The concept of mergers acquisitions in India was not popular until the year 1988. During that period a very small percentage of businesses in the country used to come together, mostly into a friendly
acquisition with a negotiated deal. The key factor contributing to fewer companies involved in the mergers is the regulatory and prohibitory provisions of MRTP Act, 1969. According to this Act, a company or a
firm has to follow a pressurized and burdensome procedure to get approval for mergers acquisitions.
The year 1988 witnessed one of the oldest business acquisitions or company mergers in India. It is the well-known ineffective unfriendly takeover bid by Swaraj Paul to overpower DCM Ltd. and Escorts Ltd.
Further to that many other Non-Residents Indians had put in their efforts to take control over various companies through their stock exchange portfolio.
A merger is a combination of two or more businesses into one business. In India the term “amalgamation” is used synonymously for merger. A merger has also been defined as an arrangement whereby the
assets of two (or more) companies become vested in, or under the control of one company (which may or may not be one of the original two companies), which has as its shareholders, all or substantially all,
the shareholders of the two companies. In merger, one of the two existing companies merges its identity into another existing company or one of more existing companies may form a new company and
merge their identities into the new company by transferring their business and undertakings including all other assets and liabilities to the new company (hereinafter referred to as the merged company). The
shareholders of the company whose identity has been merged (i.e. merging company) get substantial shareholding in the merged company. They are allotted shares in the merged company in exchange for
the shares held by them in the merging company according to the shares exchange ratio incorporated in the scheme of merger as approved by all or prescribed majority of the shareholders of the merging
companies and the merged companies in their separate general meetings and sanctioned by the court as per the agreed exchange ratio.
Merger is an external strategy for growth (i.e. inorganic growth strategy) of the organization. Mergers as a growth strategy is pretty all over the world including India. Many business firms go in for mergers
instead of internal source of growth because of certain reasons. The benefits that occur to merging units include quick and easy entry, reduced completion and dependence, faster rate of growth, merits of
diversification, availing tax concessions, benefits of synergy etc.
An acquisition may be defined as a corporate action in which a company buys most, if not all, of the target company’s ownership stakes in order to assume control of the target firm. Acquisitions are often
made as part of a company’s growth strategy whereby it is more beneficial to take over an existing firm’s operations and position compared to expanding on its own.
India in the recent years has showed tremendous growth in the Mergers Acquisitions deal. It has been actively playing in all industrial sectors. It is widely spreading far across the stretches of all industrial
verticals and on all business platforms. The increasing volume is witnessed in various sectors like that of finance, pharmaceuticals, telecom, FMCG, industrial development, automotives and metals.
The volume of transactions in Mergers Acquisitions India has apparently increased to about 67.2 billion USD in 2010 from 21.3 billion USD in 2009. At present the industry is witnessing a whopping 270%
increase in M&A deal in the first quarter of the financial year. This increasing percentage is mainly attributed to the increasing cross-border M&A transactions. Over that increasing interest of foreign
companies in Indian companies has given a tremendous push to such transactions.
Large Indian companies are going through a phase of growth as all are exploring growth potential in foreign markets and on the other end even international companies are targeting Indian companies for
growth and expansion. Some of the major factors resulting in this sudden growth of mergers acquisitions deals in India are favorable government policies, excess of capital flow, economic stability, corporate
investments, and dynamic attitude of Indian companies.
The recent merger and acquisition 2011 made by Indian companies worldwide are those of Tata Steel acquiring Corus Group plc, UK based company with a deal of US $ 12,000 million and Hindalco acquiring
Novelis from Canada for US $ 6,000 million.
With these major mergers and many more on the annual chart, Mergers Acquisitions India is taking a revolutionary form. Creating a niche on all platforms of corporate businesses, merger and acquisition in
India is constantly rising with edge over competition.
Mergers can be in the form of Horizontal merger; vertical merger, conglomerate merger etc. and acquisitions can be in the form of friendly acquisition and negotiated acquisition.
Acquiring companies use various methods to value their targets. Some of these methods are based on comparative ratios – such as the P/E and P/S ratios – replacement cost or discounted cash flow
analysis. An M&A deal can be executed by means of a cash transaction, stock-for-stock transaction or a combination of both. A transaction struck with stock is not taxable.
Mergers and Acquisitions in India are governed by the Indian Companies Act, 1956, under Sections 391 to 394 and SEBI (Substantial Acquisition of shares takeover) Regulations, 2011. Although mergers and
acquisitions may be instigated through mutual agreements between the two firms, the procedure remains chiefly court driven.
Mergers can fail for many reasons including a lack of management foresight, the inability to overcome practical challenges and loss of revenue momentum from a neglect of day-to-day operations.
Henceforth, a company should always take assistance of professionals while undergoing these procedures. Should your company is also looking for mergers acquisitions services; you may contact at
firstname.lastname@example.org or visit http://lexisjuris.in/services/mergers-acquisitions/ for more details.
M&A comes in all shapes and sizes, and investors need to consider the complex issues involved in M&A. The most beneficial form of equity structure involves a complete analysis of the costs and benefits
associated with the deals.
Acquisitions, New Delhi Law Office and Law Firms in Delhi.