Mergers and Acquisitions Types with Examples

All that’s required is for 50% of the shares of a enterprise, plus one more, to be purchased by the buying business. As quoted firms can not restrict sales of their shares on the inventory market, they have little defence to a predator, besides to attempt to persuade present shareholders not to promote their stake. Price mark ups, price manipulation, complete control over output and supply, and lack of substitutes are a part of the market once a monopoly like situation is established.

The arrangement has the potential to turn the newly formed company into one of the largest and most sought-after in the country. Horizontal Merger, Vertical Merger, Conglomerate Merger, and Reverse Merger are some of the types of concepts for merging organisations. Merger refers to the amalgamation of two entities to form a single entity and acquisition is the act of overtaking an entity and acquiring it.

Such acquisitions have massively helped in coping with unemployment in this industry. These foreign companies also bring a huge potential for technological development with them. Private players, quite obviously look to maximize profits through M&A transactions and it’s been proven statistically that quite often they achieve their goals. But there is another aspect or perspective of viewing this transaction too; the market’s perspective.

L&T (an engineering firm) and Voltas (an air conditioning company) is a great example of a conglomerate merger. In contrast to a congeneric merger, where the target and the acquirer are in similar industries, a conglomerate merger occurs between companies that are in no way related. Often, the two companies involved engage in completely different industries with very little overlap in the way they operate their businesses. Conglomerates look to diversify their company by owning multiple unrelated products or businesses. This diversification is part of an overall risk management strategy that may help the company survive market downturns or fluctuations. Merging two firms can present the firms with synergies and economies of scale that can result in larger efficiency and profitability, however it is very important notice that mergers can have a draw back too.

Given that the proposed combination involved competitors as both Heineken and UBL, engaged in the manufacture and sale of beer, the CCI was required to assess the change in the competitiveness of the market resulting from the change in control of UBL. Accordingly, the proposed transaction was found unlikely to alter the competitiveness of the market. Another form of vertical merger happens when a firm acquires another firm which would help it get closer to the customer. For e.g., a consumer durable manufacturer acquiring a consumer durable dealer, an FMCG company acquiring m advertising company or a retailing outlet etc.

  1. This allocation of resources and avoidance of the wastage of a certain amount of manpower, machinery, product line or even talent, is a highly economical transaction.
  2. In July, 2023, the board of directors of both IDFC first bank and IDFC Ltd. announced their merger.
  3. Post Covid19, acquirers will must vicinity additional emphasis on some key areas like due diligence, business valuation, enterprise structure and felony documentation.
  4. A hit M&A method might be to optimally explore capability enterprise opportunity with an apt business method together with to mitigate the legal/enterprise dangers will be the backyard stick for a successful M&A.
  5. As a result, businesses take advantage of other companies that are underperforming or governments that are willing to sell their assets.

‘Cross border merger’ has been defined in the FEMA Regulations as „any merger, amalgamation or arrangement among Indian corporation and overseas agency according with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 notified under the Companies Act, 2013”. Since the Companies Act is the governing regulation relating to compromises, arrangements, and amalgamations, it appears that pass border demergers or other varieties of arrangement aren’t accredited, even though they’re contemplated within the FEMA Regulations. Section 234 of the Companies concentric merger example in india Act, 2013 (Companies Act) and Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Companies Merger Rules) permit mergers and amalgamations between Indian agencies and agencies incorporated in sure jurisdictions. These provisions mandate prior approval of the Reserve Bank of India (RBI) for the sort of go-border mergers. The most relevant as well as recent merger that helped save two companies and at the same time was effective in improving competition in the Telcom industry in India, was the Vodafone-Idea merger.

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The banks’ merger was announced final yr in August and the union cupboard gave the final approval on March 4. An unincorporated joint venture is one in which the participants enter into a contractual relationship to pursue together a specific activity, without forming a separate legal entity to carry on that activity. The expenses of marketing and advertising activities are distributed to both parties by the involved parties in the joint venture. It sometimes happens that the company has excess cash, but can’t expand in its business area. During a congeneric merger, you need to take care of every legal matter possible. Talk with an experienced attorney that knows how to handle a merger, and also keep your accountant close.

When you go through a congeneric merger, you can’t just expect to buy a company and put everything together, hoping it would work. In 1998, a merger between two companies from the oil industry also occurred – namely, Exxon and Mobil. The result of this was ExxonMobil, which eventually became one of the world’s largest companies. In most cases, mergers occur when a weaker company is acquired by a stronger company. Pursuant to the proposed combination, the TS Rajam Family will be able to exercise greater control over the TVS Supply Chain.

