Top 10 Biggest Mergers and Acquisitions in India

Paul was also not supported by The Life Insurance Corporation of India, a government owned monetary organization that held a minority stake in the organizations. Although fruitless, Paul’s threatening danger sent shockwaves through Indian business world. It is now and again moreover called ‘spontaneous or unwanted bid’ since it is presented by the acquirer with next to no requesting or approach by the objective organization.

While before this deal, UPL was majorly an agro product manufacturing company. However, a deal was struck with Aditya Birla group, which closed in early 2017, in which Jaypee cashed out by selling all of its assets to Ultra Tech, another cement company, in a deal of Rs Cr. While Jaypee avoided the cheap valuation in NCLT trials, Ultra Tech had an added 21 million ton capacity of production. Flipkart, the proud Indian e-commerce giant funded by Singapore based companies, acquired the fashion label ‘Myntra’ in 2014 whose product offering spanned across fashion and life-style products. This deal was made for a whopping Rs 2000 crores, however Myntra still continues to operate as a fashion apparel wing of Flipkart.

The shareholding of both the companies are surrendered and fresh shares of the new company are issued to the shareholders. When two or more companies mutually decide to combine and form a new company, it is known as Merger. Therefore, the process of merger means consolation of multiple businesses into one. By Acquiring Minority Shares An acquirer company can plan to acquire at least 50% of the shares of the Target Company. Filing of the Report of Takeover Once the process of Takeover is complete, the acquirer company files a report of takeover within seven days of the conclusion of Takeover to the commission.

The arrangement has the potential to turn the newly formed company into one of the largest and most sought-after in the country. Government initiatives to speed up mergers and acquisitions are examples of government help. A company taking over another company happens more often than you might expect. Mergers happen when two or more companies combine to form a single entity.

This makes the overall acquisition more expensive for the acquiring company making it less attractive or feasible. A proxy vote is when an acquiring firm persuades current shareholders to vote out the target company’s management so that it can be taken over more easily. And, company ‘B’ rejects the offer, saying it to not be in the best interest of shareholders. The news has again put a spotlight on the topic of « hostile takeover » in the Indian corporate industry.

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Almost fifteen years after Swaraj Paul’s unsuccessful hostile offers, the Indian government and business areas were still not ready to acknowledge an antagonistic unfamiliar obtaining. The initial offers from Tata were at£4.55 per sharebut following a bidding war with CSN, Tata raised its bid to£6.08 per share. Following Corus Steel had its name changed to Corus Steel and the combination resulted in the fifth-largest steel making company. The possible reasons for a hostile takeover can be gaining access to key assets in the target company, expansion of the market share, achieving economies of scale, elimination of competition, and increasing shareholder value. Hostile takeovers are complex and often require significant planning, resources, and expertise.

They may also be initiated by companies that are interested in acquiring the target company. The acquiring company may be left with a large debt if the proxy fight is unsuccessful. Third, the increased use of shareholder activism has made it easier for hostile bidders to find support from other shareholders. Activist investors are often willing to back a hostile bid to force changes at the target company. In the form of Cash When the acquirer company pays the consideration for the shares acquired in the form of cash to the target company.

T Mobile merger with MetroPCSIt is an American public wireless telecommunication corporation, which is owned by its parent German telecommunication company- Deutsche Telekom . Later, the company had a reverse IPO with MetroPCS, an American prepaid wireless service provider. ABC merger with DisneyAmerican Broadcasting Company was an American radio network that was reverse merged with Citadel Broadcasting corporation to spin off its former parent- Disney in 2007.

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Generally, takeovers are executed by buying a majority stake in a company that is willing to sell the stake for a predetermined price. One company takes over another company through acquisitions or mergers. In the process of a takeover, the company that makes the bid to buy is called an acquirer, and the company that is being acquired/bought is called the acquiree. Inventiva cover entrepreneurship articles & stories and interviews of entrepreneurs, ceo, cxo, top management, reviews of products and services & tech, ai, ml, vr, analytics news. We also carry some very important aspects of internal & external trade, international affairs which directly or indirectly affects the global as well as Indian economy.

