Merger and Aquisition Part 2

8/10/2019 Merger and Aquisition Part 2

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TABLEOFCONTENTS

1. INTRODUCTION...7 1.1

INTRODUCTION71.2 LARGE MERGERS AND ACQUISITIONS IN THE WORLD.............91.2.1 LARGE MERGERS AND ACQUISITIONS OF INDIAN

COMPANIES......91.3 MERGER AND ACQUISITIONSTRATEGY..10

1.3.1 FIRM DIVERSIFICATION..........101.3.2 CROSS BORDER MERGER ANDACQUISITIONS.........10

1.! AIMS AND OB"ECTIVES OF THE RESEARCH....111.!.1 AIM OF THERESEARCH...........11 1.!.2OB"ECTIVES OF THE RESEARCH...11

1.#HYPOTHESISOFTHERESEARCH...........111.$ MOTIVATIONOFTHERESEARCH..111.7 STRUCTUREOFTHEDISSERTATION............121.% FURTHERRESEARCH............1!

2. LITERATUREREVIEW..............1# 2.1

DEFINITION..1#2.2

TYPESOFMERGERS&ACQUISITIONS.............1$2.2.1 HORI'ONTALMERGERS.1$2.2.2 VERTICALMERGERS...1$2.2.3 CONGLOMERATEMERGERS..........172.2.! FINANCIALACQUISITIONS1% 2.3MOTIVESFORMERGERS.1%2.3.1 SYNERGY1%2.3.1.1 OPERATIONALSYNERGY.192.3.1.2 FINANCIALSYNERGY...20

2.3.1.3 MANAGERIALSYNERGY..........212.3.2GROWTH..212.3.3 DIVERSIFICATIONANDRIS(MANAGEMENT...222.3.! TA)ADVANTAGES...........222.3.# MANAGERIALHUBRIS.232.3.$ INCREASEDMANAGERIALCOMPANSATIONANDREWARDS2!

2.3.7 IMPROVEDMAR(ETSTANDING...........2#2.3.% EMPIREBUILDING2#2.3.9 FREECASHFLOW....2$ 2.!

PREVIOUSEPIRICALSTUDIESREGARDINGPOSTMERGERPERFORMANCES2$2.!.1 EVENTSTUDIES272.!.2 ACCOUNTINGSTUDIES...2%


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3


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2.!.3 E)ECUTIVESURVEYS..2%2.!.! CLINICALSTUDIES....29

2.#CAUSESOFFAILURES...............30

2.#.1 OVERPAYMENT.302.#.2 INTEGRATIONISSUES..302.#.3 PERSONALMOTIVESOFE)ECUTIVES312.#.! SELECTINGTHETARGET31

2.#.# STRATEGICISSUES...........31

3. RESEARCHMETHODOLOGY..323.1 RESEARCH....323.2 RESEARCHPROBLEM............333.3 RESEARCHDESIGN............33

3.3.1 "USTIFICATIONFORUSINGRESEARCHDESIGN..........3!3.! DATACOLLECTION...3#

3.!.1 PRIMARYDATACOLLECTION...........3#3.!.2 "USTIFICATION PRIMARYDATA3$3.!.3SECONDARYDATACOLLECTION.............3$3.!.! "USTIFICATION SECONDARYDATA..37

3.# SAMPLING............3%3.$ STEPSINSAMPLINGPROCESS............3%

3.$.1 DEFININGTHETARGETPOLPULATION...............3%3.$.2 DEFININGTHESAMPLINGFRAME............3%

3.$.3 TECHNIQUESOFSAMPLING...........39

3.$.3.1 PROBABILITYSAMPLINGTECHNIQUE.393.$.3.2 NONPROBABILITYSAMPLINGTECHNIQUE*

"USTIFICATION39 3.$.!SAMPLESI'E..39

3.7 DATAANALYSIS............!0

4. DATAFINDINGSANDANALYSIS..!1!.1 AVIATIONINDUSTRYOVERVIEW...............!1 !.1.1(INGFISHERAIRLINESANDAIRDECCAN

MERGER...!3 !.1.2 "ETAIRWAYSANDAIRSAHARAMERGER.!$ !.2

BAN(INGINDUSTRYOVERVIEW...!%!.2.1 HDFCBAN(ANDCENTURIONBAN(OFPUN"AB

MERGER...!9 !.2.2ORIENTALBAN(OFCOMMERCEANDGLOBALTRUST BAN(

MERGER...#3!.3OILANDGASSECTOROVERVIEW.............##!.3.1 RELIANCEINDUSTRIESLIMITEDANDIPCLMERGER.#$ !.3.2INDIANOILCORPORATIONLIMITEDANDIBPMERGER..........................................................................................

