09 Chapter 1

Chapter I INTRODUCTION AND CONCEPTUAL FRAMEWORK
CHAPTER I
INTRODUCTION AND CONCEPTUAL FRAMEWORK
I.1. Introduction
Corporate restructuring consists of any significant change in a
firms fiscal structure, or ownership, or control, or corporate portfolio
that is planned to increase the value of the firm. A variety of forces like
global competition, technological innovations, managerial innovations,
regulatory changes, transformation of formerly centrally planned socialistic
and communistic economies, and growth of international trade have operated
it. Corporate restructuring has been a dominant global corporate theme
from the mid-seventies. By and large, corporate restructuring has been a
resounding success, which has led to remarkable improvement in corporate
performance. Observers of corporate restructuring believe that the gains
are attributable to synergetic benefits, sharper forces, better corporate
governance, enhancement in managerial incentives and motivation, greater
disciplining power of debt, and elimination of cross subsidies.
That corporate restructuring leads to improved performance is

a debatable issue. Many studies have covered short-run and long-run
operating performance (OP) and shareholders wealth (SW) of the acquiring
firms after merger and acquisitions (M&As). The post-merger period saw
A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 1

a negative abnormal return (Revenscraft and Scherer, 1989).1 Poor corporate

performance in the post-merger period has been attributed to numerous
reasons managers desire for position and influence, low productivity, poor
quality, reduced commitment, voluntary turnover, and related hidden costs and
untapped potential (Hughes, 1993).2 On an average, takeovers reduce the
value of the acquiring firm (Kent and Ofek, 19943; and Ming and Hoshino,
2002).4 Acquiring firms did not receive any significant abnormal returns while
the target firms posted positive significant abnormal returns (Kusnadi and
Sohrabian, 1999).5 When post-merger profitability (P) was compared with
pre-merger P, no significant improvement in P was found (Pawaskar, 2001).6
However, a positive impact of merger was found in increased size and leverage.
Merging firms were at the lower end in terms of growth, tax, and liquidity of the
industry but merged firms performed better in terms of P (Pawaskar, 2001).7
Both, the P and efficiency of targeted firms declined in the post-merger period,
but the change in post-merger performance was statistically not significant
(Surjitkaur, 2002).8 There were no dramatic differences between M&As in the
manufacturing and the service sectors and between domestic and cross-border
merger (Gugler Collins et al., 2003).9 Therefore, M&As did not improve
the SW of the acquiring firms, rather, it actually decrease (Coontz, 2004).10
Cross-border deals are not significantly different from domestic deals (Gugler
and Yurtoglu, 2004).11 Hence, M&As fail to create additional value for the
shareholders, and are for that reason, are said to be unsuccessful (Stahl and
Mendenhall, 2005).12 The OP of M&As involved firms in Greece showed that
there is a strong evidence that the P of a firm decreases due to the M&As event
(Pazarskis Collins et al., 2008).13 Cash flow return did not significantly change
after M&As, but stayed positive; low P levels, conservative credit policies
and good cost-efficiency status before merger are the main determinants of
industry-adjusted cash flow returns and provide the source for improving
these returns after merger (Ismail et al., 2009).14 However, an assumption
of underperformance is not definite, as results are not all one-sided. Some
studies, viz., by Healy et al. (1992)15, Heron and Lie (2002)16, and Lau et al.
(2008)17 showed that the OP of acquiring firms improved significantly following
acquisitions. Cost efficiency improved in most of the M&As of banks (Fixler

and Zieschang, 1993).18 Conglomerate M&As perform better than horizontal
M&As (Hughes, 1993).19 Domestic mergers among equal-sized partners
significantly increased the performance of the merged banks (Vennet, 1996).20
A significant improvement was observed in the OP (after merger) in terms
of cost efficiency, economies of scale, and scope of the Taiwanese banking
industry (Harari, 1997).21 The return on conglomerate M&As were superior
to non-conglomerate M&As (Kusnadi and Sohrabian, 1999).22 There was a
positive and significant increase in value of target banks (Lepetit et al., 2004)23
and American studies report a negative abnormal return for acquiring firms
and a positive abnormal return for target firms (Yuce and Ng, 2005).24 Large
bank mergers produced greater performance gains than that of the small bank
mergers (Cornett et al., 2006).25
International M&As announcements by Indian firms create a

significant short-term SW, but in the long-run international M&As have a
negative impact on the SW (Malhotra and Zhu, 2006).26 Performance of
international M&As is a function of successful cultural combination during
the post-acquisition integration process (Rottig, 2007).27 Significantly
positive changes to the innovation performance of firms following M&As
and post-merger changes are driven by both the success in research and
development activity and the weakness in internal technological capabilities
at acquiring firms prior to a merger (Gantumur and Stephan, 2007).28
However, when acquiring firms were taken over by firms with reputed and
good management, it was possible for the merged firms to turn around
successfully in due course (Vanitha and Selvam, 2007).29 Post-merger
performance is the function of relative size, price-to-book ratio, synergy,
cost of equity, and book value change, and these factors affect the P of a
successful merger simultaneously (Nam et al., 2008).30
M&As have a positive effect on the key financial ratios of firms

acquiring domestic firms, while a slightly negative impact is found on
the firms acquiring cross-border firms (Sidharth and Sunil, 2009).31 The
post-acquisition performance of the acquiring firms profitability, assets
utilization, debt utilization, cost utilization, liquidity, and capital structure had
not uniformly changed in all the industries, and the horizontal, vertical, and
conglomerate M&As had no uniform impact to change the post-acquisition
performance of the industries. However, horizontal M&As have greater
influence in improving the post-acquisition performance when compared
with the other two types of M&As, namely, the vertical and conglomerate
(Gurusamy and Radhakirishnan, 2010).32 The acquiring and target firms
existing relationship, industry similarity, and hostile takeover result had
no statistically significant impact on post-acquisition performance (Orgil,
2010).33 Acquiring firms always benefited more than the target firms in the
M&As event (Jain and Raorane, 2011).34
Indian manufacturing corporate firms involved in M&As have

achieved an increase in the liquidity position, profitability, and financial and
operating risk which leads to increase the overall efficiency of acquiring
firms (Azhagaiah and Sathishkumar, 2011).35 Acquiring corporate firms
in India appear to have performed better financially after the merger, as
compared to their performance in the pre-merger period (Azhagaiah and
Sathishkumar, 2011).36 Acquiring firms increased their wealth, that is,
increased the returns for the investment after the M&As event (Indhumathi
et al., 2011).37 There is a significant positive impact of M&As on the
short-run post-merger P of acquiring firms in the chemical industry in India
(Azhagaiah and Sathishkumar, 2011).38
The above literature provides an overview of the OP and SW firms

undergone of the M&As. An attempt has been made in the present study
to analyse the impact of M&As considering the models used in the stated
studies. The present study attempts to overcome the limitations of the earlier
studies and, a fair answer will be found from the attempt.

