Académique Documents
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1.1 Introduction
1.2 What is Merger?
1.3 What is Acquisition?
1.4 Purpose of Merger and Acquisition
1.5 Types of Merger
1.6 Advantages of Merger
1.1 INTRODUCTION
We have been learning about the companies coming together to from
another company and companies taking over the existing companies to expand
their business. With recession taking toll of many Indian businesses and the
feeling of insecurity surging over our businessmen, it is not surprising when we
hear about the immense numbers of corporate restructurings taking place,
especially in the last couple of years. Several companies have been taken over
and several have undergone internal restructuring, whereas certain companies in
the same field of business have found it beneficial to merge together into one
company. In this context, it would be essential for us to understand what
corporate restructuring and mergers and acquisitions are all about.
All our daily newspapers are filled with cases of mergers, acquisitions,
spin-offs, tender offers, & other forms of corporate restructuring. Thus
important issues both for business decision and public policy formulation have
been raised. No firm is regarded safe from a takeover possibility. On the more
positive side Mergers & Acquisitions may be critical for the healthy expansion
and growth of the firm. Successful entry into new product and geographical
markets may require Mergers & Acquisitions at some stage in the firm's
development. Successful competition in international markets may depend on
capabilities obtained in a timely and efficient fashion through Mergers &
Acquisitions. Many have argued that mergers increase value and efficiency and
move resources to their highest and best uses, thereby increasing shareholder
value.
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(c) General public affected in general having not been user or consumer or
the worker in the companies under merger plan.
(a) Consumers
The economic gains realized from mergers are passed on to consumers
in the form of lower prices and better quality of the product which directly
raise their standard of living and quality of life. The balance of benefits in
favour of consumers will depend upon the fact whether or not the mergers
increase or decrease competitive economic and productive activity which
directly affects the degree of welfare of the consumers through changes in
price level, quality of products, after sales service, etc.
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Chapter 2
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travel loans, as well as many banks have started capitalizing on recent capital
market boom by providing IPO finance to the investors.
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Once the valuation is accepted by the respective banks , they send the
proposal along with all relevant documents such as Board approval,
shareholders approval, valuation report etc to Reserve Bank of India and
other regulatory bodies such Security & exchange board of India SEBI
for their approval.
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such information
C. If the values have relied upon projected information, the names and
designations of the persons who have provided such information and the
extent of verification, if any, made by the values in relation to such
information
D. Details of the projected information on which the values have relied
E. Detailed computation of the realizable value of assets of the acquired
bank.
Chapter 3 COMPANY PROFILE
3.1 Kotak Mahindra Bank
3.2 ING Vysya Bank
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Type
Public company
Traded as
BSE: 500247
Industry
Founded
Headquarters
Mumbai, India
Products
NSE: KOTAKBANK
Number of
employees
Website
www.kotak.com
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Kotak Mahindra Finance Limited enters leasing and hire purchase business
5
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Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited,
for financing Ford vehicles.
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(KMAMC).
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www.kotaksecurities.com).
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banking license from the Reserve Bank of India (RBI). With this, KMFL becomes
the first non-banking finance company to be converted into a commercial bank Kotak Mahindra Bank Ltd.
200
4
200
5
200
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Enters alternate assets business with the launch of a private equity fund.
Kotak Mahindra Group realigns joint venture in Ford Credit; takes 100%
ownership of Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus
Limited) and sells its stake in Ford credit Mahindra to Ford.
Launches a real estate fund
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Buys out Goldman Sachs' equity stake in Kotak Mahindra Capital Company and
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200
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ING Vysya Bank has merged with Kotak Mahindra Bank with effect from 1 April
2015.
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Advisory. In the Brand Trust Report 2013, Kotak Mahindra Bank was ranked
861st among India's most trusted brands and subsequently, according to the
Brand Trust Report 2014, Kotak Mahindra Bank was ranked 114th among
India's most trusted brands.
Won National Securities Depository Ltd. (NSDL) award in the Best Performer
in account Growth Rate category 2013, for Demat Accounts
Type
Public
BSE: 531807
Industry
Founded
2002
(est. 1930 as Vysya Bank)
Headquarters
Bangalore, India
Key people
Revenue
Net income
Total assets
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Number of
employees
Over 10,000
No. of Branches: 527
No. of ATMS: 405
No. of Extension counters: 10
Website
ING Vysya Bank was a privately owned Indian multinational bank based
in Bangalore, with retail, wholesale, and private banking platforms formed from
the 2002 purchase of an equity stake in Vysya Bank by the Dutch ING Group.
This merger marks the first between an Indian bank and a foreign bank. Prior to
this transaction, Vysya Bank had a seven-year-old strategic alliance with
erstwhile Belgian bank Banque Bruxelles Lambert, which was also acquired by
ING Group in 1998.