In case it rejects the offer citing various reasons, option X has to force the deal through various methods, including a proxy vote, a tender offer, or a large stock. Evidently, in Adani Group vs NDTV’s case, the former has gone to acquire the channel by purchasing large stocks. Here both the private, as well as public parties, are benefitted, such that, Private investors obtain shares through the primary market, whereas, public investors get a chance to be a part of this globalized offering. In horizontal and vertical mergers, the resulting entities attain a stronger market power, resulting in power to influence prices and be more in control of its supply chain. An acquisition is when a larger company acquires a smaller company, thereby absorbing the business of the smaller company. On the other hand, a merger describes two firms, of approximately the same size, that join forces to move forward as a single new entity, rather than remain separately owned and operated.

Since a hostile takeover takes place by the acquirer directly approaching the shareholders, quite often the affected party is usually the management of the target company and the majority shareholders. For instance, in the case of NDTV, prior to the acquisition, Radhika Roy and Prannoy Roy, two of the Directors of NDTV individually and through their parent company RRPR held majority shareholding. Post-acquisition, AEL replaced them to become the largest individual shareholder in NDTV. Similarly, the management of the target company is also at risk and gets affected because in terms of Section 169 of the Companies Act, 2013 (« Companies Act »), the directors are vulnerable to being removed by a mere ordinary resolution. The goodwill that the management has established in the process of advancing the company gets affected because of the takeover.

L&T, Mindtree: The tale of hostile takeovers in Indian corporate history

In 1983, Swaraj Paul, a London-based industrialist, attempted to seize control of the management of two Indian companies- Escorts Limited and DCM, by purchasing their stock on the stock market. Following lengthy legal proceedings, the parties reached an agreement through mediation, with Swaraj selling his shares back to the promoters of the respective companies at a mutually negotiated price. A proxy fight is a battle for control of the Board of Directors in the target company.

In 2010, when AOL took over much larger firm TimeWarner, it was considered the ‘deal of the millennium’ at the time. However, the former destroyed its value over time and announced a split later. Public companies have a high amount of revenues, which in turn is a key feature to consider converting into one. Over and above, the company’s securities then enjoy higher liquidity when they are traded on an exchange. M&A is really confirmed to be one of the most useful methods to overcome current difficulties and improve the development of companies.

In what could be termed as the first three-way amalgamation in India, Vijaya Bank and Dena Bank both merged with Bank of Baroda, effective from April 1, 2020, resultantly forming the third largest bank in India. Vodafone was still fighting the tax case with India back then, a while both companies were still reverberating from the 2G scam. In terms of compensation, the companies both hold an almost equal stake in the post-merger company, while Idea holds 54.9%, Vodafone holds 45.1%. Current Indian law exceptionally compels the capacity of a target organization to decline to enrol shares. According to a correction to the Companies Act accommodating free adaptability of offers, organizations may not decline to enrol shares except if the Indian Company Law Board views the move as disregard to the law. The sponsors utilized their political clout against Paul, notwithstanding his own binds to Prime Minister Indira Gandhi.

Asia’s richest man Adani launched a hostile takeover of media giant NDTV, first with an indirect acquisition of a 29.18% stake in the broadcaster followed by an offer to buy out a further 26% controlling stake. NDTV said the debt was converted into equity without any input from the founders or the company. The advantages of a reverse merger include less expenditure as the deal is between a private and public shell company and there is no need to create a hassle.

The Takeover Regulations prescribe certain circumstances where an acquirer is obligated to make a Mandatory Tender Offer to the shareholders of the target company to acquire at least 26% of the shares of the target company. In 2012, Essel Group’s Subhash Chandra sought to control Iragavarapu Venkata Reddy Construction Limited , an infrastructure company. The promoters in the target company had only 11.2 per cent stake in IVRCL. Subhash Chandra’s Essel Group after acquiring 10.7 per cent stake in IVRCl, made a u-turn and decided to exit its shareholdings in the target company.

Such an offer is generally at a premium price to attract shareholders with significant gains. Hostile Takeover basically refers to the acquisition of a company by another company against the consent of the former. Under this kind of takeover, the acquirer usually goes through either a tender offer or a proxy fight. The company that initiates a hostile takeover bid approaches the shareholders directly, contrary to seeking approval from the company’s directors. The one who acquires through a hostile bid is called a corporate raider.