I.2. Recent Trends in Merger and Acquisitions in India

Corporate firms in India announced M&As deals worth $ 2.1 billion
in August 2011, taking the total value of M&As activities in India to over
$ 30.5 billion.39 The year 2011 saw five M&As deals valued at over a billion
dollars each, with two of these valued at over US $ 5 billion each, the largest
British Petroleums US $ 7.2 billion acquisition of Oil & Gas assets of Reliance
Petroleum. The year was also witness to some large transactions in iGates
acquisition of a controlling stake in Patni Computers for US $ 1.2 billion,
the largest domestic IT & ITeS deal, ever.
Table I.1
Merger and Acquisition Deals in 2011
Sl. No. Sector Percentage
1. Telecom 28.26
2. Energy 23.59
3. Metal & Mining 23.19
4. Pharmaceutical 08.20
5. BFSI 05.72
6. Others 11.02
Total 100.00
Source: www. indiacurrentaffairs.org40
The percentage share of total valuation of M&As deals that took

place in India during the financial year 2011, is presented in Table I.1. The
major M&As occurred in Telecom followed by Energy, Metal and Mining,
Pharmaceutical, Banking, Financial Services and Insurance Sectors, and Other
Sectors like IT/ITES, Auto/Auto Components, Hospitality, Steel, Consumer
Durable, Real Estate, Media and Entertainment, Logistics, Consumer
Non-durable, and Healthcare.
There has been an increasing trend of stake sales by promoters of

Indian corporate firms to strategic acquirers. This trend is expected to
continue as Indian corporates come to terms with the need for a large scale
of operation and increasing demand for international operation. This has

also been a reason why several incoming investments have been done as
a significant premium to market valuations. Interestingly, private equity
investors have made a significant comeback making larger investments
at various stages across sectors, geographies and industry segments. The
popular industries, like, Real Estate, Telecom, and Pharma have returned to
the front, in addition to Sunrise sectors, such as, Cleantech and Education
which saw some large deals in the first half of 2011. Foreign private equity
funds have also made some big ticket investments, identifying the massive
potential of small Indian firms as being the agents of change, growth and
development. On the other hand, Indian Qualified Institutional Placements
(QIP) and Initial Public Offering (IPO) market slowed down considerably
in 2011 (Srividya, 2011).41
I.3. Top Ten Merger and Acquisitions Deals in 2011

I.3.1. The Reliance BP Deal
Reliance industries signed a US $ 7.2 billion dollar deal with UK
energy giant (British Petroleum firm) BP, with a 30% stake in 21 Oil and
Gas blocks operated in India, which is one of the biggest foreign direct
investment (FDI) deals still in India.
I.3.2. Essar Exits Vodafone

The Vodafone Group announced to buy a 33% stake in its Indian
joint venture for about US $ 5 billion dollars, later the Essar Group sold its
holdings and existed from the Vodafone. Healthcare giant Piramal Group
too, bought about 5.5% in the Indian arm of Vodafone for about US $ 640
million dollars. This brings Vodafones current stake to about 75%.
I.3.3. The Fortis Healthcare Merger

In September 2011, Indias second largest hospital chain, Fortis
Healthcare (India) Ltd, announced to merge with Fortis Healthcare

International Pvt. Ltd., the promoters privately held firm. This made Fortis,
Asias top healthcare provider with the approximate total revenue pegged
at 4,800 crore. Fortis India bought the entire stake of the Singapore based
Fortis International. This firm is currently held by the Delhi-based Singh
brothers (Malvinder Singh and Shivinder Singh).
I.3.4. iGate Acquires Majority Stake in Patni Computers

In May 2011, the IT firm iGate completed its acquisition of its midsized
rival Patni Computers for an estimated US $ 1.2 billion dollars. For iGate, the
main aim of this acquisition was to increase its revenue, vertical capability
and customer base. iGate now holds an approximate stake of 82.5% in Patni
Computers, which is now called iGate Patni.
I.3.5. GVK Power Acquires Hancock Coal

In one of the biggest overseas acquisitions initiated by India in
September 2011, Hyderabad-based GVK Power bought out Australias
Hancock Coal for about US $ 1.26 billion dollars. The acquisition includes
a majority of the coal resources, railway line and port infrastructure of
Hancock Coal, along with the option for long-term coal supply contracts.
I.3.6. Essar Energys Stanlow Refinery Deal with Royal Dutch Shell
The Ruias flagship firm for its oil business, Essar Energy, completed
its 350 million dollar acquisition of the UK based Stanlow Refinery of Shell
in August 2011. In addition to a direct access to the UK market, Essar is
planning to make optimum utilization of this deal with its 100 day plan to
improve operations in the UK unit.
I.3.7. Aditya Birla Group to Acquire Columbian Chemicals

In June 2011, the Aditya Birla Group announced its completion of
acquiring US based Columbian Chemicals, a 100 year old carbon black maker
firm for an estimated US $ 875 million dollars. This made the Aditya Birla

Group one of the largest carbon black maker firms in the world, doubling
its production capacity instantly.
I.3.8. Mahindra and Mahindra Acquires Ssangyong

In March 2011, Mahindra acquired a 70% stake in ailing South Korean
auto maker Ssangyong Motor Company Limited (SYMC) at a total of US $
463 million dollars. This acquisition shows the Korean firms flagship SUV
models, the Rexton II and the Korando C foray into the Indian market.
I.3.9. The Vedanta Cairn Acquisition

December 2011 saw the completion of the much talked about
Vedanta Cairn. Touted to be the biggest deal for the Indian energy
sector, Vedanta acquired Cairn India for a neat US $ 8.6 billion.
I.3.10. Adani Enterprises Takes over Abbot Point Coal

