

Project on Merger
and acquisition of
TATA Motors &
JAGUAR

By

PGPM 08 (Finance major)

Group 7
 GROUP MEMBERS
Aparupa Adhikary 010108072
Arijita Chanda 010108044
Chandrika Nath 010108135
Deepshikha Choudhury 010108001
Neha Bhuwalka 010108089
Rezwan Anjum 010108129
Soumitry Panigrahy 010108104
Subhashish Ganguly 010108136

2 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
 ACKNOWLEDGEMENT

We would like to take this opportunity to express our sincere gratitude to our
mentor, Prof. B.K Bhattacharya for giving us this opportunity to carry out this
project work.
We thank him, for his continued guidance and support, and for having faith in
us that we will carry out this responsibility excellently. We feel fortunate
enough for the kind of affection and attention we got from him during the
project, who taught us not only the technicalities but also how to achieve clarity
and perfection in analysis and presentations.
Lastly we thank our team who has helped us in making this project successful.

3 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
 Table of Contents
Introduction 5
Mergers and Acquisitions 6-11
. World Scenario of Mergers and 12-13
Acquisitions
Indian Scenario of Mergers and 14-15
Acquisitions
Case Study: Tata Motors & Jaguar 16-19
Merger
Post- Merger Analysis 20
AAnnexure 21-24

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 INTRODUCTION

The financial year 2008-09 witnessed a slew of acquisitions across diverse

sectors of the economy in India. Unlike in the past, such activity was not limited
to acquisitions within India or of Indian companies. Of all sectors, steel was the
most dominant in terms of stake sales as deals valuing $ 3.862 billion took place
in Q1 of 2008-09 by the Indian companies in the global arena. Energy ranked
second, with automotive and auto components close on its heels. In the
domestic segment, iron ore, aviation and steel were the most prolific in terms of
mergers and acquisitions.

With Indian corporate houses showing sustained growth over the last decade,
many have shown an interest in growing globally by choosing to acquire or
merge with other companies outside India. One such example would be the
acquisition of Britain’s Corus by Tata an Indian conglomerate by way of a
leveraged buy-out. The Tata’s also acquired Jaguar and Land Rover in a
significant cross border transaction. Whereas both transactions involved the
acquisition of assets in a foreign jurisdiction, both transactions were also
governed by Indian domestic law.

Whether a merger or an acquisition is that of an Indian entity or it is an Indian

entity acquiring a foreign entity, such a transaction would be governed by
Indian domestic law. In the sections which follow, we touch up on different
laws with a view to educate the reader of the broader areas of law which would
be of significance.

Mergers and acquisitions are methods by which distinct businesses may

combine. Joint ventures are another way for two businesses to work together to
achieve growth as partners in progress, though a joint venture is more of a
contractual arrangement between two or more businesses.

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 MERGERS AND ACQUISITIONS
The term ‘merger’ is not defined under the Companies Act, 1956 (the
‘Companies Act’), the Income Tax Act, 1961 (the ‘ITA’) or any other Indian
law. Simply put, a merger is a combination of two or more distinct entities into
one; the desired effect being not just the accumulation of assets and liabilities of
the distinct entities, but to achieve several other benefits such as, economies of
scale, acquisition of cutting edge technologies, obtaining access into sectors /
markets with established players etc. Generally, in a merger, the merging
entities would cease to be in existence and would merge into a single surviving
entity.

Laws in India use the term 'amalgamation' for merger. The Income Tax
Act,1961 [Section 2(1A)]defines amalgamation as the merger of one or more
companies with another or the merger of two or more companies to form a new
company, in such a way that all assets and liabilities of the amalgamating
companies become assets and liabilities of the amalgamated company and
shareholders not less than nine-tenths in value of the shares in the amalgamating
company or companies become shareholders of the amalgamated company.

Thus, mergers or amalgamations may take two forms:-

 Merger through Absorption:- An absorption is a combination of two or

more companies into an 'existing company'. All companies except one
lose their identity in such a merger. For example, absorption of Tata
Fertilisers Ltd (TFL) by Tata Chemicals Ltd. (TCL). TCL, an acquiring
company (a buyer), survived after merger while TFL, an acquired
company (a seller), ceased to exist. TFL transferred its assets, liabilities
and shares to TCL.
 Merger through Consolidation:- A consolidation is a combination of
two or more companies into a 'new company'. In this form of merger, all
companies are legally dissolved and a new entity is created. Here, the
acquired company transfers its assets, liabilities and shares to the
acquiring company for cash or exchange of shares. For example, merger
of Hindustan Computers Ltd, Hindustan Instruments Ltd, Indian Software
Company Ltd and Indian Reprographics Ltd into an entirely new
company called HCL Ltd.

