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In liberalised era, Kerala polity gets ready for mergers and acquisitions game
August, 22nd 2016

Kerala politics, as it is poised now, could well take a leaf out of the corporate text books, especially the chapter on Mergers & Acquisitions.

Fixated on the bipolar polity of the Congress-led UDF and the CPM-led LDF for many decades, the politicians have never had any reason to worry about the rise of a third front. The very idea of such a possibility was laughed at during the last elections and the results pretty much reiterated this reality, though the single seat entry of the BJP into the Assembly has technically opened up a third front. As the saying goes, in a parched land of political options, now it is pouring opportunities. Kerala Congress Mani has decided to be a totally independent front, keeping equal distance from the existing ones, even as the lone MLA PC George is already perched as a separate entity in the state assembly.

By application of simple arithmetic, that is five fronts in Kerala. Goodbye TINA (there is no alternative) factor, one major reason for the long run that the LDF-UDF exchange of batons has had in Kerala. Welcome to the beginning of an era of innumerable political possibilities, at least some maneuverability that never existed all these years. This brave new world surely gives hope for some. The scenario best suits the BJP-led NDA as it gives it the space to a get move on, from what has hitherto been limited to the grind of organic growth which has yielded only limited results to the limitless possibilities offered by way of inorganic growth.

It has been no secret for some time now that the BJP, even as it picks from as many factions of the larger Hindu canvas as possible, also needs to forge an alliance with the Christian community sooner or later. And what better chance to consummate this marriage than the opportune one offered by Kerala Congress Mani which has declared itself free of all encumbrances, having at long last shrugged off the UDF baggage. It is also time for due diligence by the various factions that are eyeing each other for tie-ups of various kinds. Just as in the corporate world, they would be looking at the balance sheet, not only for the evident gross and net profit, but for the hidden debts, liabilities and NPAs that are being dressed up as performing assets. Given the present it can be a game more of mergers than outright acquisitions, the latter happening mostly at the grassroots level.

A good instance is that of the CPI picking on the CPM cadre, much to the chagrin of the elder brother. Given the outright violence such poaching on the rank and file of the party evokes when it is the BJP on the other side in the bloody feuding grounds of Kannur, it takes no pundit to predict that such acts of aggression by the CPI will certainly result in friction between the two allies. It may be here that the Congress, if it were not in its present state of disarray, should be looking for a strategic partner, at least theoretically.

But one sees no such attempt as it is fighting a rearguard action and trying frantically to shut the stable door after the horse has bolted. But if the theatre of politics is often compared to what happens on a chessboard, then you need to make a counter move after you lose a pawn or a horse as the case may be.

That is something we are yet to see even as some of the CPM leaders are not only openly wooing Kerala Congress Mani but warning the new independent block in the state Assembly of what a folly it would be to join the NDA. This, even as the CPI has made its distaste for any such association amply clear.

But then, even the Muslim League has not been averse to a dalliance with the LDF, as was the case in 1967, though it eventually led to much upheaval within the CPM. May be it won’t result in any more cleaving among the comrades in this era of practical politics where the end invariably justifies the means.

Meanwhile, the deal advisers would be working overtime, setting up the inevitable escrow, if not offshore accounts as they scout for potential buy-outs through creeping and other devious routes of acquisitions. Instead of bank guarantees, it will be vote banks that will determine if the shareholders get a ripe dividend or if it’s time to exit the joint venture.

It will take the next election at some level to decide whether the investing public stays with the course or dump the shares. That is the time to declare if the deal valuation done by the merging entities was correct or not. Of course, all this will be preceded by the two merging entities working out the swap ratio in the electoral market, privately if not publicly. Surely, it is time to get a move on with the M&A game as the potential players are on the prowl and ready to pounce.


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