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Indian companies are now more experienced in dealing with overseas M&A

transactions and are considered serious contenders for acquiring global businesses.
Acquiring global brands, gaining access to overseas markets and leveraging new
technologies for Indian markets are some of the key drivers for outbound
acquisitions by Indian companies.
Many large corporations and businesses are flush with cash after their remarkable
recovery from the Great Recession. Due to tight cost controls and limited hiring of
new employees, their operating and profit margins have rebounded dramatically.
Even when a merger or acquisition makes sense strategically (and is well
integrated and managed after the deal), its ultimate success in creating shareholder
value hinges on how much was paid.
A recent study shows that the majority of the M&As were initiated to expand the
market. Other motives included diversification, technology acquisition, and
vertical integration
Both mergers and acquisitions are attempts from companies to combine their
strengths in order to achieve synergistic benefits. The reasons behind a merger or
acquisition may be various, e.g. increasing market share, entering new markets,
developing new products through R&D, or achieving administrative benefits. In a
merger, two companies combine to form a new company. In an acquisition, one
company takes over the other in terms of management or ownership.
Much research and planning is required in the early stages of these processes,
which starts with an acquisition strategy used in trying to find a suitable company
to merge with. Advantages and disadvantages of the merger must be thought out,
as well as many other important aspects, such as risk factors and new
organizational structures that must be considered and closely monitored throughout
all of the stages of the merger or acquisition. It is of these competitive strategies,
mergers and acquisitions, as well as a recent case study following the conclusion,
that will be the focus of my paper. Before going further into the merger and
acquisition process, a more complete explanation is necessary. A merger is the
combining of two or more companies into a single corporation. This is achieved
when one company or business purchases the property or some other form of assets
from another company.
Companies being bought out or merging with other companies has become very
common in the recent years. When one company buys another, it is making an
investment, and the basic principles of capital investment decisions apply.
The complex phenomenon that mergers and acquisitions (M&As) represent has
attracted substantial interest from a variety of management disciplines over the past
30 years. Three primary streams of enquiry can be identified within the strategic
and behavioural literature, which focus on the issues of strategic fit, organizational
fit and the acquisition process itself.
The banking industry has experienced an unprecedented level of consolidation on a
belief that gains can accrue through expense reduction, increased market power,
reduced earnings volatility, and scale and scope economies.
Mergers and Acquisitions in Indian and Global Context focus on comprehensive
literature, review of Mergers and Acquisitions in Indian and Global context to
bring out the Strategic Perspective of Mergers and Acquisitions in new millennium
Economic downturns have a tendency to accelerate emerging technologies, boost
the adoption of effective solutions, and punish solutions that are not cost
competitive or that are out of synch with industry trends
After a deep and widespread contraction in economic activity and significant
loss of output and employment, policy makers, financial analysts and media
pundits all appear to be heartened by the news coming from different parts of
the world that the worst is over. The main concern now is about the strength
and the shape of the recovery that is, whether there will be a sharp, V-
shaped upturn that would recuperate most, if not all, output and employment
losses incurred during the past two years or a sluggish, U-shaped, recovery
wherein, despite positive growth, output will stay below its potential for some
years to come and job creation will remain sluggish. In addition, there is of
course the possibility of a double-dip or a W-shaped recovery that may result
from inventory cycles or premature exit from stimulus packages.
The In?dian economy has though not completely but has been moderately affected
by this fall. As the recession and negative sentiments are replaced by positivity the
Indian companies would have spent the time in innovating and would be able to hit
at the opportunity then. They would be at power with the global bigwigs.
Creativity among employees need to be encouraged, and a company culture of
innovation should be encouraged which takes into confidence the employees to
perform in the crisis situation and encourage to channel their creativity to cut costs.
At a time when survival is the focus for global players Indian companies which are
not that badly affected should invest in the future, in innovation and these
companies will take off as the recession ends.

