mergers and acquisitions, meaning, difference, types of M&A, process of M&A, reasons of failure, how to prevent failure, example of Indian airlines and Air India

1. Mergers
&
Acquisitions
Presented By:
Aprameya Joshi
Mourya B
Kishore Sharma
Madhuri
Sephora

2. Merger:
A transaction where two firms agree to integrate their operations on a
relatively co-equal basis because they have resources and capabilities that
together may create a stronger competitive advantage.
Example: Company A+ Company B= Company C
Acquisition :
A transaction where one firms buys another firm with the intent of more
effectively using a core competence by making the acquired firm a subsidiary
within its portfolio of business
It also known as a takeover or a buyout
Example: Company A+ Company B= Company A.

3. Difference between merger and acquisition :
i. Merging of two organization in to
one.
ii. It is the mutual decision.
iii. Merger is expensive than
acquisition(higher legal cost).
iv. Through merger shareholders can
increase their net worth.
v. It is time consuming and the
company has to maintain so much
legal issues.
vi. Dilution of ownership occurs in
merger.
i. Buying one organization by another.
ii. It can be friendly takeover or hostile
takeover.
iii. Acquisition is less expensive than
merger.
iv. Buyers cannot raise their enough
capital.
v. It is faster and easier transaction.
vi. The acquirer does not experience the
dilution of ownership.
MERGER ACQUISITION

4. Types of Mergers & Acquisitions
Mergers
 Horizontal merger
 Vertical merger
 Concentric merger (similar
products)
 Conglomerate merger
 Reverse merger
Acquisitions
 Friendly
 Hostile
 Full cash
 Partly cash and partly shares
 Full in shares

5. Some Mergers and Acquisitions:
Mergers:
 Tata and Docomo
 Hero and Honda
 Maruthi and Suzuki
Acquisition:
Flipkart and Myntra
Myntra and Jabong
BookMyShow and Masti Teckets

6. Why Merger or Acquisition:
Synergy(1+1>2)
Financial Operational Managerial
= It is pooling of complementing
resources

7. PROCESS OF MERGER & ACQUISITION IN INDIA:
The process of merger and acquisition has the following steps:
i. Approval of Board of Directors
ii. Information to the stock exchange
iii. Application in the High Court(competition commission of India: if required)
iv. Shareholders and Creditors meetings
v. Sanction by the High Court
vi. Filing of the court order
vii. Transfer of assets or liabilities
viii. Payment by cash and securities
Maximum Waiting period:210 days from the filing of notice(or the order of the commission - whichever
earlier).

8. Process For Unlisted And Unregulated Sectors
 Interested party will approach an investment bank for the deal
 Valuation of target company is done by the investment bank
 A one pager on no name basis is prepared and sent to interested parties
of acquisition.
 The interested parries will sign an NDA( non disclosure agreement to get
the information memorandum.
 After further negotiations the del is finalized for merger or acquisition.
valuation
One pager
& NDA
Information
Memorandum
Deal

9. Why Mergers and Acquisitions Fail?
 Cultural Difference
 Flawed Intention
 No guiding principles
 No ground rules
 No detailed investigating
 Poor stake holder outreach

10. How to Prevent the Failure
 Continuous communication – employees, stakeholders,
customers, suppliers and government leaders.
 Transparency in managers operations
 Capacity to meet new culture higher management
professionals must be ready to greet a new or modified
culture.
 Talent management by the management

11. Merger Between Air India And Indian Airlines
 The government of India on 1 march 2007 approved the merger of Air India
and Indian airlines.
 Consequent to the above a new company called National Aviation Company
of India limited was incorporated under the companies act 1956 on 30 march
2007 with its registered office at New Delhi.

12. Aim of The Merger
 Create the largest airline in India and comparable to other airlines in Asia.
 Provide an Integrated international/ domestic footprint which will significantly enhance customer
proposition and allow easy entry into one of the three global airline alliances, mostly Star
Alliance with global consortium of 21 airlines.
 Enable optimal utilization of existing resources through improvement in load factors and yields
on commonly serviced routes as well as deploy ‘freed up’ aircraft capacity on alternate routes.
 The merger had created a mega company with combined revenue of Rs 150 billion ($3.7billion)
and an estimated fleet size of 150. It had a diverse mix of aircraft for short and long haul
resulting in better fleet utilization.
 Provide an opportunity to fully leverage strong assets, capabilities and infrastructure.
 Provide an opportunity to leverage skilled and experienced manpower available with both the
Transferor Companies to the optimum potential.
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13. Benefits of The Merger
 Potential to launch high growth & profitability businesses (Ground Handling Services,
Maintenance Repair and Overhaul etc.)
 Provide maximum flexibility to achieve financial and capital restructuring through revaluation of
assets.
 Economies of scale enabled routes rationalization and elimination of route duplication. This
resulted in a saving of Rs1.86 billion, ($0.04 billion) and the new airlines will be offering more
competitive fares, flying seven different types of aircraft and thus being more versatile and
utilizing assets like real estate, human resources and aircraft better. However the merger had also
brought close to $10 billion (Rs 440 billion) of debt.
 The new entity was in a better position to bargain while buying fuel, spares and other materials.
There were also major operational benefits.
 Traffic rights - The protectionism enjoyed by the national carriers with regard to the traffic right
entitlements is likely to continue even after the merger. This will ensure that the merged Airlines
will have enough scope for continued expansion, necessitated due to their combined fleet
strength.
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14. Presented By:
Aprameya Joshi
Mourya B
Kishore Sharma
Madhuri
Sephora