.#9 !.!STEELINDUSTRYOVERVIEW.$3

!.!.1 STEELAUTHORITYOFINDIALIMITED+SAIL,ANDIISCOMERGER...$3 !.!.2

"SWANDSISCOLMERGER..$$


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5. CONCLUSION.$9

!


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REFERENCELIST.............73

APPENDI).............

%!

LIMITATION.%9

ChapterOne


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Introduction

T- / / - / / 4 56 5 - 8 // 56 :- 4- :5; 6 5=@ 4 5 - > / 5 > 5 / 684 /- -5 ? / 68 4 ; / 56/. M ? / 68 4 ; / 56/ / 6 6 < ? 5: -

/ ? - / ? 6 8 / ; = 4 ;/ 5 64 / 8 8 ?;< 56 56

? 5 6 > 8 ;> 5

68 58;4 5 5< 5/ 6 6 : > / 68 4 ; 4-65 56 ? ? / 68 4 ; / 56/ = 6

6 8 6 5 5 656 > 6? /56/ . . 5 @;/ =; 6 / 5 < 68 / ? .

C56/5< 8 56 6 - 5 > 5 > ? / 68 4 ; / 56/ - / = 6 : 6 // 8

5;68 - :5 5= . S5> 5 - = ?? / > ? / 6

; 5>5= < < D >< *B 6 68 C- /< < 6 / A F 64 68 (LM 68

< 45> SBC 68 AT&T - 56 / :- 4- - :5 6 ? > 6 56 - 68 5 = 6 / :- 4- 8 8 5; 5

> ? / 5 =5 - - 4 ; 6? 68 ? 45> 6 - 4;/ 5> / 68 -

/54 < ? . H5: 56 5 - >5/ : 8 < ;/ 8 6 / ? 56/ - /

= 6 6 5 - /- -5 > 56 5; 5 > ? / 68


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1.2.1LargeMergers and Acquisitions of Indian Companies

T- 6 :/ =5; I68 6 45> 6 / 4 ; 6? 5 ?6 = / 8 45> 6 / : /

6 : : / = 4 =; - / 6 > / - 4- 6? 8. T- / ; 56

=5; I68 6 45> 6 / 6 ; 6? = 5 8 68 6? 5 ?6 45> 6 /

- / = 45> ; 6 . S5> 5 - : 5;/ - :5 ? 5 T S < 68

C5 ;/ G 5; . S 4568 = ?? / > ? : / = : 6 - > < ? 6

H 68

(5 : / - - 8 < ? / 5 / / 8 4 ; 4 < / 4 5

D54 5 R 88 / L =5 5 / 4 ; 8 B - > 5> G > 6 . T- 5

> ? / 68 4 ; / 56/ 5 ? 6 6? 5> I68 / <


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O6 5 - = ?? / > ? / 5 / / 6 < / 5> -

< 45>>;6 4 56 / 4 5 . T- I68 6 < 45> ? 6 B- A < / 6 < /

5 > ? : - S5; - A 4 6 MTN. T- / > ? :5;;6 4 56 > . S5 6 - / $ >56 -/ 5 2009

I68 6 =5;68 > ? / 68 4 ; / 56/ = 5 8 - 56< = 6R/

20= / :5;;< < < 4 / :- 4- - >

4 8 56 - 5;?- - 8 / 4 56 5; :- 4- :5;. H5: 8 6? < / 6 > ? / 68

4 ; / 56/ / - / 5 4568;4 / 5:6 / 56 / 6? - 68 : 6 // /

= 5 /.

1.3.2Cross#$order Mergerand Acquisitions

I6 6 56 < 56 / 5 6 / ? / :- 4- >/

85 6? 6 58 / > 5 / 8 / 5 56/ 6 5 ?6 45;6 /.

C 5// =5 8 4 ; / 56/ 5 4 ; / 56/ 856 = 6 45> 6

: - - 8 ; / 6 56 45;6 68 > ? 6 8 K 6 45;6 /.

D5> / 4 > ? / / 5 4; = 4 ;/ 5 - > < 56 5


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=5 - - 6 5< 8 45> 6 / - < :/ 54 8; / 68 5 - /;4- 4 5 /

-5: 6 4 / 5 6 6 56 < > ? / - 5;/ 45> < /

9


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6 5< 8 +I < 68 68 H5 //56 200#,. T- /56 5 >/ 5 6? 5

4 5// =5 8 > ? / 68 4 ; / 56/ / = 4 ;/ / > 456/;> 6?

5 56 5 6 68 / ; 5 56/ 6 5 ?6 45;6 . A 68

45/ / / 8 6 =; 6/ : < - 5 4 ; 6?/- -5 ? / 68 4 ; / 56/ 56 -

5 6? 5 > 64 5 - > 6 I68

? T5 / ? 4 5 / - 5 6? 5 > 64 68 /- -5.

