Acquisitions

Both Mergers and Acquisitions are corporate strategies

aimed at increasing the present capabilities of a
company. Sometimes both mergers and acquisitions
terms are used interchangeably, but both these terms
are quite different.
Merger is a process by which two or more companies take a
strategic decision to come together as one company with a
new name.  The acquisition is the process by which one
company acquires stake of another company. The financially
strong company acquires more than 50% of shares to take
over another company.

Merger helps the company to share information, technology,

resources etc. thereby increasing the overall strengths of the
company. It also helps in reducing the weakness and gain a
competitive edge in the market.  In acquisition, the
transition is not always smooth as the company that took
over will impose all the decisions on staffing, structure,
resources etc. and thereby creating an air of unease to the
company that was acquired and to its employees.
Merger always happens on friendly terms as the information
is already been passed to the directors, employees etc. and
proper planning is done on the structuring of the new
company.  The acquisition doesn’t always happen on friendly
terms. It can be a forced move by a company to acquire
another company for various reasons like gaining new
markets or gaining new customers or reducing competition
etc. But acquisition may also happen without any hostility.

 If management of the target company is unwilling to

negotiate a contact with prospective acquirer, it can approach
directly to the shareholders of the target company by making
an open offer. This is known as Hostile takeover.
Year Mergers Acquisitions Total
1974-79 156 11 167
1980-84 156 15 171
1985-89 113 91 204
1990-94 236 646 882
1995-97 NA NA 1627
2003 642 1664 2306
2004 272 797 1069
2005 370 867 1237

Source: Rajesh Kumar, Mergers and Acquisitions: Text and Cases

2018 M&A is India – approx Rs.5000 billion (USD
77billion)
Sectoral Review of M&As
Cement
Pharma
Food and Beverages
Oil and Energy
Media and Entertainment
Telecommunication
Chemical
IT and IT related
Steel
Automotives
Financial services
Other Services
Metal
Textiles
Consumer Goods
Machinery
Reasons for Acquisitions
Small firm. Can’t face competition
 Taxi for Sure sold to Ola

 Ola and TaxiForSure will continue to operate as separate

entities.
 The leadership and all of the 1700 employees shall continue to

work with TaxiForSure, with Arvind Singhal (currently COO)

being appointed the CEO.
 Aprameya Radhakrishna and Raghunandan G, the founders of

TaxiForSure, will contribute in an advisory role for a certain

period.

To reduce the debt burden

 Etihad planning to acquire stake in Jet. Currently at 26%. Will
be capped at 49%
 If open offer fails, Jet to issue rights shares
Selling stake to meet personal and other financial
obligations
 Siddhartha selling stake in Mindtree (owns 21% stake directly
and through Café Coffee Day)
Diversification which also helps in current business
 LIC buying stake in IDBI (LIC to get into diverse area of
banking and using this channel to sell its insurance products)