By: BHARATH PAVANJE

1.Introduction
 What is merger?
 What is acquisition?
 What is Takeover?

3.Reasons of mergers to the company

4.M&A Activities in India

5.Case study-Ranbaxy & Daiichi Sankyo Co.

Ltd. Merger

6.Causes for failure of M&A

7.Conclusion
 Important tools of corporate growth
 Alternatively way to achieve growth is
resort to external arrangements like M&A
 Daily transaction now a days
 Important area of capital market activity in
restructuring a corporation
 Restructuring the corporation to meet
global competition
 Main objective –gain profits
 M&A has a great scope in different sectors
 India is one of the leading nations in the

world in terms of M&A

 85 % are using M& A as a core growth

strategy.
 Merger is defined as combination of two or
more companies into a single company
where one survives and the others lose
their corporate existence.
 Merger is the fusion of two or more existing

companies
• An acquisition, also known as a takeover or a
buyout, is the buying of one company (the ‘target’)
by another. An acquisition may be friendly or
hostile. In the former case, the companies
cooperate in negotiations; in the latter case, the
takeover target is unwilling to be bought or the
target's board has no prior knowledge of the offer.
Acquisition usually refers to a purchase of a smaller
firm by a larger one.
 Increased market power
 Learning and Developing new
capabilities
 Overcoming entry barriers
 Cost of new product development
 Increase speed to market
 Lower risk than developing new
products
 W hen one company takes over another and
clearly establishes itself as the new owner, the
purchase is called an acquisition. From a legal
point of view, the target company ceases to exist,
the buyer "swallows" the business and the buyer's
stock continues to be traded
 In the pure sense of the term, a merger
happens when two firms, often of about the same
size, agree to go forward as a single new
company rather than remain separately owned
and operated. This kind of action is more precisely
referred to as a "merger of equals". Both
companies' stocks are surrendered and new
company stock is issued in its place.
 In 2007, there were a total of 676 M&A deals
and 405 private equity deals, in 2007, the total
value of M&A and PE deals was USD 70 billion,
Total M&A deal value was close to USD 51
billion, Private equity deals value increased to
USD 19 billion.
 In year 2008..
 • M&A deals in India in 2008 totaled worth USD
19.8 bn
 • Less compared to last year which stood at 33.1
bn $.
 • Decline of M&A activity was in line with the
global activity.
 • Cross border M&A totaled 8.2 bn $ compared
to 18.7 bn $.
Acquirer Target Country Deal Industry
Company targeted value ($
ml)
Tata Corus UK 12,000 Steel
Steel Group plc
Hidalgo Novelist Canada 5,982 Steel
Videocon Daewoo Korea 729 Electronics
Electronics
Corp.
Dr. Beta harm Germany 597 Pharmaceu
Reddy’s tical
Labs
Suzlon Hansen Belgium 565 Energy
Energy Group
HPCL Kenya Kenya 500 Oil and
Petroleum Gas
Refinery
Ltd.

Ranbaxy Terapia SA Romania 324 Pharmaceu

Labs tical
Tata NatSteel Singapore 293 Steel
Steel
 Tata steel buys Corus Plc : 12.1$ billion
 Hindalco acquired novelis: 6$ billion
 Tata buy jaguar and land rover : 2.3$ billion
 Essar steel buys Algoma Steel: 1.58$ billion
 Vodafone buys hutch : 11$ billion
 POSCO to invest in building steel manufacturing
plants and facilities in India by 2016
 Goldman Sachs Plans investment in private equity,
real estate, and private wealth management
1. Net Value Asset (NAV) Method
2. Yield Value Method
3. Market Value Method
 Background:
 Daiichi Sankyo Co. Ltd. signed an agreement to
acquire 34.8% of Ranbaxy Laboratories Ltd. from
its promoters
 The main benefit for Daiichi Sankyo from the
merger is Ranbaxy’s low-cost manufacturing
infrastructure and supply chain strengths
 Ranbaxy’s addition is said to elevate Daiichi
Sankyo’s position from #22 to #15 by market
capitalization in the global pharmaceutical
market.
 SYNERGIES:
 Respective presence in the developed and emerged markets
 To tap the potential of the generics business
 Introduce generic versions
 Competitive advantages
 R&D
POST ACQUISITION OBJECTIVES:
 Develop new drugs and fill gaps
 Managing the different working cultures
 Undertaking minimal and essential integration
 Consolidate their intellectual capital and acquire an edge over their foreign
counterparts
 Size Issues:
 Diversification:
 Poor Organization Fit:
 Poor Strategic Fit:
 Striving for Bigness
Poor Cultural Fit:
 Limited Focus:
 Failure to Examine the Financial Position:
 Failure to Take Immediate Control:
 Failure of Top Management to follow Up:
 Failure of Leadership Role
 It is widely accepted, for instance, that the 'human
factor' is a major cause of difficulty in making the
integration between two companies work successfully.
If the transition is carried out without sensitivity
towards the employees who may suffer as a result of it,
and without awareness of the vast differences that may
exist between corporate cultures, the result is a
stressed, unhappy and uncooperative workforce - and
consequently a drop in productivity.