1.+Moti!ation of the(esearch

T- / 4- 6 - / 6 4 - / 54;/ 8 5: 8/ < 6 6? /5> - 6?

=5; 6 64 . I6 - / 6 @5; 6 6 / ;8 6? =5; 6 64 68 -


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> / / / ;8 6 I

0*


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- < 6 =5; > 6 45> 6 / > ? 6? 68 ? 4 ; 8 6 I68

- 5;?- - > 8 ;> 5 6 :/ 4- 66 8

? / 8; 6 56 5 > ? / 68 4 ; / 56/ :- 4- 64 / / -

4; 5/ 5 65: >5 =5; /;4- - 6 6?/. O - / I - / 6

> 6 > ? / - 6 6? 6 I68 4 5// 8 68;/ /. B 4 ;/ 5 - /

/56 > ? / 68 4 ; / 56/ / /;=@ 4 - / = 6 4

- . A - / 5 6 6 > 4 I > >5 8 5 / ;8 =5; > ? /

68 6 4 ; / 56 - 6 6? 6 I68 68 - > 4 - / 56 -

5 6? 5 > 64 68 /- -5. I -

65 4 8 - 65 ? / - = 6 /;44 // ;< 68 - /- -55/ 5 - > ? / - > / 8. M > 6

>5 56 < 4 5 5 85 6? - / / 4- 45> / - :- I : 6 5

;68 / 68 :- > 4 85 / 5/ > ? 68 4 ; / 56/

-5.

1.,Structureof the issertation

T- / ;4 ; 5 - - / / :5;


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1*


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Chapter1

C- 56 :5; 6 - > 5 - / 4- :5; 8 ; 5/ 5 - / 4- 68 ; ; 5 - / 4-.

Chapter2

C- T:5 :5; 4 :- 4- > ? / 68 4 ; / 56/

- 56 - : < -5 - /- -5


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- ?-< ?- / =5; - >.M 6> ? / :- 4- - - 6 8 : - 6 -

/ 4 5 :5; 5

2*


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3*


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Chapter /o

Literature (e!ie/

2.1 e"nition0#

T- 5;/ / ? 4 68 6 64 < 5=@ 4 / - 6J; 64 > ? /

68 4 ; / 56/. T:5 5 ? 6 / 56/ : - 5 6 8 K 6 45 5

/56 < / 4;< ; / 68 / =5;?- 5? -

+S;8 / 6 > 2003,. T- >/ > ? / 68 4 ; / 56/ 5 6 ;/ 8

6 4- 6? =< . I6 < < 64 =5 - : 8 / - / > . H5:

4 8 > 4/ - 5 6 8 5; : 8 K 64 / - - < 8 > 6

:- - 4;< 4 / > ? 5 6 4 ; / 56.

A 4;< 4 / 4 ? :- 6 45 5 56/ 45> 5? - 5

45>= 6 68 /- - /5; 4 / 5 4- 45>>56 5=@ 4 /. I6

> ? =5 - >/ 45>= 6 5 5 > - 8 6 68 - 5:6 / 5 =5 -

- 45>= 6 6? >/ > 6 / @5 6 5:6 / 5 - 6 :

6 +S;8 / 6 > 199#,.

A6 4 ; / 56 45; 6 /

456 5 < ? < /;=/ 8 5 65 -

> 5 / < 4 8 // / 5 65 - >. T- / > 6 5< - ; 4- / 5

65 - > / // / 5 / 54

( D56 - < / 200%,. A4 ; 6? 65 /- -5


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- > 65 /- -5 6 / > 6 ? > 6 . I6

> ? / 68 4 ; / 56/ /4 6 5 - >/ > ? / 4 ; / 56/

5 456/5< 8 56 68 >


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: 6 // 8 ; : /;4- > ? / < - ( 6? /- < 6 A D 44 6

> ? 68 - " A : / A S - > ? . T- T C ;6 4 56/ > ? : / 56 = ? -5 56 < > ? 6 -< 45>>;6 4 56 / 4 .

2.2.25ertica Mergers

A 4 < > ? / - 45> 6? 5? - 5 45> 6 / 8 K 6 / ? / 5

< 58;4 5 / 4 . G 6 6 5=@ 4 5 /;4-

> ? / / 5 6/; - /5; 4 / 5 /; < +B =; 200#,.

I6 4 < > ? / - > 6; 4 ; 68 8 / =; 5 5 > 6 /- .