In June 2011, Adani acquired the Australian Abbot Point Port for
US $ 2 billion dollars. With this deal, the revenue from port operations is
expected to almost triple from 110 million Australian dollars to 305 million
Australian dollars in 2011. According to Adani, this was among the largest
port deals ever made.42
Recent Scenario of M&As in India

Among the different Indian sectors that have resorted to M&As in the
recent times are telecoms, finance, FMCG, construction materials, automobile
industry and steel industry. With the increasing number of Indian firms
opting for M&As, India is now one of the leading nations in the world, in
terms of M&As. Till the recent past, the incidence of Indian entrepreneurs
acquiring foreign enterprises was not so common. There has been a sea
change in the last couple of years. Acquisition of foreign firms by the Indian
businesses firms has been the latest trend in the Indian corporate sector. There
are different factors that played their parts in facilitating M&As in India.

Favourable government policies, flexibility in economy, additional liquidity in

the corporate sector, and dynamic attitudes of the Indian entrepreneurs are
the key factors behind the success trends of M&As in India.43
Figure I.A
Merger and Acquisitions Deals Announcement in India from 20002001 to 201112
Source: Compiled Data from PROWESS Database Provided by CMIE
The figure (vide figure I.A) shows a representation that M&As

underwent during 2000-2001 & 2011-2012. This figure discloses the history
of M&As in the last twelve years. The highest M&As deal was in the
financial year 2006-2007 and the lowest was M&As in 2011-2012. The firms
undergone M&As are listed in one of the leading Indian stock exchanges in
India namely Bombay Stock Exchange.
I.4. Concepts and Theoretical Framework of M&As

Corporate restructuring has gained significant importance all over the
world because of instances like competition, globalisation, and technological
changes. The structural reforms initiated in the early 1990s have constrained
the Indian industry to adopt focused strategies like, corporate restructuring
by detaching non-core activities and M&As. The decision to invest in new

assets would mean inner expansion for the firm. New assets would generate
returns raising the value of the corporation. M&As offer an additional
means of expansion, which is external, and is the productive operation,
but not within the corporation itself. For firms with limited investment
opportunities, M&As can provide new areas for expansion. In addition, the
combination of two or more firms can offer several other benefits to each
of the firms, such as, operating economies, risk reduction, and tax advantage
(Schall and Hally, 2008).44
There are compound reasons for attractive M&As activity. The M&As
take place under conditions of uncertainty, it is not surprising that not all
business combinations are successful. Past studies show that successful firms
that combine businesses can benefit from economies of scale or economies
of scope, but diversification for other reasons tends to be less successful
(Shleifer and Vishny, 198945; Denis and McConnell, 200346; and Cole et al.,
2006).47 Ever-increasing global competition, rapid economic development,
changes in political rules and regulations, and technological innovations all
these factors contribute to the increasing popularity of M&As (McDougal,
1995).48 The event study methodology has been the predominant method
used to measure share price responses to merger or takeover announcements,
and most studies suggest that takeovers create SW findings (Bruner, 200249;
Campa and Hernando, 200450; Patrick et al., 200451; and Akbulut and
Matsusaka, 2010).52 Most studies also suggest that takeovers do not create
SW; however, they have negative effects (Lamont and Polk, 200253; Lins
and Servaes, 200254; and Gugler Collins et al., 2003).55 There are certain
traditional business and economic motives for M&As which can be split
into three categories: Motives that are believed to contribute to SW, such
as: synergy creation, market share increase, achievement of economies of
scale or scope, motives which are believed not to contribute to SW, such
as: accounting considerations, and managerial hubris, and finally, motives
which are believed to have an uncertain impact on SW: (diversification).
The processes will fast-track with the opening of the economy to attract foreign

investment. The status of a regulatory framework is also being formulated.

The role of different institutions involved in corporate restructuring, through
Securities Exchange Board of India (SEBI), Company Law Board (CLB),
Stock Exchanges (SE), and Shareholders Bodies, are noticeable. In todays
globalised economy, M&As are being increasingly used the world over, for
improving the attractiveness of firms through gaining greater market share,
broadening the portfolio to reduce business risk, for entering new markets and
geographies, and capitalising on economies of scale extra (Mantravadi and
Reddy, 2008).56
I.5. Evolution of Merger and Acquisitions

There have been many interesting trends in recent M&As history.
These include the fact that M&As has become a worldwide phenomenon as
opposed to being mainly centred in the USA. Other trends include the rise
of the emerging market acquirer, which has brought a very different type of
bidder to the takeover scene. The evolution of M&As are shown in Table I.2.
Table I.2
The Evolution of Merger and Acquisitions
Waves Period Facet
First wave 1897-1904 Horizontal mergers
Second wave 1916-1929 Vertical mergers
Third wave 1965-1969 Diversified conglomerate mergers
Fourth wave 1984-1989 Co-generic mergers, hostile takeovers,
corporate raiders
Fifth wave 1992-2000 Cross border, mega mergers
Sixth wave 2003-2008 Globalisation,
activism
private equity, shareholder
Source: www.kpmg.com.57
Mergers Waves
Six periods of high merger activity, often called merger waves, have
taken place in USA history. These periods are categorised by cyclic activity;

that is, high levels of mergers followed by periods of relatively fewer deals.
The first four waves occurred between 1897-1904, 1916-1929, 1965-1969,
1984-1989, and 1992-2000. Merger activity declined at the end of the 1980s
but resumed again in the early 1990s to begin the sixth merger wave. The
market also had a relatively short but intense merger period between 2003
and 2008. A good argument could be made that this period constitutes a
sixth merger wave.
I.6. Objectives of Merger and Acquisitions
A merger happens when two firms combine to form a single firm.
The primary motives for mergers are synergy, tax considerations, purchase of
assets under their replacement costs, diversification, and gaining control over a
larger enterprise. Mergers can provide economic benefits through economies
of scale and through putting assets in the hands of more efficient managers.
However, mergers also possible for reducing competition, and for this
reason, they are carefully regulated by government agencies (Brigham et al.,
2001).58 An organization may go for corporate restructuring for any one or
more of the following objectives. The objectives of corporate restructuring
are shown in figure I. B.
Figure I.B
Souce: Compiled Information from Various Sources Provided by Various Authors.