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Both of these companies will have something in common, be it the market, the technology, or the process of production. By merging, these two companies will extend their line by making use of both their markets. However, necessity is the mother of invention and adversities bring about possibilities. I sense post-corona, groups going through the survival project can also become participating with other corporations thru together benefitting business approach to live on the exceptional economic challenges. The corona virus disaster is also in all likelihood to bring to the fore tremendous importance of pressured assets – forcing financial establishments to leverage those pressured belongings.

What Is a congeneric merger?

Sonata finance focuses on rural and semi-urban areas, where access to traditional banking service is limited, and there is a significant unmet demand for financial inclusion. The 2015 merger of Heinz and Kraft valued at around $100 billion, is thought to be the largest concentric merger in history. The deal created Kraft-Heinz, a food industry behemoth whose 2019 revenues were $24.97 billion. This e-platform serves information on the fast-changing business world and to create a space of unconfined ideas and visions. ICICI Prudential Life Insurance Company Ltd is a joint venture between ICICI Bank and UK-based Prudential Corporation Holdings Limited. A Joint venture between Mahindra-Renault, brings together India’s largest automobile manufacturer Mahindra & Mahindra and world-renowned vehicle maker, Renault SA of France.

A move border merger explained in simplistic phrases is a merger of companies that are positioned in distinctive nations ensuing in a third enterprise. A move border merger could contain an Indian business enterprise merging with a foreign company or vice versa. A enterprise in a single country can be received via an entity (some other enterprise) from different international locations. In the occasion of the merger or acquisition through foreign investors referred to as pass-border merger and acquisitions. Cross border merger will bring about the switch of manipulate and authority in running the merged or received business enterprise.

Hindalco moved up the value chain and became a world leader in downstream aluminium-rolled products by investing in downstream. It was already Asia’s largest producer of primary aluminium and India’s largest copper producer. Hindalco Industries Ltd. is an aluminium manufacturer and a subsidiary of the Aditya Birla Group, whereas Novelis is the world leader in aluminium rolling, generating roughly 19% of all flat-rolled aluminium products.

Although after being acquired by BharatPe, trillion loans will still function as an independent entity and will continue to make new connections with other companies in order to enter other sectors too. BharatPe’s technological and product capabilities will help Trillion loans to launch its new digital lending products. As a result of the merger the value of per share of the bank would increase by 4.9%. This merger will help simplify the structures of these banks making the process streamline of regulatory compliance. Adani group acquired additional shares of 1.76 crores through its indirect subsidiary RRPR holdings. Initially RRPR was a promoter owned company, which Adani acquired in August 2022 through its AMG network.

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Two of India’s largest media companies, Zee EntertainmentEnterprises Limited and Sony Pictures Networks India, have agreedto a multibillion-dollar merger. The arrangement has the potentialto turn the merged entity into one of the largest and mostsought-after in the country. Both companies are expected to benefitfrom the merged entity and the synergies produced between them,which will not only accelerate business growth but will also allowshareholders to participate in its futuresuccess. The parent firm, ONGC, anticipates that the merging of OMPL and MRPL will increase cooperation between the two subsidiaries on matters like product supply pooling. As a result of the merger, ONGC will become one of India’s major firms and strengthen its market position. It is the acquisition of a controlling interest in the share capital of another existing company by one corporation.

With an aim to enter the quick market space to deliver groceriesonline, Zomato is set to acquire quick commerce setup, Blinkit,formerly Grofers in an all-stock deal worth INR 4,448,00,00,000/-(Indian Rupees four thousand four hundred and forty-eight croreonly). With this acquisition, Zomato will get access to the 400dark stores of Blinkit. Moreover, the acquisition of dark storesaligns with the online food aggregators’ newly launched app’Zomato Instant’ which promises food delivery within 10minutes. The purpose of the merger was to providecustomers of Flipkart expanded product choices with the wide arrayof global inventory available on eBay while eBay customers wouldhave access to a more unique Indian inventory from Flipkartsellers. Bharti Infratel, a telecommunications infrastructure company,merged with Indus Towers, India’s largest mobile towerinstallation company, in 2020, to create a mega tower company bythe name of Indus Tower Limited.

Joint ventures also create synergies and give the companies cost and benefits. It can be formed because of different reasons to enter a new market or to enter a new business line altogether. And where both the company’s goal is to complete an activity, task, or business growth, and once that task is completed, the commercial venture could close the deal or any form of a contract signed between both companies.

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