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A fundamental characteristic of merger (either through absorption or
consolidation) is that the acquiring company (existing or new) takes over the
ownership of other companies and combines their operations with its own
operations. There are three major types of mergers:-

1. Horizontal Mergers. Also referred to as a ‘horizontal integration’, this kind

of merger takes place between entities engaged in competing businesses
which are at the same stage of the industrial process. A horizontal merger
takes a company a step closer towards monopoly by eliminating a competitor
and establishing a stronger presence in the market. The other benefits of this
form of merger are the advantages of economies of scale and economies of
scope.

Following are the important examples of horizontal mergers:

 The formation of Brook Bond Lipton India Ltd. through the merger of
Lipton India and Brook Bond
 The merger of Bank of Mathura with ICICI (Industrial Credit and
Investment Corporation of India) Bank
 The merger of BSES (Bombay Suburban Electric Supply) Ltd. with Orissa
Power Supply Company
 The merger of ACC (erstwhile Associated Cement Companies Ltd.) with
Damodar Cement

2. Vertical Mergers. Vertical mergers refer to the combination of two entities

at different stages of the industrial or production process. For example, the
merger of a company engaged in the construction business with a company
engaged in production of brick or steel would lead to vertical integration.
Companies stand to gain on account of lower transaction costs and
synchronization of demand and supply. Moreover, vertical integration helps
a company move towards greater independence and self-sufficiency. The
downside of a vertical merger involves large investments in technology in
order to compete effectively. Vertical merger may take the form of forward
or backward merger. When a company combines with the supplier of

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 material, it is called backward merger and when it combines with the
customer, it is known as forward merger.
Example:
Merger between Time Warner Incorporated, a major cable operation, and the
Turner Corporation, which produces CNN, TBS, and other programming. In
this merger, the Federal Trade Commission (FTC) was alarmed by the fact
that such a merger would allow Time Warner to monopolize much of the
programming on television. Ultimately, the FTC voted to allow the merger
but stipulated that the merger could not act in the interests of anti-
competitiveness to the point at which the public good was harmed. 

3. Conglomerate Mergers. A conglomerate merger is a merger between two

entities in unrelated industries. The principal reason for a conglomerate
merger is utilization of financial resources, enlargement of debt capacity, and
increase in the value of outstanding shares by increased leverage and
earnings per share, and by lowering the average cost of capital. A merger
with a diverse business also helps the company to foray into varied
businesses without having to incur large start-up costs normally associated
with a new business and also brings down the levels of their exposure to
risks.
Example :
 L&T and Voltas Ltd
 Walt Disney Company and the American Broadcasting Company

ACQUISITIONS
An acquisition or takeover is the purchase by one company of controlling
interest in the share capital, or all or substantially all of the assets and/or
liabilities, of another company. A takeover may be friendly or hostile,
depending on the offerer company’s approach, and may be effected through
agreements between the offerer and the majority shareholders, purchase of
shares from the open market, or by making an offer for acquisition of the
offeree’s shares to the entire body of shareholders.

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 Friendly takeover. Also commonly referred to as ‘negotiated takeover’, a
friendly takeover involves an acquisition of the target company through
negotiations between the existing promoters and prospective investors. This
kind of takeover is resorted to further some common objectives of both the
parties.
 Hostile Takeover. A hostile takeover can happen by way of any of the
following actions: if the board rejects the offer, but the bidder continues to
pursue it or the bidder makes the offer without informing the board
beforehand.
 Leveraged Buyouts. These are a form of takeovers where the acquisition is
funded by borrowed money. Often the assets of the target company are used
as collateral for the loan. This is a common structure when acquirers wish to
make large acquisitions without having to commit too much capital, and
hope to make the acquired business service the debt so raised.
 Bailout Takeovers. Another form of takeover is a ‘bail out takeover’ in
which a profit making company acquires a sick company. This kind of
takeover is usually pursuant to a scheme of reconstruction/rehabilitation with
the approval of lender banks/financial institutions. One of the primary
motives for a profit making company to acquire a sick/loss making company
would be to set off of the losses of the sick company against the profits of
the acquirer, thereby reducing the tax payable by the acquirer.