The objectives listed in are not the total list of motives for seeking
external growth. Other factors, like, socio-economic conditions, economic,
fiscal, and trade policies of the government, statutes governing the firm etc.,
may induce the firms to achieve long-term benefits for the firm and its
shareholders (Maheshwari, 2010).59
I.7. Methods of Corporate Restructuring

Business firms engage in a wide-range of activities including,
expanding, contracting, and otherwise restructuring the assets and ownership
structure. Taking as a criterion, the traditional technological process and/or
the value chain, mergers can be categorized into any of the following forms
(Maheshwari, 2010)60:
I.7.1. Expansion
The most common and appropriate form of restructuring is expansion,
as it involves only increasing the existing capacity of the business and does
not involve in any additional funds through debt and / or equity, acquisition
of modern machinery and value-addition to the product segments, and this
ultimately increases the firms P.
Merger, Amalgamation, and Acquisitions

Mergers, amalgamations, and acquisitions help in achieving a quicker
growth of the firm. Indian industrialists today feel that a merger is now the
best route to achieve a size for their firm which is comparable with global firms
for giving effective competition to them. This is because in the present-day era
of liberalisation, privatisation, and globalisation (LPG) the old theory sall is
beautiful has been swapped by the new theory big is bountiful.
I.7.2. Merger
The standing merger includes amalgamation, absorption, and
consolidation. Laws in India use the term amalgamation for merger.
When two or more firms join together and form a new entity, it is called a
merger. As a result of a merger, if a new firm comes into existence, it is a
process of amalgamation or consolidation. On the other hand, if one firm
survives (usually the bigger one) and the others (smaller ones) lose their
identities, it is a case of absorption. For example, ICICI Ltd. merged with
ICICI Bank Ltd., in order to convert it into a universal bank. Hindustan
Lever Ltd., absorbed the businesses of Tata Oil Mills Ltd., and then Brooke
Bond India Ltd., and Lipton India Ltd. resulted in the formation of a new
firm Brooke Bond Lipton (India) Ltd (Srinivasan and Murugan, 2009).61
I.7.2.1. Statutory Merger

The acquiring firm acquires all of the targets assets and liabilities;
there by, the smaller target ceases to exist.
I.7.2.2. Subsidiary Merger

The target firm becomes a subsidiary of the acquiring. When the
target firms have stronger brands associated with them, the acquiring may
choose to continue with the target as a subsidiary rather than consolidating
into the acquirers whole business entity.
I.7.2.3. Reverse Subsidiary Merger

A subsidiary of the acquiring firm is merged into the target firm. It
includes consolidation, amalgamation and absorption (George, 2005).62
I.7.2.4. Horizontal Merger

Mergers are two or more firms operating in the same field and in the
same stages of process of attaining the same commodity or service (Okonkwo,
200463; and Gaughan, 2007).64 The purpose of this type of merger is to
remove a competitor firm, to increase market share, buy up surplus capacity
or obtain a more profitable firm in order to gain a competitive improvement.
Typical examples of horizontal M&As are, the merger of IBTC-Chartered

bank with Stanbic bank Nigeria Ltd., Access Bank with Capital Bank, Marina
International bank and Platinum bank Ltd., merged with Habib Nigeria
bank Ltd., Exxon merged with Mobil, Ford merged with Volvo, Volkswagen
and Rolls Royce merged with Lamborghini, IBP merged with IOC, AT&T
merged with SBC, Bharat Forges merged with CDP (Germany), Nations
Bank merged with Bank of America, and S&Ps merged with CRISIL.
I.7.2.5. Vertical Merger

Vertical merger is the joining of two or more firms involved in
different stages of the production or distribution of the same product or
service. If a firm purchases the dealer of its inputs, then such a merger is
called backward vertical merger, for example, IBMs merger with Daksh. In
case a firm buys its seller, then such an acquisition is called forward vertical
merger, for example, S&Ps merger with CRISIL. Reliance Petro Chemicals
merger with Reliance Industries Ltd., Fords merger with Bendix, and iGates
acquisition of a majority stake in Patni Computers, had as their main aim,
the increase of revenue, vertical capability, and customer base.65
I.7.2.6. Conglomerate Merger

Often, the synergies realized from the merger of two firms from
two different industries, is very little other than diversifying the revenue
stream (Okonkwo, 2004).66 Firms may seek an entry to new product
markets in order to increase their market power or try to spread their
risks by de-investing from conservative markets and investing into
developing markets, for example, HLLs merger with BBIL can be treated
as a conglomerate merger.
I.7.2.7. Circular Combination

Firms making different products in the same industry seek
amalgamation to share common distribution and research facilities in order to
obtain economies by eliminating costs of duplication and promoting market

expansion. The acquiring firm obtains benefits in the form of economies

of resource sharing and diversification (Ansoff and Weston, 1962).67
Forms of corporate restructuring are shown in figure I. C.
Figure I.C
Source: Compiled Information from Various Sources Provided by Various Authors.

I.7.2.8. Demerger
Demerger is the act of splitting off a part of a present firm to
become a new firm, which operates entirely separate from the original
firm. Shareholders of the original firm are usually given an equal stake of
ownership in the new firm. A demerger is often done to help each of the
parts operate more smoothly, as they can now focus on a more specific task,
which is the opposite of a merger,68 an example is the DCM group which
split into four firms, viz., DCM Ltd., DCM Shriram Industries Ltd., Shriram
Industrial Enterprise Ltd., and DCM Shriram Consolidated Ltd.
I.7.2.9. Reverse Merger

A smaller firm that acquires the management and control of a larger
or longer established firm and keeps its name for the combined entity is
known as a reverse merger. A reverse merger occurs when a private firm, that
has strong forecasts and is ready to raise financing, buys a publicly listed
shell firm, usually one with no business and limited assets.
I.7.2.10. Cross Border Merger