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This deal was frowned upon by the executives because they were influenced by the patriotic economics of several governments. The deal worked both for Idea and Vodafone as Vodaphone went on to hold a45.1% stakein the combined entity with the Aditya Birla group holding a26% stakeand the remaining by Idea. On the 7th of September,Vodafone Idea unveiled its brand new identity ‘Vi’which marked the completion of the integration of the 2 companies.

First, the globalisation of the economy has made it easier for companies to operate in multiple countries and to raise capital internationally. This has made it easier for hostile bidders to find the financing necessary to make an aggressive offer. Are typically done through a negotiated transaction, in which the acquiring company and the target company’s management agree on the terms of the acquisition. If the transaction is approved, the acquiring company will then take control of the target company. In a company takeover, the losses incurred by an acquirer company are set-off against the profits of a target company, thereby reducing the net taxable income.

• In 2006, Mittal Steel announced its initial bid of $23 billion for Arcelor which was later increased to $38.3 billion.
• S are typically done through a tender offer, in which the acquiring company makes an offer to buy shares of the target company at a premium to the current market price.
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• In this tactic, the target company tries to acquire the company that has made a hostile takeover attempt.

In a span of a few yeatakeover examples in india, he has claimed a spot as one of the richest people in the world. Along with the acquisition of NDTV, the Adani Group also acquired a majority stake in Ambuja Cements and its subsidiary, ACC Ltd. Adani is now the second largest cement manufacturer in the country after Aditya Birla Group’s UltraTech. UPL was looking for diversification of its product line and increasing its market reach, when in 2018 Arysta LifeScience expressed an intention to sell.

Strategies of Mergers and Acquisitions are globally adopted by the companies to excel in this competitive business environment. Companies are adopting M&A to restructure their businesses for a post-Covid world, and this increased deal pace is being driven by faster change across sectors. Hindalco Industries Ltd made a $6 billion all-cash offer to buy Novelis Inc., combining the world’s 13th largest aluminium producer with a significant manufacturer of vehicle components, cans, and packaging to become a powerful global metals powerhouse. This acquisition provided the company with access to high-end vehicles, as well as the opportunity to add two legendary luxury brands to its roster and a global presence. Tata Motors possess the world’s cheapest car, the US$ 2,500 Nano, as well as luxury brands like Jaguar and Land Rover. The Uber Eats brand in India will cease to exist, and all its customers will be transferred to Zomato’s app.

Proxy Fights In this, the acquirer company forces the shareholders of the target company to either agree or gather proxies to win the corporate vote. According to this method, shareholders of the target company vote out the management for making the process of takeover easier. In India, company takeover is one of the most preferred growth-oriented strategies. It is a process in which one company acquires control over another by purchasing the majority stake in that company. The company acquiring the majority stake is known as the Bidder or Acquirer, and the company whose control is acquired is known as the Target Company. Fourth, if a company avails the option to adopt the principle of proportional representation for the appointment of directors in terms of Section 163 of Companies Act, the chances of a hostile takeover can be lessened.

Tata group acquired Air India in January 2022 through its subsidiary Talace after making a successful bid of INR 18000,00,00,000/- for 100% stake in Air India. This acquisition could be a part of Tata group’s strategy for aviation business as the group also holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines. M&A is aimed to smooth a firm’s earnings outcomes, which in turn smooths the stock price over time, providing conservative investors more confidence in the company. This in turn offers the company new sales opportunities and new areas to explore the possibility of their business. If a tale of poison pills, dawn raids and shark repellents were to be narrated, one could reasonably assume that the tale would feature at least one jaded well-heeled spy. And it would not fall very far from the truth, as hostile takeovers have typically been imbued with the intrigue of a classic thriller.

Down raids are referred to the sudden entry of the predator acquirer in the open markets. The acquirer company attempts to buy a significant stake in the target company at a higher than current value in a very short time. This also allows them the element of surprise and an opportunity to buy a controlling stake. This type of acquisition is followed by a further takeover offer or similar action over the course of an acquisition attempt.