Takeover (2.4.

2)
 Takeover
• It is a popular cooperation expansion strategy
adopted by companies.
• Pre liberalization the normal route of growth
was licensing and setting up new projects.
• Post liberalization it is the era of takeovers
• Are of two types
– Friendly
– Hostile
 How takeover take place
• The individuals involved in a majority of
takeovers were NRIs like Manu Chhabria and
the Hinduja brothers, local industries like R P
Goenka, Dhirubhai Ambani ,Vijay mallya and
Ajay Piramal. It is believed that the chhabrias
,who were virtually unknown till 1985, had
companies worth Rs1,500 crore by the early
1990s in the worth of the Goenka group
companies has gone up from Rs 70 crore in
1979 to Rs 5,500 crore in 15 years.
 Example of Takeover
• Tata Tea’s takeover of Consolidated Coffee and
Asian Coffee is an example of friendly
takeover.
• NEPC hostile takeover of Modiluft
 NEPC hostile takeover of Modiluft
• 01 FEBRUARY, 1996
– Indian independent NEPC Airways is moving aggressively to
consolidate its position as a major domestic player with a hostile
takeover bid for rival Modiluft.
– NEPC's chairman Ravi Prakash Khemka's goal is to become the
largest independent in the Indian domestic sector. 'We want to
be number one in the airline business,' he says. Last year the
carrier took over Damania Airways, which now operates as
NEPC Skyline on the country's major trunk routes with four
Boeing 737-200s. NEPC's seven Fokker 27s feed regional traffic
into the Skyline operation.
– Khemka has also received government clearance to acquire
three 200-seater aircraft: combined with Modiluft's aircraft that
would bring the total fleet to 20 (including two executive jets
operated by NEPC)
• The real impetus for takeovers came after the
liberalisation measures of 1991. The MRTP Act
was amended and acquisitions. The securities
and exchange board of India (SEBI) introduced
the substantial Acquisitions of shares and
takeovers regulations ,1994 ( popularly known as
takeover code) , that provide for hostile takeovers
, revision and withdrawal of open offer , and
competitive bidding , introducing a measures of
transparency in takeover dealings.