Mergers and acquisitions (M & A) is the area of corporate finances, management and strategy dealing which deals with purchasing and/or joining with other companies.
Though the two are often mentioned together, a merger is very different from an acquisition.
A merger, in a nutshell, involves two corporate entities joining forces and becoming a new business entity, with a new name. It usually involves two companies of same size and stature joining hands.
An acquisition, on the other hand, involves one bigger business taking over a smaller company which may be absorbed into the parent company or run as a subsidiary. The company being taken over is referred to as the ‘target company’ in the corporate world.
Mergers Acquisitions Handshake
Here is a list of some of the most happening mergers and acquisitions in India in the year 2014, listed in random order.
1. Flipkart- Myntra
The huge and most talked about takeover or acquisition of the year. The seven year old Bangalore based domestic e-retailer acquired the online fashion portal for an undisclosed amount in May 2014. Industry analysts and insiders believe it was a $300 million or Rs 2,000 crore deal.
Flipkart co-founder Sachin Bansal insisted that this was a “completely different acquisition story” as it was not “driven by distress”, alluding to a plethora of small e-commerce players either having wound up or been bought over in the past two years. Together, both company heads claimed, they were scripting “one of the largest e-commerce stories”.
2. Asian Paints- Ess Ess Bathroom Products
Asian paints signed a deal with Ess Ess Bathroom products Pvt Ltd to acquire its front end sales business for an undisclosed sum in May, 2014.
“The company on May 14, 2014 has entered into a binding agreement with Ess Ess Bathroom Products Pvt. Ltd and its promoters to acquire its entire front-end sales business including brands, network and sales infrastructure,” Asian Paints said in a filing to the BSE on Wednesday.
Ess Ess produces high end products in bath and wash segment in India and taking them over led to a 3.3% rise in share price for Asian paints.
3. RIL- Network 18 Media and Investments
Reliance Industries Limited (RIL) took over 78% shares in Network 18 in May 2104 for Rs 4,000 crores. Network 18 was founded by Raghav Behl and includes moneycontrol.com, In.com, IBNLive.com, Firstpost.com, Cricketnext.in, Homeshop18.com, Bookmyshow.com while TV18 group includes CNBC-TV18, CNN-IBN, Colors, IBN7 and CNBC Awaaz.
4. Merck- Sigma Deal
One of the leading Indian manufacturers, Merck KGaA took over US based Sigma-Aldrich Company for $17 billion in cash, hoping the deal will help boost its lab supplies business.
Sigma is the leading supplier of organic chemicals and bio chemicals to research laboratories and supplies groups like Pfizer and Novartis with lab substances. 5. Ranbaxy- Sun Pharmaceuticals
Sun Pharmaceutical Industries Limited, a multinational pharmaceutical company headquartered in Mumbai, Maharashtra which manufactures and sells pharmaceutical formulations and active pharmaceutical ingredients (APIs) primarily in India and the United States bought the Ranbaxy Laboratories. The deal is expected to be completed in December, 2014.
Ranbaxy shareholders will get 4 shares of Sun Pharma for every 5 Ranbaxy shares held by them. The deal, worth $4 billion, will lead to a 16.4 dilution in the equity capital of Sun Pharma.
6. TCS- CMC
Tata Consultancy Services (TCS), the $13 billion flagship software unit of the Tata Group, has announced a merger with the listed CMC with itself as part of the group’s renewed efforts to consolidate its IT businesses under a single entity.
At present, CMC employs over 6,000 people and has annual revenues worth Rs 2,000 crores. The deal was inked a few days back. TCS already held a 51% stake in CMC. 7. Tata Power- PT Arutmin Indonesia
India’s largest private power producer, Tata Power, purchased 30% stake in Indonesian coal manufacturing firm for Rs 47.4 billion. Earlier this year, they sold off 5% of its stake in PT Arutmin Indonesia (Arutmin) and PT Kaltim Prima Coal (KPC) for Rs. 250 billion due to falling coal prices globally. It plans to sell the remaining 25% stake for $ 1 billion soon too.
8. Tirumala Milk – Lactalis
The largest dairy player in the world, Groupe Lactalis SA, acquired the 18 year old Hyderabad based Tirumala Milk products for a whopping Rs 1750 crore ($275 million) in January, 2014.
Founded in 1896 by D Brahmanandam, B Brahma Naidu, B Nageswara Rao, Dr N Venkata Rao and R Satyanarayana, Tirumala is the second largest private dairy company in South India.
Lactalis acquired 100% of their shares.
9. Aditya Birla Minacs- CSP CX
Aditya Birla Nuvo Ltd (ABNL) owned ABNL IT & ITeS Ltd. was sold to a Canadian based technology outsourcing firm marking Aditya Birla’s exit for the IT industry.
The deal was chalked out with a group of investors led by Capital Square Partners (CSP) and CX Partners (CXP) for $260 million (approximately Rs. 1,600 crore).
10. Sterling India Resorts- Thomas Cook India
Billionaire Prem Watsa owned Thomas Cook India bought the Sterling Resorts India for Rs 870 crores in , marking Thomas Cook’s entry into the hospitality sector. Thomas Cook had earlier acquired Ikya Human Solutions in 2013.
11. Yahoo- Bookpad
The search engine giant, Yahoo, acquired the one year old Bangalore based startup Bookpad for a little under $15 million, though the exact amount has not been disclosed by either of the two parties concerned. While the deal value is relatively small, this was the first acquisition made by Yahoo, and was much talked about and hence finds a mention in our list.
Bookpad was founded by three IIT Guwahati pass outs and allows users to view, edit and annotate documents within a website or an app.