As of March 2013, ING Vysya is the seventh largest private sector bank in India
with assets totaling 54836 crore (US$8.1 billion) and operating a pan-India
network of over 1,000 outlets, including 527 branches, which service over two
million customers. ING Group, the highest-ranking institutional shareholder,
currently holds a 44% equity stake in ING Vysya Bank, followed by Aberdeen
Asset Management, private equity firm Chrys Capital, Morgan Stanley,
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and Citigroup, respectively. ING Vysya has been ranked the "Safest Banker" by
the New Indian Expressand among "Top 5 Most Trusted Private Sector Banks"
by the Economic Times.
On 20 November 2014, in an all stock amalgamation, ING Vysya Bank decided
to merge with Kotak Mahindra Bank, creating the fourth largest private sector
bank in India. On 1 April 2015, the Reserve Bank of India approved the merger.
Chapter 4
4.1 Mergers and Acquisitions
4.2 Formal merger with the ING Group
4.3 Post merger News
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4.1 Mergers and acquisitions (M&A) are transactions in which the ownership
of companies, other business organizations or their operating units are
transferred or combined. As an aspect of strategic management, M&A can allow
enterprises to grow, shrink, change the nature of their business or improve their
competitive position.
From a legal point of view, a merger is a legal consolidation of two entities into
one entity, whereas an acquisition occurs when one entity takes ownership of
another entity's stock, equity interests or assets. From a commercial and
economic point of view, both types of transactions generally result in
the consolidation of assets and liabilities under one entity, and the distinction
between a "merger" and an "acquisition" is less clear. A transaction legally
structured as a merger may have the effect of placing one party's business under
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Merger Introduction
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ING Vysya Bank has merged with Kotak Mahindra Bank with effect from April
1, 2015 and the combined entity will bear the name Kotak Mahindra Bank. I see
this as a historic moment for the Indian financial services sector, because never
before has a merger of this magnitude ever taken place.
ING Vysya Bank has been a respected name in Indian banking, with a sterling
legacy spanning eight decades.
In less than thirty years, Kotak Mahindra Group has built a comprehensive
financial services conglomerate that truly serves all its customers needs under
the same roof.
The ING Vysya-Kotak Mahindra merger will give the merged entity a
significant national footprint, affording it the capacity and means to serve you
even better. Our deep Indian roots, long and proven experience, and global
standards of service will enable us to deliver a truly seamless banking and
financial services experience.
Over 230 million Indians can now benefit from Kotaks offerings, including
6%* p.a. interest on the balances of above rupees one lakh in their savings
accounts, helping them earn more and from banking services delivered through
1,200+ branches and 1,900 ATMs across nearly 643 locations.
As we integrate our two organisations, my colleagues will be working hard to
minimise the hiccups entailed in such transitions. However, I do seek your
forbearance and support in advance.
We are at the cusp of a remarkable opportunity. I am confident that this merger
will firmly place us in a different orbit and on a new trajectory of growth and
excellence.
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insurance products to farmers by employing the fertilizer company's brokerdealer network in the rural sector.
In 2005, ING Vysya Bank named Ned Swarup to the CEO and MD role. ING
Vysya launched a cheque account product for mid-sized businesses. It also
rolled-out its own proprietary online money transfer service.
In 2006, Vaughn Richtor stepped into the CEO and MD role for a fixed threeyear term. Under Mr Richtor's leadership, ING Vysya went private and delisted
from the Bangalore Stock Exchange. ING Vysya also forayed into private
banking and portfolio management services.
In 2009, Shailendra Bhandari was appointed as CEO and MD. He was formerly
the Head of Private Equity at Tata Capital, the Tata Group's private equity arm.
Having completed his three-year term in India, Vaughn Richtor was promoted
to CEO of ING Banking Asia. Mr Thiagarajan was selected for his vast
international experience across strategic planning, economics and finance,
technology and systems.
As of January 2013, ING Group announced plans to divest itself of its Indian
insurance and investment management businesses through the sale of its 26%
interest in ING Vysya Life Insurance Company Ltd. to its joint venture
partner Exide Industries Ltd.
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The acquisition will make Kotak Mahindra Bank the fourth largest private
sector lender in the country, will have about 1,200 branches and a total business
of Rs 2.25 lakh crore, as on December 2014, and a combined market
capitalisation of close to Rs 1.25 lakh crore.
Jaimin Bhatt, president & group chief financial officer, Kotak Mahindra, said
there would be a total of 30,000 employees in the bank after the merger, while
at the group level, there would be 40,000 employees.
In November 2014, Kotak Mahindra had announced it was acquiring
Bengaluru-headquartered ING Vysya in an all-stock deal.
With respect to the branches, Bhatt said change at signage in ING Vysya
branches had already begun and the process would be completed within a
month. For ATMs, too, the same has started.
On employee rationalisation, Bhatt said, they were in a growth phase and would
need people for branch expansion. We will keep growing and would first
utilise our combined employee strength before hiring from external sources, he
added.
On restructuring the existing branch network, he said the company would look
into it. In Mumbai, Delhi, Bengaluru and Chennai, the bank would expand its
branch network. It would also look at shifting branches to new locations, if
necessary, he said.
