MERGERS

&
ACQUISITIONS
 GROUP
MEMBERS
PAURAV (14)

JAY (16)

ANDREW (18)

AVNI (20)

INDERPAL (22)

NIRAV (24)
INTRODUCTION

• MERGER
•AQUISITION
MOTIVES BEHIND MERGER AND
AQUISITION
• Synergy
• Increased
revenue/Increased
Market Share
• Cross selling
• Taxes
• Resource transfer
 REASONS FOR MEGER AND
AQUISITIONS
• Obtaining quality staff or
additional skills, knowledge of
your industry or sector and
other business intelligence.

• Accessing funds or valuable

assets for new development

• Your business underperforming

• Accessing a wider customer

base and increasing your
market share

• Reducing competition
 WHY NOT?
• Booming Stock Market
• Glory – Seeking
• Fear
• Diversification or Poor Business
fit.
• Competitor
• Manager’s hubris (Overpayment)
• Cultural Conflict
• Integration of IT
• Compatibility of systems
• Governance & Leadership
• Boardroom Schisms
• Regulatory Delay
 LEGAL PROCEDURE
• The moa to be
scrutinized.
• Intimation to stock
exchange.
• Approval of draft
amalgamation proposal.
• Notice to shareholder
and creditors.
• Transfer of assets and
liabilities.
• Issue of shares and
debentures.
 SEBI GUIDELINES
•The securities market is
regulated by SEBI
established under the
Securities and Exchange
Board of India Act 1992
(SEBI Act).

• SEBI has prescribed the

Securities and Exchange
Board of India (Substantial
Acquisition of Shares and
Takeovers) Regulations
1997 and SEBI Takeover
Code which regulates the
acquisition of shares and
 SEBI (SUBSTANTIAL ACQUISITION
OF SHARES AND TAKEOVERS)
REGULATION.
Checkpoints before making the
public announcement
• Appointment of Merchant
Banker
• Drafting of the Public
Announcement and Letter of
offer to be given to the
existing shareholders of the
Target Company
• Arranging cash for opening
Escrow Account
• Opening Escrow Account
Mandatory Requirements
• Acquiring shares or voting rights, singly or jointly with persons
acting in concert, which, along with his existing shareholding,
would entitle him to exercise 15% or more voting rights, can
acquire such additional shares only after making Public
Announcement to acquire at least 20% of the voting capital of the
Target Company from shareholders through an open offer.
• If a target company is unlisted, but has obtained listing of 10% of
issue size, then the limit of 75% will be increased to 90%
• Creeping Acquisition
• Non compliance of vital regulatory provisions by the acquirer
would now attract more stringent penalty provisions such as;
• Forfeiture of escrow
• Payment of interest to the shareholders for delay in payment of
consideration
• Prohibiting entry into the board of the target during the offer
period.
 TAKEOVER CODE
•Public announcement is required to be made by the acquirer
through its merchant banker not later than four working days
after entering into an agreement for acquisition of shares or
voting rights.

•The merchant banker has to publish it in all editions of one

English National Daily, Hindi National Daily, Regional Language
Daily with wide circulation at a place where the registered
office of the target company is situated and at a place of the
stock exchange where the shares of the target company are
more frequently traded.

•The public announcement specifies a date, which shall be the

‘specified date’ for the purpose of determining the names of
the shareholders to whom the Letter of Offer should be sent.
• The Letter of Offer is required to be dispatched to the shareholders not
earlier than twenty-one days from its submission to SEBI within which
SEBI may require changes to be made to the Letter of Offer.

• The public announcement should contain details about the acquirer, the
purpose of acquisition, the price of offer, the specified date of submission
of Letter of Offer

• The date of opening of the offer should not be later then sixty days from
the date of public announcement and the offer is required to be open for
a period of thirty days

• Withdrawal accepted up to three days prior to the date of closure.

• Under the Takeover Code, the price may be paid either in cash or by
issue, exchange and or transfer of shares of the acquirer company where
the acquirer is a listed company and in other cases by issue, exchange
and/or transfer of secured instruments of the acquirer company.
• Under the Takeover Code SEBI does not approve the offer price.
The acquirer / merchant banker is required to ensure that all the
relevant parameters are taken into consideration while determining
the offer price and that justification for the same is disclosed in the
Letter of Offer.

• Takeover Code does not apply to the following types of transactions

• public issue to a rights offer
• inter-se transfer of shares amongst groups, relatives and
promoters
• Purchase by a registered stock-broker on behalf of clients
• By a public financial institution on their own account
• acquisition of shares by way of transmission on succession or
inheritance.
• acquisition of shares by government companies and statutory
corporations
• or any scheme framed under the Sick Industrial Companies
(Special Provisions) Act, 1985
 SEBI’S DILEMMA
• Disclosures by
companies during
takeovers, mergers
and acquisitions.
• Insider trading
• Centurion bank and
ICICI bank
KEYS TO SUCCESS OF MERGERS AND ACQUISITIONS
It’s a continual process not an event

Key decisions should be made swiftly

Communicating effectively

Close involvement of hr manager

Building organizational capacity

Appointment of an integration manager

Standardized integration plan

 IS
NOW
MAX
TOUCH

 DATE: 20TH SEPTEMBER 2007

 PRICE : $19.3 BILLION (67% STAKE-$794 PER SHARE)

 SLOGAN : “CHANGE IS GOOD”

 BIGGEST BRAND CHANGE IN INDIA AND FORCHAIRMAN HUTCH ESSAR - RAVI

RUIA & CEO VODAFONE INDIA -
VODAFONE ARUN SARIN

 FOURTH BIGGEST BRAND CHANGE GLOBALLY IN 2007

 IMPACTING 35 MILLION CUSTOMERS & 4 LAKH RETAIL

OUTLETS
 IS
NOW

 AIM

 IMAPCT ON HUTCH
CUSTOMERS
THANK
YOU