m

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A Merger may be defined as the combination

of two
or more independent business corporations
into a
single enterprise, usually involving the
absorption
of one or more firms by a dominant firm.

Mergers may be broadly classified as

Horizontal,
Vertical or Conglomerate
%


{t is defined as an act of one enterprise of

acquiring,
directly or indirectly of shares, voting
rights, assets
or control over the management, of another
enterprise .
 ifference Between
Mergers & Acquisitions
m
   

The case when two companies
decide to move forward as a single
new company instead of operating
business separately.
The stocks of both the companies
are surrendered, while new stocks
are issued afresh.
For example, Glaxo Welcome and
SmithKline Beehcam ceased to exist
and merged to become a new company,
known as Glaxo SmithKline.
The case when one company takes over
another and establishes itself as the
new owner of the business.
The buyer company ³swallows´ the
business of the target company, which
ceases to exist.
r. Reddy's Labs acquired Beta harm
through an agreement amounting $597
million.
Regulatory act¶s for merger:-
^ The Companies Act, 1956
^ The Takeovers Code, 1997
^ The Monopolies and Restrictive Trade Practices Act,
1969
^ The Foreign Exchange Management Act, 1999
^ The Foreign {nvestment Promotion Board (F{PB)
^ The Reserve Bank of {ndia
^ The {ncome Tax Act, 1961

 Mergers, amalgamations, de-mergers,

acquisitions of business units or divisions, are
all governed by The Companies Act for all
registered companies
 Acquisition of shares in listed {ndian companies
is governed by The Takeover Code, 1997.
Motives behind M&A
D Economy of scale
D Economy of scope
D {ncreased revenue or market share
D Cross-selling
D Synergy
D Taxation
D Vertical integration
Types of merger
1. HOR{ ONTAL: Between enterprises
in the same product market and at
the same level of the production or
distribution cycle.
2. VERT{CAL: Between enterprises
that operate at different levels of
the production and distribution
cycle.
3. CONGLOMERATE: Between
enterprises operating in different
markets.
Advantages of merger
D Accessing new markets
D Maintaining growth momentum
D Acquiring visibility and international
brands
D Buying cutting edge technology
rather than importing it
D Taking on global competition
D {mproving operating margins and
efficiencies
D eveloping new product mixes
D The { 

   
{ 
 
commonly known by {{ is one
of {ndia's leading public sector banks and 4th
largest Bank in overall ratings.
D The {ndustrial evelopment Bank of {ndia ({B{)
was established on July 1, 1964 under an Act of
Parliament.
D 10th largest development bank in the world in
terms of reach with 1228 ATMs, 720 branches
and 486 centers.
D Some of the institutions built by {B{ are NSE,
NSL, SHC{L, the Credit Analysis & Research Ltd,
the Exim Bank, S{B{ , the Entrepreneurship
evelopment {nstitute of {ndia.
 {{

Type Public sector bank

{ndustry Banking

Financial services

Founded July 1964

Headquarters Mumbai,{ndia

Key people Mr. R. M. Malla, CM

Products Finance and insurance

Website www.idbibank.com
{B{ Bank Ltd - Company Profile
Snapshot
d
   {{

Ticker: 500116

Exchanges: BOM

2010 Sales: 178,170,000,000

Major {ndustry: Financial

Sub {ndustry: Commercial Banks

Country: {N{A

Employees: 10201
 Total mergers of {B{

D
nited Western Bank

D Satara Swadeshi Commercial
Bank
D
nion Bank of Kolhapur
D {B{ Ltd
A
 

Saraswat Co-operative
Bank Ltd.
(A Schedule Bank)
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1. Maratha Mandir Co-op. Bank.
2. Mandyi Co-op. Bank Ltd.
3. Annashaheb Karale Janata Sahakari Bank.
4. Murgharajendra Sahakari Bank Ltd.
5. Nashik People¶s Co-op. Bank Ltd.
6. South {ndian Co-op. Bank Ltd.
7. Kolhapur Maratha Co-op. Bank Ltd.
KOLHAP
R MARATHA CO-OP. BANK
MERGE W{TH SARASWAT BANK
D Those were merged on August 15, 2007.
D {t is the fifth acquisition for Saraswat Bank.
D The Saraswat banks chiarman is Mr. Eknath Thakur.
D Across the country there are 15 branches of Kolhapur
Maratha Co-op. Bank.
D With the merger, the total branches of Saraswat Bank
goes to 172 and now including the Maratha bank.
D Total Business added in Saraswat bank of Rs. 86.63
caror.
D NPA still constant from the date of merger i.e. Rs.26
caror.
D Saraswat co-op. bank goes on loos when it is merged
with Kolhapur Maratha Bank i.e. 2.42 crore.
Reason of merger
D Kolhapur Maratha with a total business of Rs 110
crore and number of depositors of 1.31 lakh
spread over 15 branches, had run into more
different types of difficulties.
D Shareholders of the acquired bank will not
receive any shares after merger since the bank is
a loss-making one. ³The merger is not with the
intention of expansion but to protect small
depositors.
D {t is also considering merging two cooperative
banks with itself. The bank has set a business
target of Rs 19,000 crore for the current financial
year and expects to touch Rs 25,000 crore by
2010-11.
ifficulties of Kolhapur
Mhanagar bank
The Kolhapur-based bank has reported an
accumulated loss of Rs 24 crore till date
and its gross non-performing assets stood
at 40 per cent. {t has a deposit base of Rs
65 crore and advances base of Rs 45
crore.