bn 2003

Pharmacia
Corp.
Glaxo $76 billion 2000
-Smithkline
Merger
Exxon & Mobil $81 billion 1999

Sirius & XM Undisclosed 2008

Radio
Disney & Pixar $7.4 billion 2006
Dr. Dayananda Murthy C P
 Worst M&A of All Time
 New York Central & Pennsylvania Railroads
- (Bankruptcy in 2 Yrs)
Daimler Benz and Chrysler
Mattel and The Learning Company
Sears and Kmart
Sprint and Nextel
AOL and Time Warner
Quaker and Snapple
Dr. Dayananda Murthy C P
 Beauty lies in the eyes of the
“BEHOLDER”
“SUCCESS.” sometimes lies in the eyes of
 the “BEHOLDER”

What is Successful M / A is really in the eyes

of the “SHAREHOLDER”
 Failure & success

Integration is a journey - one which

both sides of the deal must take
together, if you intend to generate
value from a M&A transaction.
It is not always choosing a wrong
partner / poor deal construction
But Poor integration - Planning &
execution is the reason for failure.
Dr. Dayananda Murthy C P
Choosing the path previously followed by
the stronger of the pair will only lead to
“more of the same”
Plus in all probability a dissatisfied
partner
Decide the new vision - understand the
starting point - use each other’s strengths
to get there - together”.

Dr. Dayananda Murthy C P

Objects, Reasons & Advantages of M & A
 Synergistic operational advantages –
Coming together to produce a new / enhanced effect
compared to separate effects.
 Economies of scale (scale effect) –
Reductions in the average cost of production, & hence
in the unit costs, when output is increased,
Enable to offer products at more competitive prices &
to capture a larger market share.
 Reduction in expenses -
Production, administrative, selling, legal &
professional.
 Benefits of integration –
Reducing competition; saving costs by
reducing overheads; capturing a larger market
share; pooling technical / financial resources;
cooperating on R&D; etc.
Dr. Dayananda Murthy C P
Objects, Reasons & Advantages
Cont…
 Optimum use of capacities & factors of
production.
 Tax advantages - Carry forward & set off of
losses of a loss-making amalgamating Co.
against profits of a profit-making amalgamated
Co., e.g. Sec. 72A, Income-Tax Act, 1961.
 Overcome Financial constraints – Going for
Expansion - A Co. which has the capacity to
expand but cannot do so due to financial
constraints may opt for merging into another
Co. which can provide funds for expansion.
 Diversification: Co. can go for diversification of
production (GE, Honeywell, Wipro)
Dr. Dayananda Murthy C P
Objects, Reasons & Advantages
Advantage of brand-equity

Dr. Dayananda Murthy C P

 Objects, Reasons & Advantages
 Loss of objectives of Co’s set up as independent
entities / Survival
 Competitive advantage:
Factors that give a Co. an advantage over its
rivals
 Eliminating / weakening competition
 Revival of a weak / sick Co.
 Sustaining growth

Dr. Dayananda Murthy C P

Forces Influencing M&A decision making
John O. Nigh & Marco Boschetti

Dr. Dayananda Murthy C P

Factors leading to deal success
Leading reasons that so many deals in the past
have failed

Dr. Dayananda Murthy C P

Why Failure? Flawed Intention:

Dr. Dayananda Murthy C P

 Key Takeaway Points
Consider the ease with which the merged
partner will integrate.
Decide what you want from the merger.
Decide - Do you want
Something that will add to your business by
bringing new things to your offering /
Something that merely complements what you have
already?
 Decide - the Process & mechanisms needed for
the merger.

Dr. Dayananda Murthy C P

 Key Takeaway Points
 Ensure there are clear, open communication
channels in place for decision makers - keep
them informed every step of the way.
 Produce a business plan so that there is a clear
vision for the merged firm, with detailed
objectives & targets.
 Recognize & appreciate that there will
inevitably be costs incurred as part of the
merger process.

Dr. Dayananda Murthy C P

 Lawyer’s Role & Value in
Mergers & Acquisitions
Financial situation
Business status &
operation
Product & Market
Competition
Regulatory system
Rights &
obligations of Co.

Lawyers are
deal killers ?
Lawyer’s Role & Value in M&A

Multi-
Disciplinary
Practice

Accounting Standards
Dr. Dayananda Murthy C P
Merger of Banking Co. Ill.