T- / > / 8 4;< 5 45> 6? 45> 6 / 5 /; 8; 5 -

8 6 ? / 5 - > ? . T- 8 / =; 5 6 8 65 88 56 < 45/ / 5

- /; < / - =5 - 65: 5 - / > 6

+< 6> ? /.45>,. S;4- 64 / 8 / 6 ? / > - =;/ 6 //

> < 5 =< 68 8 5; 45> 56.

P; 4- / 5 ; 5>5= < 8 < / = > 6; 4 ; / < F5 8 68 V ; - < / 5 4 < > ? /. F5 8 / 4 ; / 56 5 H / 6 > ? +G 88 / 200$,. T- 4 ; / 56 5 F< ? T < 45> =

I68 6 < 45> 45> 6 R < 64 C5>>;6 4 56/ L 8: / / ?6 4 6

4 < > ? .

2.2.3Cong omerate Mergers

C56? > ? / 544; = : 6 >/ - ;6 < 8 = 56. C56? / 5 > 8 : - - = < -

56 4 6 < 5 4 :5;


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/ 8 / 4 56 / -

/;44 // ;< 5 > / = < 64 - = 8< 5 > 6? /;=/ 8 / 5 - ? 5;

4B 6C5 < 2000,.

$*


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C56? > ? / 4 6 ? = : 6

45> 6 / :- 4- 65 45> 5 / 68 >56< 8 /4;// 8 :- < 4< // 6?> ? / 68 4 ; / 56/. S;4- 4 ; / 56/ 8 6 = - 6 64 6 / +( ;/- < 199#,.B;/ 6 //

O ? 6 56< ; - / 8 6 8 :545>>56 /56/

:- 4- 8 85; 5 > ? / 68 4 ; / 56/ . . 4 64 ? 668/ ? 4 56 < +N 200!,.E 4 64 ? 6> 6/ - > ? :5; 5 4565> / 5 /4 < 68 4565> / 5 /45 .

E4565> / 5 /4 < 68/45 4- 8= 4 ;/ 5 - 6 ? 565 -

5 / 68 4 64 / 5 =5 - - 45> 6 / ;

5? - .S 4568< - / ? 4 56 < / 8 8 5> - 5 6 -

> ? / 68 4 ; / 56 4 :5;= 6 8 6 :- 4- :5; 4 56

- 5 / 5 - >.


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7*


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H5: : /- ? / 68 4 ; / 56/. T- / 4 5 / 8 /4;//8= 6 199%,. I

> < / - - 45>= 6 8 - 68< 6? 5 8 K 6 4 / 6 / 6?= 6 8 5 ? 6 / 56 / = < ? 5 ? - 6 :- :5; / 5> G :5 8 - > 6/ 5 45*5 5

:5 5? - +B ;6 200!,. M ? / - 5 4 4564 :- :5 45 5 56/ : - 45> 5? - 68 55< 6 -

/ 68 /5; 4 / 5 5 > = . E/ > 6? / 6 ? / 68 /

K 4 / 6 > 5 6 8 4 / 56 6 - > ? 54 // > < 5 5;

/56/. F / < > ? / > 6 5 6 ? / 6 8 5 8 /4 5 6 . L / < 5 6 5 8 ? 6 ? 56 / ? / +B ;6

200!,. H5: > 5 6 = 4 4 6 / 4 ; 6 ? 8 6? - 5=@ 4 / 5 - 8 < 5 /5< - 5/ 4/ > < .

S 6 ? / 4 6 = ; - 8 /4;// 8 / = 6? 6 64 < 5 6? 5

> 6 ? < / 6 ? /.

2.3.1.1Operationa Synergy

O 56 < / 6 ? / 5 -5/ 4< // / 5 /5; 4 / - < 8 5


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58;4 56 68 5 8> 6 / 4 64 / +P 4 T > < 2002,. P 58;4

< 8 8 / 4 56 5

%*


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> ? / 5 6 4 8 5; 6? 5 56 < / 6 ? / 6 > 68.

T- / / 6 ? / - < >/ = 6? 85:6 ;6 45/ / 8; 5 58;4

< 86 //. C5>>56 4-65 6? 4-6 ; / < 45>>56 = 68/ 68 > 6; 4 ; 6? 4 < / < 45>>56

= 6 56 5 4565> / 5

/4 < :- 4- :5;5 4 6 ;/

5 /5; 4 / 68 4565> / 5 /45 :- 4- :5; 6 8 5 5> - / > >5;6 5 6 ; / +B H 6 200!,.

2.3.1.2Financia Synergy

F 6 64 < / 6 ? / 5 - > 4 5 > ? / 68 4 ; / 56/ 56

? 8 5 6 :< 5 > 8 6

+D P > - < / 200#,. F 6 64 < / 6 ? / < 8 5 8;4 8 45/ 5 4

Merger and Aquisition Part 2

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