The joining of two firms or the takeover of one firm by another when
the parties involved are based in different national economies is called cross
border merger. In some instances, M&As between foreign partners and firms
located within the same country are included. For example, Tega Industries
Ltd., merged with Losugen Pvt. Ltd., Gitanjali Gems Ltd., merged with DIT,
and TVS Logistics Services Ltd., merged with MESCO-Global Rush.69
I.7.3. Amalgamation
A merger can also be defined as an amalgamation if all assets and
liabilities of one firm are transferred to the transferee firm in consideration
of payment in the form of equity shares of the transferee firm or debentures
or cash or a mix of the above modes of payment. For example, the merger
of Brook Bond India Limited, and Lipton India Limited resulted in

the formation of a new firm, Brooke Bond Lipton India Limited, and Nirma
amalgamated with Core Health Care.70
I.7.4. Acquisition
Acquisition, in general logic, is acquiring the ownership in the
property. In the situation of business combinations, an acquisition is the
purchase by one firm of a controlling interest in the share capital of another
existing firm. An acquisition may be affected by (a) Agreement with the
persons holding majority interest in the firms management like members
of the board or major shareholders commanding majority ofvoting power;
(b) Purchase of shares in the open market; (c) To make takeover offer to the
general body of shareholders; (d) Purchase of new shares by private treaty;
(e) Acquisition of share capital or one firm may have either all or any one
of the following form of considerations viz., means of cash, issuance of loan
capital, or issuance of share capital.71 For example, Dhunseri Petrochem
and Tea Ltd., acquired Dowamara Tea Co. Pvt. Ltd., IAC Group acquired
Multivac India Pvt. Ltd., S. E. Investments Ltd., acquired Nupur Finvest Pvt.
Ltd., and DCM Ltd., and Escorts Ltd., resisted the take-over bid on their
firms by Caparo Group of the U.K.
I.7.5. Absorption
This type of merger involves merger of a small firm with a large firm.
After the merger, the small firm ceases to exist, for example TOMCO Ltd.,
with HLL.
I.7.6. Tender Offer

This involves making a public offer for acquiring the shares of a target
firm with a view to acquire management control in that firm.
I.7.7. Consolidation
The combination of two separate firms to a new firm with separate
legal existence, in this case, both the firms cease to exist. Shareholders
approval is necessary and the administrative executives are entitled to refuse

the merging proposal, for example, Conoco and Phillips that resulted in the
new Conoco Phillips was a consolidation merger.
I.7.8. Assets Acquisition

This involves buying of assets of another firm. The assets may be
tangible assets like a manufacturing unit or intangible assets like brands, for
example, HLL bought the brands of Lakme.
I.7.9. Shares Acquisition

The firm which buys invests in the shares of the bought-out firm.
I.7.10. Joint Venture

A joint venture is a corporate association in which two or more firms
combine some of their resources to achieve specific, limited objectives
(Brigham et al., 2001).72 Usually MNCs use this strategy to enter into a
foreign market. For example, the DCM group and Daewoo Motors entered
into a joint venture to form DCM Daewoo Limited for manufacturing
automobiles in India.
I.7.11. Contraction
I.7.11.1. Spin-off
If a division of the firm is converted into a wholly owned subsidiary
of the parent firm, it is a spin-off. For example, Kotak Mahindra Finance
Limited formed a subsidiary called Kotak Mahindra Capital Corporation,
by spinning-off its investment banking division.73
I.7.11.2. Split-up
If all the divisions of the parent firm are converted into separate firms
and the parent firm ceases to exist, then it is split-up.

I.7.11.3. Asset Sales

This involves the sale of tangible or intangible assets of a firm to
generate cash.
I.7.11.4. Equity Carve-outs

This is comparable to a spin-off, except that the equity of this subsidiary
is offered to the public through a public issue.
I.7.12. Corporate Controls

This involves converting a listed firm into a private firm by buying
back all the outstanding shares from the market.
I.7.12.1. Going Private: This involves changing a listed firm into a private
firm by buying back all the outstanding shares from the markets.
I.7.12.2. Equity Buy-back: This involves the firm buying its own shares
back from the market. This leads to decrease in the equity capital of the
firm. This strengthens the promoters position by increasing the stake in the
equity of the firm.
I.7.12.3. Friendly Buy-out: The administration of the bought out firm

successfully cooperates for the implementation of the buyout, for example
the acquisition of Celebrity Cruise Lines by Royal Caribbean.
I.7.12.4. Hostile Buy-out: The management of the bought out firm rejects
the buy-out proposal in order to avoid or delay the buy-out and takes to
defensive tactics (Soubeniotis Collins et al., 2006).74
I.7.13. Divestment Techniques

The following are the divestment techniques used in corporates:

I.7.13.1. Management Buy-out: The managers or directors purchase

all or part of the business from its owners. The cases of management
buy-out occur when the present owners are not capable of running the firm
successfully, and when the existence of the firm is at stake. The management
team will take considerable controlling interest from the existing owners. It
is a divestment technique to sell the business which does not fit in with the
new strategic plan of the group.
I.7.13.2. Selloff: In a strategic planning process, a firm can take a decision

to concentrate on core business activities by selling off the non-core business
divisions. A sell-off is a sale of part of the organization to a third party
under the following efficient, to come out of shortage of cash and simple
liquidity problems, to focus on main business activities, to protect the firm
from takeover activities by selling off the desirable division to the bidder, to
improve the P of the firm by selling off loss-making divisions, to increase the
efficiency of men, machines and money, to facilitate the promising activities
with enough funds by sell-off non-performing assets, to reduce the business
risk by selling off the high risk activities.
I.7.13.3. Leveraged Buy-out: A leveraged buyout (LBO) is any acquisition

of a firm which leaves the acquired operating entity with a greater than
traditional debt to equity ratio. The consideration for LBO is a mix of
debt and equity components with high gearing. Strong cash flow and high
returns are used to serve high level of interests and repayment of principal.
Internal cash flow and sale of assets are used to repay the original owner
in LBO.
I.7.13.4. Buyin: A management team, with special skills, searches for and
purchases a business, in its attracted area, with considerable potential but
that has not been run to its full advantage due to lack of managerial and
technical skills, and which fails to establish the firm products in the market.
After the identification of a suitable unit for purchase, the management

team will make arrangements with the venture capitalist for finance. The
management team will generally have lesser funds for investment, and
therefore, more external sources will be the component in their purchase of
the business unit (Srinivasan and Murugan, 2009).75
I.7.14. Other Forms of Merger and Acquisitions