• Banking Regulation Act, 1949

HDFC
Times Bank 1:5.75 Ratio
Merged
(Bennett Coleman
ICICI
& Co.) Bank
1:2 Ratio

Global
Trust UTI Bank ICICI
ICICI
Bank Personal
Capital
Merged ICICI
Services
Financial
Services
Ltd.
Ltd.
Dr. Dayananda Murthy C P
 De-merger Ill…

HCL –
HCL HP Ltd.
DCM

ICI Group Zeneca Ltd

Tata Tata DCM DCM Rath

Sons Consultancy Shri Ram
Industries Eng. Industries
Ltd. Ltd. Ltd
Ltd Ltd
Dr. Dayananda Murthy C P
 Takeover Through Merger

HLL -TOMCO
HLL Target
Transferor Co.
Co. Share allotment

Later merger taking place

Greatest Coup in Corporate History

Dr. Dayananda Murthy C P
 Reverse Merger

Gujarat Godrej
Godrej Soaps Innovative
Ltd (GIL) Chemicals Ltd.

Asian Cables Wiltech India Ltd.

India (Razoor Blade
Ltd Manu.)

Dr. Dayananda Murthy C P

 Mega Merger

Lipton India Ltd Brooke Bond Ltd

Tata Fertilizer Ltd Tata Chemicals Ltd

Reliance
Reliance Petrochemicals
Industries
Ltd (RPL)
Ltd. 1992
Dr. Dayananda Murthy C P
 Slump Sale & Hiving Off
• Sale of undertaking – for a lump sum – without value
assigned

Ciba-Geigy Ltd Colgate

CIBACA Acquired at 95.5 Crores
(Target Co.)

Nylon Tyre
Ceat Ltd. Cord unit
Glass
Fibre Plain
Division Paper Copier
Dr. Dayananda Murthy C P Division
 10 steps to successful M&A Integration
 M&A well conceived & properly executed-can deliver greater value than ever
right now. Successful integration-the key to avoiding the risks of a M / A & to
realizing its potential value-is always a challenge.
 Two deals can be integrated in the same way, with the same priorities, or under
exactly the same timetable ?
 Complicated ?
 1. Follow the money
 2. Tailor your actions to the nature of the deal
 3. Resolve the power & people issues quickly
 4. Start integration when you announce the deal
 5. Manage the integration through a “Decision Drumbeat”
 6. Handpick the leaders of the integration team
 7. Commit to one culture
 8. Win hearts & minds
 9. Maintain momentum in the base business of both Co’s &
monitor their performance closely
 10. Invest to build a repeatable integration
Dr. Dayananda Murthy C P model
2015 Acquirer Target Company
March Reliance Infrastructure Pipavav Defence & offshore Engineering Co.
Ltd (Shipping Co)
March Ola Cabs TaxiforSure 
March Newscorp VCCircle Network
March Star India Pvt ltd (21st century Fox) Screen Entertainment
March Evonik Industries AG Monarch Catalyst Pvt Ltd
Feb Snapdeal  Exclusively.com
Feb BookMyShow  Eventifier 
Feb Foodpanda Just Eat India 
Jan Emami Ltd Fravin Pty Ltd
Jan Piramal Enterprises Ltd Coldstream Laboratories Inc
Jan Hike, Messenger (JV of Bharati Zip Phone
enterprises & SoftBank
Jan Apollo Hospital Nova Speciality
Jan Godrej Consumer Products Ltd Frica Hair (Pty) Ltd (South Africa)
Jan SRF Ltd  DuPont
Jan CDP Bharat Forge Holding GmBH Mecanique Generate Langroise (MGL)
2015 Acquirer Target Company
-16
Orange Bharti Airtel’s units in Burkina Faso,
Sierra Leone
Abraaj Group CARE Hospitals (Advent International)
Persistent System US (through its Citrix Systems (ASSET TRANSER
U.S. subsidiary) DEAL)
Citrix CloudPlatform & CloudPortal
Business Manager product lines
Quess Corp Ltd  MFXchange holdings Inc
Accenture CRMWaypoint (Netherlands)
Texmaco Rail & Engineering Ltd Bright Power Projects (India) Private
Ltd (55%)
 Top M&A in India
Tata Steel Corus for $12.2 billion
Vodafone’s Hutch Essar $10 billion
Hindalco Novellis  $6 billion
Daiichi Ranbaxy’s   $4.5 billion
ONGC Imperial Energy  $2.8 billion
Tata Tele services NTT DoCoMo-  $2.7 billion
HDFC Bank Bank of Punjab $2.4 billion
Tata Motors Jaguar Land Rover  $2.3 billion

Reliance Reliance Petroleum  $1.6 billion

Industries Ltd.Dr. Dayananda
(RPL) Murthy C P