Reasons of Merger:

Every merger has its own unique reasons. The underlying principle behind mergers
and acquisitions is simple: 2 + 2 = 5. The value of Company A is $ 2 billion and
the value of Company B is $ 2 billion, but when we merge the two companies
together, we have a total value of $ 5 billion. The joining or merging of the two
companies creates additional value which we call "synergy" value.

Synergy value can take three forms:

1. Revenues: By combining the two companies, we will realize higher revenues

then if the two companies operate separately.

2. Expenses: By combining the two companies, we will realize lower expenses

then if the two companies operate separately.

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3. Cost of Capital: By combining the two companies, we will experience a lower
overall cost of capital.

For the most part, the biggest source of synergy value is lower expenses. Many
mergers are driven by the need to cut costs. Cost savings often come from the
elimination of redundant services, such as Human Resources, Accounting,
Information Technology, etc. However, the best mergers seem to have strategic
reasons for the business combination. These strategic reasons include:

 Positioning - Taking advantage of future opportunities that can be exploited

when the two companies are combined. For example, a telecommunications
company might improve its position for the future if it were to own a broad band
service company. Companies need to position themselves to take advantage of
emerging trends in the marketplace.

 Gap Filling - One company may have a major weakness (such as poor
distribution) whereas the other company has some significant strength. By
combining the two companies, each company fills-in strategic gaps that are
essential for long-term survival.

 Organizational Competencies - Acquiring human resources and intellectual

capital can help improve innovative thinking and development within the
company.

 Broader Market Access - Acquiring a foreign company can give a company

quick access to emerging global markets.

Mergers can also be driven by basic business reasons, such as:

 Bargain Purchase - It may be cheaper to acquire another company then to

invest internally. For example, suppose a company is considering expansion of
fabrication facilities. Another company has very similar facilities that are idle. It
may be cheaper to just acquire the company with the unused facilities then to go
out and build new facilities on your own.

 Diversification - It may be necessary to smooth-out earnings and achieve more

consistent long-term growth and profitability. This is particularly true for
companies in very mature industries where future growth is unlikely. It should
be noted that traditional financial management does not always support
diversification through mergers and acquisitions. It is widely held that investors

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 are in the best position to diversify, not the management of companies since
managing a steel company is not the same as running a software company.

 Short Term Growth - Management may be under pressure to turnaround

sluggish growth and profitability. Consequently, a merger and acquisition is
made to boost poor performance.

 Undervalued Target - The Target Company may be undervalued and thus, it

represents a good investment. Some mergers are executed for "financial"
reasons and not strategic reasons. For example, Kohlberg Kravis & Roberts
acquires poor performing companies and replaces the management team in
hopes of increasing depressed values.

Mergers and acquisitions are extremely difficult. Expected synergy values may not
be realized and therefore, the merger is considered a failure. Some of the reasons
behind failed mergers are:

 Poor strategic fit - The two companies have strategies and objectives that are
too different and they conflict with one another.

 Cultural and Social Differences - It has been said that most problems can be
traced to "people problems." If the two companies have wide differences in
cultures, then synergy values can be very elusive.

 Incomplete and Inadequate Due Diligence - Due diligence is the "watchdog"

within the M & A Process. If you fail to let the watchdog do his job, you are in
for some serious problems within the M & A Process.

 Poorly Managed Integration - The integration of two companies requires a

very high level of quality management. In the words of one CEO, "give me
some people who know the drill." Integration is often poorly managed with
little planning and design. As a result, implementation fails.

 Paying too Much - In today's merger frenzy world, it is not unusual for the
acquiring company to pay a premium for the Target Company. Premiums are
paid based on expectations of synergies. However, if synergies are not realized,
then the premium paid to acquire the target is never recouped.

 Overly Optimistic - If the acquiring company is too optimistic in its projections

about the Target Company, then bad decisions will be made within the M & A
Process. An overly optimistic forecast or conclusion about a critical issue can
lead to a failed merger.

