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CROSS BORDER

M&A

NEVILLE .J. RAJNAIGAM

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Introduction

Merger:- May be defined as theCombination of two ormore independent business corporations into a single

enterprise, usually involving the absorption of one or more

firm by a dominant firm

Mergers may be broadly classified as Horizontal, Vertical or

Conglomerate (Pile Up )

Acquisition:- May be defined as an act of one enterprise ofAcquiring, directly or indirectly of shares, votingrights, assets or control over the management, of another

enterprise

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Objectives

Greater Economies

of ScaleAccess to Markets

Access to

Raw MaterialDiversification

of Business

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India Inc. Goes Global

Tata Steel acquired UK based Corus for $ 8 billion.

Suzlon EnergyLtd acquired German firm Repower Systems AG for$ 1.7 billion.

United Spirits bought Scotch whisky distiller Whyte & MackayforUS$ 1.11 billion

Hindalco acquired Novelis for $ 6 billion

TATA Chemical acquires US based SodaAsh Maker GeneralIndustrial Products for $ 1 billion

Indian shipping company Great Offshoreacquires UK based SeaDragon for US$ 1.4 billion

Essar Energyacquires 50% stake in Kenya Petroleum refineries ltd.

Banswara Syntex to acquire France firm Carreman Michel Thierryfor around US$ 125 million

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Inbound Transactions Sistema, Russian Joint Stock Companys acquisition of 74% stake in Shyam

Telelink Telecommunications

French banking major BNP Paribass acquisition of 45% stake in financialservices firm Sundaram Home Financefor $45.81 million

Standard Chartered Bankbought 49% stake for $34.19 million in UTISecurities and Interpublic Group hiked its stake in Lintas India to 100% for$100 million

Fursa Mauritiuss acquisition of 42.63% equity in Gayatri Starchkem

UBS Global Managements Acquisition of Standard Chartered Asset

Management Companyfor $ 117.78 Million

EMC Corporations Acquisition ofValyd SoftwarePvt. Ltd.

Orklas Acquisition ofMTR foods for $ 100 Million

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Destination India Amongst Fastest growingmarket Economies in the World, @ over 7% p.a. last 4 years

Liberal FDI Policy Framework FDI up to 100% allowed in most sectors

Rationalization ofTax Structureto promote Investment

High Foreign Exchange Reserves

Liberal outbound investment

Currency appreciation

Entry Routes for Investment in India

Approval

Decision generally within 4-6 weeks

Govt. Approval required

Automatic

No Prior Permission Required

RBI to be informed

within 30 days of inflow/issue of shares

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Advantage India One of theLargest Free Market Democracies in the world

Unparalleled resource ofeducated, hard-working, skilled and ambitious workforce

Youngest workforcein the world

Working age population estimated to rise70% of the total population by 2030

70 million new entrants to its work force every 5 years

English the language of business in India

one of thelargest Pools of English SpeakingManpower after the US

Manpower1. Over 3 million scientific and technical manpower

2. Over 2.5milliongraduates added to the workforce every years

3. 3rd largest pool of educated personnel

A large and Growing Middle class with per capita income of more than 1000 US$ p.a.

Amongst thelargest and ever growing domestic market

Abundant Resources

Sound economic Fundamentals StableEconomic reform regime

Vibrant Financial Sector

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Data on Overseas Direct Investments

S.no. Country Outflow 2008-2009

(In US$ Million)

1. US 413.379

2 Canada 497.772

3 China 5.176

4 Netherlands 1055.518

5 Czech Republic 66.008

6 Italy 10.104

7 Germany 32.858

8 France 1.693

9 Portugal 0.909

10 Poland 1.454

11 Hungary 0.345

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FDI Policy

Sno. Sector Sectoral Cap

1. Manufacturing (Exceptions- Defense products, Products

reserved for Small Scale Sector

100%

2. Coal Mining 100%

3. Electricity (Generation, Transmission, Distribution and

Power Trading)

100%

4. Roads & Highways 100%

5. Airport Projects (Greenfield) 100%

6. Telecom-

Basic & Cellular, Unified Access Services

ISP without Gateway Infrastructure Provider providing

Dark fibre, right of way, duct space, tower etc.

74%

100%

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FDI POLICY

7. Hotels & Tourism 100%

8. Shipping & Ports 100%

9. Industrial Parks 100%

10. Hospitals 100%

11. SEZS 100%

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Prohibited Sectors

Atomic Energy

Lottery Business

Betting & Gambling Agriculture(excluding Floriculture,

Horticulture, Development of seeds, AnimalHusbandry, Pisciculture and Cultivation ofvegetables, mushrooms etc. under controlled

conditions and services related to agro andallied sectors) and Plantations (Other than Teaplantations)

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ISSUES IN CROSS BORDER M&A

Cultural Issues

Legal & regulatory

framework

Identifying and

delivering synergies

Tax regimes &

treaties

Business

Dynamics

Business

Environment

Accounting

treatment

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The top 10 acquisitions made by Indian

companies worldwide

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AnyQuestionsAnyQuestions

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ThankYou

SOURCE :GOOGLE