The significant terms relating to M&As are vital to the understanding
of the entire process of M&As. Every word encountered in the process of
M&As needs to be carefully understood for a sound understanding of the
subject. These terms may appear to be completely unrelated to M&As, but
nevertheless, these terms may indicate a very important process in M&As.
Some of the other forms of M&As are as follows: 76
I.7.14.1. People Pill

Giving a threat by the entire management team to put in their papers
if the takeover takes place is better termed as people pill. During a hostile
takeover, the people pill is used to avoid the takeover. Use of this strategy will
work provided the management team is very efficient and can take the firm
to new heights. On the other hand, if the management team is not efficient,
it would not matter to the acquiring firm if the existing management team
resigns. So, the success of this strategy is quite questionable.
I.7.14.2. Sandbag
Sandbag happens when the target firm tends to defer the takeover
or the acquisition with the hope that another firm, with better offers, may
takeover instead. In other words, it is the process by which the target firm
kills time while waiting for a more eligible firm to initiate the takeover.
I.7.14.3. Shark Repellent

There are instances when a target firm, which is being aimed at for a
takeover, fights the same. The target firm may do so by adopting different

means. Some of the ways include manipulating shares as well as stocks and
their values. All these attempts of the target firm fighting its acquisition or
takeover are known as shark repellent.
I.7.14.4. Golden Parachute

This is usually done by extending benefits to the top level executives
in case they lose their portfolio / jobs if the takeover is affected.
I.7.14.5. Raider
May be mentioned to an acquiring firm, which is always on the lookout
for firms with undervalued assets. If the firm finds that a target does exist
whose assets are undervalued, it buys a majority of the shares from the target
firm so that it can exercise control over the business of the target firm.
I.7.14.6. Saturday Night Special (SNS)

When one firm makes an attempt to takeover another firm all of a sudden
by executing a public tender offer, it is called Saturday Night Special. The name
results from the fact that such attempts were made towards the weekends. It is
now required that if a firm acquires more than 5% of stocks from another firm,
this has to be reported to the Securities Exchange Commission.
I.7.14.7. Macaroni Defense

This refers to the policy wherein a large number of bonds are issued.
At the same time, the target firm also assures people that the return on
investment for these bonds will be higher when the takeover has taken place.
This is another strategy comprised by the target firm for not submitting to
the pressures of the acquiring firm.
I.7.14.8. Market-extension Merger

Two firms sell the same products in different markets.

I.7.14.9. Product-extension Merger

Two firms sell different but related products in the same market.
I.8. Methods of Merger and Acquisitions

The process of takeover should adopt an intentionally planned
approach. Such a plan should contain a wide explanation of various stages
and activities. The aim of developing such an action plan is to give the
broad plans of the various activities and to show the connection between
these. The process of a merger or acquisition can be separated into the
steps shown in figure I. D.77 And the generalized model of M&As are
shown figure I. E.
Figure I.D
Methods of Merger and Acquisitions

Figure I.E
A Generalized Model of Merger and Acquisitions Action Plans
Working out Broad Policy Regarding Acquisition\ Merger Programme
Source: Akhilesh et al., 199578

I.9. Legal and Practical Aspects of Amalgamation or Acquisition

The implementation of an amalgamation or a merger or an acquisition
scheme involves the following steps (Maheshwari, 2010):79
I.9.1. Analysis of the Proposal

When the idea of amalgamation or merger emerges between two or
more firms, the managements of respective firms have to look into the pros
and cons of the amalgamation or merger viz., scheme.
I.9.2. Determination of Exchange Ratio

An amalgamation, merger or acquisition requires an exchange
of shares. The shareholders of the amalgamating firm or acquired firm
are offered shares in the amalgamated or the purchasing firm for their
shareholdings.
I.9.3. Approval of the Board of Directors

The scheme of amalgamation or acquisition evolved as a result of
negotiations is put finally before the board of directors of the respective
firms for their approval.
I.9.4. Approval by Shareholders

The structure of amalgamation, as permitted by the respective boards,
is placed before the shareholders for the respective firms for their approval.
I.9.5. Consolidation of the Interest of the Creditors

The scheme should also be discussed with the creditors of the
amalgamated firm, and their views, determined.
I.9.6. Approval of the National Company Law Tribunal

The scheme of amalgamation, as permitted, has to be submitted to the
national company law tribunal for its approval.

I.10. Laws Relating to Merger and Acquisitions

All countries follow their own set of rules and regulations regarding
M&As. In some countries, like USA and Nigeria, there are several strict
laws regarding M&As, while in countries like Thailand, there are no definite
laws and regulations to direct M&As.
I.10.1 Merger and Acquisitions Law in the USA

In the USA, M&As law has been created keeping in mind the welfare
of the shareholders. To protect the shareholders, the USA government
established the law, that a merger deal can be confirmed only through the
process of voting by the board of directors and voting by the shareholders
of the two separate firms.
I.10.2 Regulatory Framework in India

Primarily, the regulatory framework for M&As was contained in
the MRTP Act, 1969. As a measure for reviving the sick enterprises, the
government introduced certain fiscal concessions through the Finance
Act, 1976 under Section 72A of Income Tax Act, 1961. A profit-making
enterprise taking over a sick firm was allowed to carry forward and set off
the accumulated losses of the latter (subject to certain conditions). Presently,
the M&As of corporate entities are regulated by provisions contained in the
Companies Act, 1956, Indian Income Tax Act, 1961, Bombay Stamp Act, 1958,
Competition Act, 2002, Securities and Exchange Board of India Regulation
Act, 1997, and Foreign Exchange Management Act, 2000 (vide figure I.F.).
I.10.2.1. The Companies Act, 1956

The Act lays down the legal procedures for mergers or acquisitions.
I.10.2.1.1. Permission for Merger

Two or more firms can amalgamate only when the amalgamation
is permitted under their memorandum of association (MOA). Also, the

acquiring firm should have the permission in its object clause to carry on
the business of the acquired firm. In the absence of these provisions in the
MOA, it is necessary to seek the permission of the shareholders, board of
directors and the company law board before affecting the merger.
Figure I. F
I.10.2.1.2. Information to the Stock Exchange

The acquiring and the acquired firms should notify the stock exchanges
(where they are listed) about the merger.