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 WORLD SCENARIO OF MERGERS & ACQUISITIONS

In the years 2006 and 2007, the world experienced numerous mergers and
acquisitions. 
All over the world, in the developed and developing nations, record number
of merger and acquisition deals took place. Most of these merger and
acquisitions actually led to decrease in number of public undertakings and
increase in number of private enterprises. This happened as many public
organizations all over the world, were either merged into or acquired by big
private institutions. The reason of this particular Merger and Acquisition
Trend, was the emergence and rapid growth of Private Equity Funds.
Moreover, the regulatory environment of the publicly owned companies and
the urge to attain growth of short term earnings were also behind the specific
trend of Mergers and Acquisitions. 

Mergers and Acquisitions resulting into privatization of the public

undertakings took place not only in Europe, but also in North America, China
and even in country like Brazil. In Europe this type of Mergers and
Acquisitions took place significantly, as the market for public-to-private
investment was quite strong in Europe. In China this type of Mergers and
Acquisitions were first approved in 2006. 

According to experts this trend of going private through mergers and

acquisitions will continue in the future. As the Private Equity Funds are facing
the target of deploying the raised capital, acquisitions of large public
organizations are definitely in the pipeline. 

In the full-year 2010, the value of global mergers and acquisitions totaled
US$2.4 trillion, the strongest full-year period for M&A since 2008. Emerging
markets' M&A activity rose 76.2% from 2009 to US$806.3 billion and
accounted for 33% of the total value.

Among various sectors, the Energy and Power sector was the most active, with
20.6% of the announced M&A. For private equity-backed M&A activity, 2010
was the biggest year since 2008, with a total value of US$225.4 billion.

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Biggest Mergers and Acquisitions deals in the world:

 In 2000, SBC Communications acquired Ameritech Corp. for $70.4 billion.

Exxon Corp. acquired Mobil Corp. for $85.1 billion. In the largest
acquisition of all time, Vodafone AirTouch acquired Mannesmann for
$202.8 billion. Pfizer, Inc., acquired Warner-Lambert Co. for $88.8 billion.
 In 2002, Bell Atlantic Corp. acquired GTE Corp. for $71.3 billion. Comcast
Corp. acquired AT&T Broadband for $72.0 billion.
  In 2005, Royal Dutch Petrol acquired Shell Trans. & Trade for $80.3
billion.
 In 2008, shareholders acquired Phillip Morris Intl. for $113.0 billion, making
it the third-largest acquisition in history. Gaz de France acquired Suez for
$75.2 billion.
 In 2009, the U.S. Treasury Dept. acquired GM Certain Assets for $61.2
billion.

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INDIAN SCENARIO OF MERGERS & ACQUISITIONS
The practice of mergers and acquisitions has attained considerable significance in
the contemporary corporate scenario which is broadly used for reorganizing the
business entities. In India, the concept of mergers and acquisitions was initiated
by the government bodies. Some well known financial organizations also took
the necessary initiatives to restructure the corporate sector of India by adopting
the mergers and acquisitions policies. Indian industries were exposed to plethora
of challenges both nationally and internationally, since the introduction of Indian
economic reform in 1991. The cut-throat competition in international market
compelled the Indian firms to opt for mergers and acquisitions strategies,
making it a vital premeditated option. 

The factors responsible for making the merger and acquisition deals favorable
in India are:

 Dynamic government policies

 Corporate investments in industry
 Economic stability
 “ready to experiment” attitude of Indian industrialists

Sectors like pharmaceuticals, IT, telecommunications, steel, construction,

finance, FMCG, automobile industry  etc, have proved their worth in the
international scenario and the rising participation of Indian firms in signing
M&A deals has further triggered the acquisition activities in India.

Ten biggest Mergers and Acquisitions deals in India:

 Tata Steel acquired 100% stake in Corus Group on January 30, 2007. It
was an all cash deal which cumulatively amounted to $12.2 billion.

 Vodafone purchased administering interest of 67% owned by Hutch-

Essar for a total worth of $11.1 billion on February 11, 2007.

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 India Aluminium and copper giant Hindalco Industries purchased
Canada-based firm Novelis Inc in February 2007. The total worth of the
deal was $6-billion.

 Indian pharma industry registered its first biggest in 2008 M&A deal
through the acquisition of Japanese pharmaceutical company Daiichi
Sankyo by Indian major Ranbaxy for $4.5 billion. 

 The Oil and Natural Gas Corp purchased Imperial Energy Plc in
January 2009. The deal amounted to $2.8 billion and was considered as one
of the biggest takeovers after 96.8% of London based companies'
shareholders acknowledged the buyout proposal.