Over the past decade, Mergers and Acquisitions (M&As) have reached
unprecedented levels as companies use corporate financing strategies to maximize
shareholder value and create a competitive advantage. Acquisitions occur when a
larger company takes over a smaller one; a merger typically involves two relative
equals joining forces and creating a new company. Most mergers and acquisitions
are friendly, but a hostile takeover occurs when the acquirer bypasses the board of
the targeted company and purchases a majority of the company's stock on the open
market. A merger is considered a success if it increases shareholder value faster
than if the companies had remained separate. Because corporate takeovers and
mergers can reduce competition, they are heavily regulated, often requiring
government approval. To increase chances of the deal's success, acquirers need to
perform rigorous due diligence-a review of the targeted company's assets and
performance history-before the purchase to verify the company's stand-alone value
and unmask problems that could jeopardize the outcome.
While most of the deals in 2010 were done to fortify markets in which the acquirer
was already strong, in some instances, the transactions created completely new
markets for the buyers or significantly increased their footprint in markets where
they had only a minor presence.
The Indian economy has been growing with a rapid pace and has been emerging at
the top, be it IT, R&D, pharmaceutical, infrastructure, energy, consumer retail,
telecom, financial services, media, and hospitality etc. It is second fastest growing
economy in the world with GDP touching 9.3 % last year. This growth
momentum was supported by the double digit growth of the services sector at
10.6% and industry at 9.7% in the first quarter of 2006-07. Investors, big
companies, industrial houses view Indian market in a growing and proliferating
phase, whereby returns on capital and the shareholder returns are high. Both the
inbound and outbound mergers and acquisitions have increased dramatically.
According to Investment bankers, Merger & Acquisition (M&A) deals in India
will cross $100 billion this year, which is double last years level and quadruple of
In the first two months of 2007, corporate India witnessed deals worth close to
$40 billion. One of the first overseas acquisitions by an Indian company in
2007 was Mahindra & Mahindras takeover of 90 percent stake in
Schoneweiss, a family-owned German company with over 140 years of
experience in forging business. What hit the headlines early this year was
Tatas takeover of Corus for slightly over $10 billion. On the heels of that
deal, Hutchison Whampoa of Hong Kong sold their controlling stake in
Hutchison-Essar to Vodafone for a whopping $11.1 billion. Bangalore-based
MTRs packaged food division found a buyer in Orkala, a Norwegian
company for $100 million. Service companies have also joined the M&A
The taxation practice of Mumbai-based RSM Ambit was acquired by
PricewaterhouseCoopers. There are many other bids in the pipeline. On an
average, in the last four years corporate earnings of companies in India have been
increasing by 20-25 percent, contributing to enhanced profitability and healthy
balance sheets. For such companies, M&As are an effective strategy to expand
their businesses and acquire global footprint.
Mergers or amalgamation, result in the combination of two or more companies into
one, wherein the merging entities lose their identities. No fresh investment is made
through this process. However, an exchange of shares takes place between the
entities involved in such a process. Generally, the company that survives is the
buyer which retains its identity and the seller company is extinguished.
With a GDP growth rate in excess of 8% in 2009 and 2010, we have seen the
emergence of several $50-$100m companies across the engineering, power and
mining sectors. These companies present good consolidation platforms for global
players and there is growing acceptance of the merits of such alliances by these
domestic mid-sized businesses

It is clear that you cannot stay in the top league if you only grow internally.
You cannot catch up just by internal growth. If you want to stay in the top
league, you must combine.
Daniel Vasella, Chief Executive Officer, Novartis,
July 2002

In the past 27 years, there have been three major waves of surging cross-border
M&A transactions.
The first wave was seen in the late 1980s, the second big cross-border in the latter
half of the 1990s and the third in 2007 when globally M&A deals worth $4.48
trillion were announced, as against $3.61 trillion in 2006- a growth of 24 percent.
From 467 deals in 2005, deals in 2007 reached 1,081(Grant Thornton, 2008).
During these periods, the global economy experienced relatively high economic
growth and there was widespread industrial restructuring, according to the United
Nations Conference on Trade and Development. Much of the increased cross-
border M&A activity this year has involved companies from the US and Europe
who are in a major consolidation process. Such deals are also becoming more
common in developing countries, which are beginning to liberalize their trade and
investment markets.

Global mergers and acquisitions (M&A) have become a reality of life for all kinds
of companies. The headlines might be dominated by a few 'mega' deals involving
corporate giants, but that is not the whole picture. Privately held businesses (PHBs)
have quietly recognised that, in an increasingly competitive, changing and
challenging environment, well-thought-out and carefully executed cross-border
M&A transactions can boost the value of their business.

With a burgeoning Indian economy, a competitive private sector and a strong
entrepreneurial spirit, Indian companies are increasingly seeking help in
identifying and acquiring suitable domestic and overseas targets.