I.10.2.1.3. Approval of Board of Directors

The board of directors of the individual firms should approve the draft
proposal for amalgamation and authorise the managements of the firms to
further follow the proposal.
I.10.2.1.4. Application in the High Court

An application for approving the draft amalgamation proposal duly
approved by the board of directors of the individual firms should be made
to the high court.
I.10.2.1.5. Shareholders and Creditors Meetings

The individual firms should hold separate meetings of their
shareholders and creditors to approve the amalgamation scheme. At least
75% of shareholders and creditors in separate meetings, voting in person or
by proxy, must accord their approval to the scheme.
I.10.2.1.6. Sanction by the High Court

After the approval of the shareholders and creditors, on the petitions
of the firms, the high court will pass an order, sanctioning the amalgamation
scheme after it is satisfied that the scheme is fair and reasonable.
I.10.2.1.7. Filing of the Court Order

After the court order, its certified true copies will be filed with the
registrar of companies.
I.10.2.1.8. Transfer of Assets and Liabilities

The assets and liabilities of the acquired firm will be transferred to the
acquiring firm in accordance with the approved scheme, with effect from the
specified date.

I.10.2.1.9. Payment by Cash or Securities

As per the proposal, the acquiring firm will exchange shares and
debentures and/or cash for the shares and debentures of the acquired firm.
These securities will be listed on the stock exchange.
I.10.2.2. The Indian Income Tax Act (ITA), 1961

Income Tax Act, 1961 is vital among all tax laws which affect the
merger of firms from the point view of tax savings/ liabilities. However,
the welfares under this Act are available only if the following conditions
mentioned in Section 2 (1B) of the Act are fulfilled.80
All the amalgamating firms should be firms within the meaning of

the Section 2 (17) of the Income Tax Act, 1961.
All the properties of the amalgamating firm (that is, the target
firm) should be transferred to the amalgamated firm (that is, the
acquiring firm).
All the liabilities of the amalgamating firm should become the
liabilities of the amalgamated firm.
The shareholders of not less than 90% of the share of the amalgamating
firm should become the shareholders of amalgamated firm.
In case of mergers and amalgamations, a number of issues may arise
with respect to tax implications. Some of the relevant provisions are:
I.10.2.2.1. Depreciation: The amalgamated firm continues to claim

depreciation on the basis of written down value of fixed assets transferred
to it by the amalgamating firm. The depreciation charge may be based on
the consideration paid and without any re-valuation. However, unabsorbed
depreciation, if any, cannot be assigned to the amalgamated firm, and hence,
no tax benefit is available in this respect.

I.10.2.2.2. Capital Expenditure: If the amalgamating firm transfers to the

amalgamated firm any asset representing capital expenditure on scientific
research, then it is deductible in the hands of the amalgamated firm under
Section 35 of Income Tax Act, 1961.
I.10.2.2.3. Exemption from Capital Gains Tax: The transfer of assets

by amalgamating firm to the amalgamated firm, under the scheme of
amalgamation is exempted from capital gains tax, subject to conditions,
namely, (i) that the amalgamated firm should be an Indian firm, and (ii) that
the shares are issued in consideration of the shares, to any shareholder, in
the amalgamated firm. The exchange of old share in the amalgamated firm
by the new shares in the amalgamating firm is not considered as sale by the
shareholders, and hence, no profit or loss on such exchange is taxable in the
hands of the shareholders of the amalgamated firm.
I.10.2.2.4. Carry Forward Losses of Sick Firms: Section 72A (1) of the
ITA, 1961 deals with the mergers of the sick firms with healthy firms and
to take advantage of the carry forward losses of the amalgamating firms.
But the benefits under this section with respect to unabsorbed depreciation
and carry forward losses are available only if the followings conditions
are fulfilled:
The amalgamating firm is an Indian firm.

The amalgamating firm should not be financially viable.
The amalgamation should be in the interest of the public.
The amalgamation should facilitate the revival of the business of
the amalgamating firm.
The scheme of amalgamation is approved by a specified authority.
The amalgamated firm should continue to carry on the business of
the amalgamating firm without any modification.
I.10.2.2.5. Amalgamation Expenses: In case expenditure is incurred towards
professional charges of solicitors for the services rendered in connection

with the scheme of amalgamation, then such expenses are deductible in the
hands of the amalgamated firm.
I.10.2.3. The Bombay Stamp Duty Act, 1958

Stamp Act varies from state to state. As per the Bombay Stamp Act,
1958 conveyance includes an order in respect of amalgamation; by which
property is transferred to or vested in any other person. As per this Act,
rate of stamp duty is 10%.81
I.10.2.4. The Competition Act, 2002

The Act controls the various forms of business combinations through
the Competition Commission of India (CCI). Under the Act, no person or
enterprise shall enter into a combination, in the form of an acquisition, merger
or amalgamation, which causes or is likely to cause a considerable adverse
effect on competition in the relevant market, and such a combination shall be
void. Enterprises intending to enter into a combination may give notice to
the Commission, but this notification is voluntary. But, all combinations do
not call for scrutiny unless the resulting combination exceeds the threshold
limits in terms of assets or turnover as specified by the CCI. The CCI while
regulating a combination shall consider the following factors:82
Actual and possible competition through imports

Extent of entry barriers into the market
Level of combination in the market
Degree of countervailing power in the market
Possibility of the combination to significantly and substantially
increase prices or profits
Extent of effective competition likely to sustain in a market
Availability of substitutes before and after the combination
Market share of the parties to the combination, individually, and

as a combination
Possibility of the combination to remove the vigorous and effective
competitor or competition in the market
Nature and extent of vertical integration in the market
Nature and extent of innovation
Whether the benefits of the combinations balance the adverse
impact of the combination
Competition Act does not seek to eliminate combinations and only
aims to eliminate their harmful effects.
I.10.2.5. Security Exchange Board of India (Substantial Acquisition of
Shares and Takeover) Regulations Act, 1997
The earliest attempts at regulating takeovers in India can be traced
back to the 1990s with the incorporation of Clause 40 in the Listing
Agreement. While, the Securities and Exchange Board of India (SEBI)
(Substantial Acquisition of Shares and Takeovers) Regulations, 1994
which were notified in November 1994 made way for regulation of hostile
takeovers and competitive offers for the first time; the subsequent regulatory
experience from such offers brought out certain inadequacies existing in
those Regulations. As a result, the SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997 were introduced and notified on February
20, 1997, pursuant to the repeal of the 1994 Regulations.
Owing to several factors, such as, the growth of M&As activity in India
as the preferred mode of restructuring, the increasing sophistication of the
takeover market, the decade-long regulatory experience and various judicial
pronouncements, it was felt necessary to review the Takeover Regulations
1997. Accordingly, SEBI formed a Takeover Regulations Advisory Committee
(TRAC) in September 2009. After extensive public consultation on the
report submitted by TRAC, SEBI came out with the Substantial Acquisition
of Shares and Takeovers Regulations 2011 which were notified on September
23, 2011. The Takeover Regulations, 1997 stands repealed from October