In February, the proposed Rs 15,000-crore merger deal between Kotak
Mahindra Bank and ING Vysya Bank got the Competition Commission of
Indias approval.
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According to the fair trade regulator, the merger, which would create the
countrys fourth largest private sector lender, was not likely to have an
appreciable adverse effect on competition in India.
The deal implies a price of Rs 790 for each ING Vysya share, based on the
average closing price of Kotak shares during the month to November 19,
valuing the deal at about Rs 15,000 crore. That was a 16 per cent premium to a
like measure of ING Vysya market price, Kotak Bank had stated.
Chapter 5
5.1 FREQUENTLY ASKED QUESTIONS ABOUT THE MERGER
5.2 Conclusion
5.3 Bibliography
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Q1. Why have ING Vysya Bank and Kotak Mahindra Bank merged?
ING Vysya Bank and Kotak Mahindra Bank had complementary branch
networks, products and client segments. ING Vysya Bank has a stronger
presence in South India while Kotak has an extended franchise in the West and
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North India. The merger created a large financial institution with a vast national
footprint. Together, the new entity will have over 1,200 branches and 1,900
ATMs across the country and will be Indias 4th largest private sector bank.
Kotak Mahindra Bank is a one stop shop for all your financial needs be it
deposits, loans or investments. It has customized offerings for both individual
and corporate customers. It offers transaction banking, operates lending
verticals, manages IPOs and provides working capital loans. Kotak has one of
the largest and most respected Wealth Management teams in India, providing
the widest range of solutions to high net worth individuals, entrepreneurs,
business families and employed professionals.
Q3. Will ING Vysya Bank change its name to Kotak Mahindra Bank?
Yes. With effect from April 1st, 2015 ING Vysya Banks name has been changed
to Kotak Mahindra Bank. To help manage the transition from ING Vysya Bank
to Kotak Mahindra Bank, our branches and ATM signage will be changed to
ING Vysya Bank is now Kotak Mahindra Bank till complete integration of
systems and processes takes place.
Q4. How does this merger impact me as a customer now?
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Customers can now earn up to 6% p.a. interest on your savings account balance.
You also have access to a wider network of ATMs (1,900+ across the country).
These changes are w.e.f. April 1st, 2015. There is no change in the terms and
conditions, service offerings and charges of your existing accounts / products.
Q7. Will the ATM transactions be free of charge across all your ATMs?
Customers can now have access to the combined network of erstwhile ING
Vysya Bank and Kotak Mahindra Bank ATMs. The number of free transactions
will be as per your bank account features and yes, up to that limit, all
transactions on the combined network will be free. Next time you need to use an
ATM, look for the signage of Kotak Mahindra Bank or ING Vysya Bank is
now Kotak Mahindra Bank on ATMs.
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5.2 CONCLUSION
Analysts at top brokerage firms were of the view that the merger
between Kotak Mahindra Bank and ING Vysya Bank will be a happy
marriage and strategically fill many gaps for Kotak Mahindra Bank.
"The amalgamation would gave Kotak access to ING Vysya's 573
branches. An important point to note is that Kotak doesn't have branch
presence in 65 per cent of ING Vysya's current branch locations.
"The deal, if concluded as a full share swap deal, will help reduce the
promoter stake at Kotak Bank from 40.07 per cent to 33 per cent. Note,
the RBI has mandated that Kotak Bank reduce its promoter holding to
30% by December 2016 and 20% by March 2018," Morgan Stanley said
in a report.
"The acquisition will increase Kotak's number of branches from 600 in
FY14 to 1,200 branches and give access to ING's SME platform. ING
Vysya's key strength is in SME," Nomura said in a report.
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CASA ratios for Kotak and ING Vysya at 32-33% are very similar, but
since SME banking is CASA-heavy, liability franchise in the long run
would benefit.
ING Vysya Bank and Kotak Mahindra Bank had complementary branch
networks, products and client segments. ING Vysya Bank has a stronger
presence in South India while Kotak has an extended franchise in the
West and North India.
The merger created a large financial institution with a vast national
footprint. Together, the new entity will have over 1,200 branches and
1,900 ATMs across the country and will be Indias 4th largest private
sector bank.
Kotak Mahindra Bank is a one stop shop for all your financial needs be it
deposits, loans or investments. It has customized offerings for both
individual and corporate customers.
It offers transaction banking, operates lending verticals, manages IPOs
and provides working capital loans. Kotak has one of the largest and most
respected Wealth Management teams in India, providing the widest range
of solutions to high net worth individuals, entrepreneurs, business
families and employed professionals
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5.3 BIBLIOGRAPHY
http://ir.kotak.com/node/707
http://profit.ndtv.com/topic/kotak-ing-merger
http://www.ing.com/Newsroom/All-news/Press-releases/PR/ING-VysyaBank-completes-merger-with-Kotak-Mahindra-Bank.htm
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