 In November 2008 NTT DoCoMo, the Japan based telecom firm

acquired 26% stake in Tata Teleservices for USD 2.7 billion. 

 India's financial industry saw the merging of two prominent banks -

HDFC Bank and Centurion Bank of Punjab. The deal took place in
February 2008 for $2.4 billion.

 Tata Motors acquired Jaguar and Land Rover brands from Ford Motor
in March 2008. The deal amounted to $2.3 billion.

 2009 saw the acquisition Asarco LLC by Sterlite Industries Ltd's for
$1.8 billion making it ninth biggest-ever M&A agreement involving an
Indian company.

 In May 2007, Suzlon Energy obtained the Germany-based wind turbine

producer Repower. The 10th largest in India, the M&A deal amounted to
$1.7 billion. 

15 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
CASE STUDY: TATA MOTORS & JAGUAR

Introduction
In June 2008, India-based Tata Motors Ltd. announced that it had completed the
acquisition of the two iconic British brands - Jaguar and Land Rover (JLR) from
the US-based Ford Motors for US$ 2.3 billion. Tata Motors acquired Jaguar and
Land Rover for $2.3 billion on a cash-free, debt-free basis. Ford also contribution
$600 million JLR pension plans. David Smith the acting CEO of JLR will
continue his position. After the acquisition, Tata Motors owns the world's
cheapest car - the $ 2,500 Nano, and luxury marquees like the Jaguar and Land
Rover. Though there was initial scepticism over an Indian company owning the
luxury brands, ownership was not considered a major issue at all during this
merger.

Reasons for the Merger

 The sales of Jaguar and Land Rover in the U.S. markets were down by
25.7% and 1.8% in May 2007.
 In U.S. and Europe Jaguar sales went down by 33% in 2008’s first 2
months. Land Rover sales in U.S. fell by 13% and in Europe it fell by7.7%
in the same period.
 Jaguar lost 15.3billion dollars in the 2 years and responded by shutting
down plants and reducing the workforce in North America by more than
40,000 workers.
 Tata Motors wanted to have presence outside India. It desired to have a
diversified line-up ranging from the world's cheapest car to some of the
more expensive. It enabled Tata’s entry into luxury car segment.
 Ford sold Jaguar and Land Rover as a package since the engineering,
purchasing and distribution of the two brands had become interdependent as
Ford had tried to find efficiencies in running the business.
 No other brands with so good research and development facilities were
available to Tata at so reasonable a price. Also the economic downturn had
affected the automobile industry. Tata paid 2.3 billion whereas Ford paid
5.2 billion for acquiring JLR, which was more than double of what Ford
paid.
16 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
  Acquiring JLR would help Tata for component sourcing, design services
and low cost engineering which would in the long run reduce the cost of
production and facilitate in increasing the bottom line and thus achieve
economies of scale.
 Corus being the major supplier of  automotive high grade  steel to
JLR and other automobile industries in USA and Europe, acquiring JLR
would result in a cost synergy for Tata motors.

Problems during Acquisition

Just before acquiring JLR, Tata had acquired Corus and moreover Tata
motors had undergone huge capital expenditure to bring Nano into the
market and hence financing the acquisition was a major concern for Tata
motors. Investors were not in favour of the decision of acquiring JLR at that
time , both Jaguar and Land Rover were loss making units and automobile
industry at that point of time was under pressure of downturn, in fact
Tata motors itself had gone in for rationalization and retrenchment
strategies. Investors believed that the balance sheet of Tata motors was not
strong enough to absorb more loans. To finance the deal Tata motors raised a
bridge loan of 3 billion through consortium of banks by the end of 2009.Tata
motors had yet to pay 2 billion towards the bridge loan, moreover it required
additional funds and that too quickly to keep the operations running. Tata
motors’ share prices dropped in the market post acquisition of JLR because of
the investor perception that it was not the right time to invest in that acquisition,
when Tata had recently undergone huge capital expenditure in the Nano project
in Singur whose results were yet to be revealed.

17 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
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19 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
Post-Merger Analysis

Immediately after the merger the shares of Tata Motors took an initial hit as the
synergies were yet to be exploited. But it bounced back after sometime and
reported a good margin. Though the Land Rover sales softened in some markets
especially in Europe, globally it increased due to high sales volume in markets like
Russia and China. In June 2008 Jaguar sold 3836units in West Europe as
compared to 2924units sold in June 2007. It was a clear 31% increase in just a
span of one year. Because of this the Indian Government followed some
liberalized policies which allowed foreign investors and manufacturers to
participate in the Indian car market.