22, 2011, i.e., the date on which the Substantial Acquisition of Shares and
Takeovers Regulations, 2011 came into force.83
I.10.2.6. Foreign Exchange Management Act, 2000

The Foreign Exchange Laws relating to issuance and allotment of
shares to foreign entities are contained in the foreign exchange management
(transfer or issue of security by a person residing out of India) regulation,
2000 issued by the Reserve Bank of India (RBI) vide G. S. R. No. 406(E) dated
3rd May, 2000. These regulations provide general guidelines on issuance of
shares or securities by an Indian entity to a person residing outside India or
recording in its books any transfer of security from or to such person. RBI
has issued detailed guidelines on foreign investment in India vide Foreign
Direct Investment Scheme contained in Schedule 1 of the said regulation.84
I.10.2.7. Recent Trend in Merger and Acquisitions Laws 2011 in India

M&As has seen many ups and downs, and numerous vital developments
took place in 2011. Corporate M&As in India are very common, and India
has been updating its corporate M&As on regulations in India from time
to time. Recently, CCI (procedure in regard to the transaction of business
relating to combinations) Regulations, 2011 were formulated by the CCI
with the objective of controlling the combinations formulated in an anti-
competition manner in India.
Regulatory environment touching M&As in India was also modernised

in the year 2011 and stress upon technological developments made. The
SEBI is planning to use electronic initial public offer (IPO) in India. A
foreign investment in pharmaceuticals in India has been relaxed by RBI.
Likewise, FDI in India has also been relaxed in many areas. Naturally,
lots of investments, IPO, private equity funds exchange and many more
collaborative and cooperative activities took place in India in the year 2012.

Further, to modernise the banking contacts, an integrated banking

law in India has been planned. Similarly, the cap upon mobile banking
financial transactions in India has been removed by the RBI. These reforms
would help M&As transactions in India in a big way in a in the years to
come. Although there was a slowdown in the M&As deals in India in 2011
yet Indias energy, mining and utilities sector witnessed a sound growth.
The telecommunication sector faced the biggest hindrance in India and
therefore there were only very few M&As dealings in this sector in 2011.85
I.11. Summary
The M&As, often enables the acquiring firms to enter into a new
market quickly, by avoiding the delay associated with building a new plant
and establishing a new line of products. The acquiring firms grow at a faster
rate when compared with non-acquiring firms. This chapter highlighted the
recent trends in M&As in India, objectives of M&As, methods of corporate
restructuring, legal and practical aspects of M&As, and laws relating to
M&As in India.
The following chapter presents a review of literature, which has been

carried out based on the previous studies in the chosen research domain.

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Chapter I INTRODUCTION AND CONCEPTUAL FRAMEWORK

That corporate restructuring leads to improved performance is

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 1

a negative abnormal return (Revenscraft and Scherer, 1989).1 Poor corporate

acquisitions. Cost efficiency improved in most of the M&As of banks (Fixler

International M&As announcements by Indian firms create a

M&As have a positive effect on the key financial ratios of firms

Indian manufacturing corporate firms involved in M&As have

The above literature provides an overview of the OP and SW firms

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 4

I.2. Recent Trends in Merger and Acquisitions in India

The percentage share of total valuation of M&As deals that took

There has been an increasing trend of stake sales by promoters of

of operation and increasing demand for international operation. This has

I.3. Top Ten Merger and Acquisitions Deals in 2011

I.3.2. Essar Exits Vodafone

I.3.3. The Fortis Healthcare Merger

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 6

I.3.4. iGate Acquires Majority Stake in Patni Computers

I.3.5. GVK Power Acquires Hancock Coal

I.3.7. Aditya Birla Group to Acquire Columbian Chemicals

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 7

I.3.8. Mahindra and Mahindra Acquires Ssangyong

I.3.9. The Vedanta Cairn Acquisition

I.3.10. Adani Enterprises Takes over Abbot Point Coal

Recent Scenario of M&As in India

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 8

Favourable government policies, flexibility in economy, additional liquidity in

Source: Compiled Data from PROWESS Database Provided by CMIE

The figure (vide figure I.A) shows a representation that M&As

I.4. Concepts and Theoretical Framework of M&As

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 9

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 10

investment. The status of a regulatory framework is also being formulated.

I.5. Evolution of Merger and Acquisitions

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 11

Souce: Compiled Information from Various Sources Provided by Various Authors.

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 12

I.7. Methods of Corporate Restructuring

Merger, Amalgamation, and Acquisitions

I.7.2.1. Statutory Merger

I.7.2.2. Subsidiary Merger

I.7.2.3. Reverse Subsidiary Merger

I.7.2.4. Horizontal Merger

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 14

I.7.2.5. Vertical Merger

I.7.2.6. Conglomerate Merger

I.7.2.7. Circular Combination

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 15

expansion. The acquiring firm obtains benefits in the form of economies

Source: Compiled Information from Various Sources Provided by Various Authors.

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 16

I.7.2.9. Reverse Merger

I.7.2.10. Cross Border Merger

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 17

I.7.6. Tender Offer

approval is necessary and the administrative executives are entitled to refuse

I.7.8. Assets Acquisition

I.7.9. Shares Acquisition

I.7.10. Joint Venture

A STUDY ON THE IMPACT OF M&As ON OP AND SW IN INDIAN MANUFACTURING INDUSTRY 19

I.7.11.3. Asset Sales

I.7.11.4. Equity Carve-outs

I.7.12. Corporate Controls