During the quarter ended June 2010 JLR generated a profit of Rs 1613 crore. Tata
motors had never ventured into luxury car segment before acquiring JLR, hence
the inefficiency in handling such segment hampered Tata motors’ operational
efficiency for quite some time.

20 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
 ANNEXURE
A) Merger & Demergers
ISSUES: SALES TAX

 No Sales tax on Amalgamation or demerger.

 Where effective date is retrospective, any transfers between

amalgamating company and amalgamated company retrospectively cease
to be liable to sales tax- Mad HC Castrol Oil v. State of TN, 114 STC 468

 Some Sales Tax enactments contain specific provisions to tax such

transactions eg. S.33C, Bombay Sales Tax Act. No such provisions
Central Sales Tax Act.

B) Merger
ISSUES: STAMP DUTY
 Divergences between states: Shopping for beneficial rates usually
pointless
 Duty to be imposed on value of shares transferred not on individual assets
transferred: Bom HC in Li Taka AIR 1997 Bom 7
 States with Specific entries: Maharashtra, Karnataka, Rajasthan and
Gujarat
 States without specific entries: Unclear if duty leviable.
 Cal HC in Madhu Intra Ltd. v. ROC, 2004 (3) CHN 607 - 394
Order is not an instrument chargeable to duty
 Supreme Court in Ruby Sales v. State of Maharashtra (1994) 1
SCC 531 - specific inclusion of civil court decrees in Bombay
Stamp Act only abundant caution
 1937 Notification under Indian Stamp Act, 1899 remits duty when
merger is of a 90% subsidiary: Remission not available in states
21 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
 with own legislations eg. Kerala, Karnataka, Maharashtra, Gujarat
and Rajasthan
 Gujarat and Maharashtra have limits on stamp duty for mergers and
demergers at Rs.10 crore and Rs. 25 crore.

C) Merger
ISSUES: SEBI
 Acquisition of shares pursuant to a scheme of arrangement or
reconstruction under any law, Indian or foreign – exempt from SEBI
Takeover Code.
 Exemption claimed unsuccessfully by Luxottica in the acquisition
of Ray Ban Sun Optics India
 Listing Agreement:
 Scheme before the Court/ Tribunal must not violate, override or
circumscribe the securities laws or stock exchange requirements
 Disclosure required
 Shares allotted by unlisted transferee company to shareholders of listed
transferor company under a HC sanctioned scheme – can be listed
without an IPO subject to conditions (DIP).
 Eg. Dabur Pharmaceuticals
 Constitutes ‘Price Sensitive Information’ in terms of Insider Trading
Regulations.
 Compliance with Delisting Guidelines if public shareholding below
prescribed limit.

D) Mergers
MISCELLANEOUS ISSUES
 Foreign Exchange Management Act, 1999
• Where the amalgamated company is Indian, non resident
shareholders of the foreign amalgamating company require RBI
approval to receive shares.
• Where the amalgamated company is foreign, the issue of its shares
to Indian shareholders requires RBI approval.
• Automatic route available where non residents have to be issued
shares in a merger of Indian companies.
 Human Resources

22 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7
 • Workmen entitled to retrenchment benefits unless retained in
employment on same terms.
• Adjustments of pay scale needs to be resolved.
 Global Trust employees were retained on same terms in
OBC. Pay packages of former GTB staff could be altered
only after 3 years. OBC management had to contend with
GTB’s complex salary structure.

E) Mergers & Acquisitions

COMPETITION LAW

 Monopolistic and Restrictive Trade Practices Act, 1969

• Status: Repealing provision in Competition Act, 2002 not notified.
• No Central Government approval required for a merger or
acquisition under the MRTPA
• Act attracted only if amalgamated company discovered to be
monopolistic in its working not at stage of amalgamation-
Hindustan Lever, 1995 Supp (1) SCC 499

 Competition Act, 2002 (Partially notified)

• Merger or Acquisition = “Combination” if stipulated thresholds
respecting aggregate asset or turnover are exceeded
• Prior approval of combination is not mandatory
• Test – “Cause or likely to cause an appreciable adverse effect on
competition within the relevant market”

23 Project on merger and acquisition of TATA motors & Jaguar| PGPM 08(Fin) – Group 7