Recent M&A and FDI’s World-Wide List of 2011-2012.

Here in this page you can find a regular update starting from now, the major recent Mergers & Acquisition(M&A) or Foreign Direct Investment(FDI) by the companies for different reasons(Entry, Exit, Expansion, Employment Creation, Innovation(R&D Investment), etc., 

Recent Investments proposed/done by companies in 2011 and 2012: 

Japan based automotive company Honda has announced plans to set up a new manufacturing plant in state of Guanajuato, Mexico where it will invest $800m into the plant for a additional production capacity of 2lakh vehicles where the operations will begin in 2014.

Michigan based Chrysler Group plans to invest atleast $365m to expand and improve its assembly complex in Toledo, Ohio for further production of Jeep Liberty and Dodge Nitro SUV’s by 2013.

Ireland based heathcare products manufacturer Covidien has invested $45m to setup a new manufacturing plant in San Isidro Industrial Park, Dominican Republic where manufacturing of instruments for minimally invasive surgery is done.

DHL, Global logistics company part of Germany based Deutsche post, has opened seven new security monitoring centers across Latin America.( New centres are located in venenzula, Peru, Mexico, Colombia, Costa Rica, and Guatemala, and Honduras.

CMA CGM, a France based container termical shipping company, has announced plans to setup a new hub in Kingston, Jamaica and will invest $100m.

US based software giant Microsoft has opened its first Microsoft Technology centre(MTC) in Latin America.  The unit will test the performance of their products in simulated environment within the facitlity.

Updated regularly

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Good Due Diligence requires?

Before every Merger and Acquisitions a report called Due Diligence report is prepared for the purpose of examining the potential ability of the target company for many reasons. This Due Diligence report will helps an acquirer firm to make a decision whether to go further or not for making a merger or acquisition.

In short a good due diligence is done to find out the target customer's costs and capabilities, competitors, competitive advantages, market share etc.  This should contain the accurate knowledge about the target company, information like

• The Size and Growth rate of the Target Market: This will give an idea which area the company has to concentrate in the future, which products and markets have better scope where with the capabilities available which market can be tapped etc.
• The target company's rank among the competitors and what the intensity of the competition along with market share, revenue, profit within each segment. This information will helps in figuring out the future scope of growth and market share more accurate 
• Cost efficiency aspects what already possessed and what the competitors have initiated, where the measures can be identified which can be incorporated in the future post acquisition, and the amount of further investment required can be measured out of it.  To further change the target companies and existing strategies the company's capabilities, competencies, and technologies has to be taken in consideration for the purpose of further investment or make use of the present existing resources to the best possible way.
• To carry Mergers & Acquisition the acquirer has to take lots of things into consideration before stepping in, whether the M&A will lead to a diversification, either related or unrelated diversification. Any of them a proper synergy has to be formed for the best use of the diversification or reinforcement. 

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Aditya Birla Group in Acquisition Spree.

Recent times, the word Acquisition is buzzing all over the country, Inbound acquisition and outbound acquisitions number is increasing year on year(yoy) basis. One company Aditya Birla Group is in a high-speed acquisition mode.  Three(3) Acquisitions in just four months that cumalatively cost $1.4billion( that is close to Rs.6,300 crore) are the signs a man looking for size and scale, and getting them in a hurry. 

Kumar Mangalam Birla,
 Chairman of Aditya Birla Group

Kumar Mangalam Birla(43 yrs in age) chairman of the Aditya Birla Group(ABG) aims to more than double the revenue of his conglomerate to $65 billion(Rs.2.93lakhs crore approximately) by 2015 as per the recent press note released where the figures will take it to the current revenue of Tata Group.


Recent Acquisitions of Aditya Birla Group.
On 18th April, the group bough Swedish pulp and fiber maker Domsjo Fabriker for $340 Million(Rs.1530 crore). Earlier in same industry it took over Athloville and Nackawic in Canada, and Jingwei Fibres Company in China. 
Note: Aditya Birla Group is the largest player in the Pulp and Fiber maker segment with 20% market share.
Earlier it also agreed to acquire the chloro-chemicals division(CCD) of Kilkata based Kanoria Chemicals & industries(KCIL) for Rs.830crore in cash.
Aditya Birla Group first deal of the year was the acquisition of Atlanta based Columbian Chemical Company for $875 million (Rs3975 crore) in January. 


Other Recent Deals of Aditya Birla Group
Domsjo Fabriker for $340 Million.(April 2011)
Kanoria Chemicals for $184 Million(mn).
Columbian Chemicals $875 mn (Jan 2011)
Spice Telecom $600 mn (June 2008)
Novelis $5.7 bn (Feb 2007)
Tata's stake in Idea for $983 mn (April 2006)
Ultratech Cement $183 mn (May 2004)

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Its No More HeroHonda, Now It's Hero and Honda.

Hero and Honda Group has tied to do business in India in the year 1984, now after an 27years Joint venture between BM Munjal-owned Hero Group and Japanese origin Honda Group has come to end.  One of the successful association and continued to be an market leader in Two wheelers in India both companies has decided to split up.  The news itself has discouraged the investors to rest their capital in this stock as a fall is been observed in the stock price on the day itself when the news broke out.

Hero-Honda Stock Fall down From December 2010- April 2011

[More Info: 5lakhs Shares were traded on an single trading day which is 8 times th
e normal of the particular stock.
9% down in stock price of Hero Honda Motors India Limited]

Case Study: Consequences of this Hero-Honda De-merger/ Joint Venture Split Up:
At the time of Split up Honda Group was holding 26% stake in the Hero-Honda Group which for approximately  $1.2bn.  The company is function in the same name for few more months until Hero group makes it own identity in Two-wheeler market.

Honda Group Logo

Impact on Honda Group:
First of all lost its Indian partner. But where as the company(Honda Group) is function in the country for past few years and made an strong presence though having less market share. So it doesn't need to create a new Identity/Brand awareness among the people and can directly target its customers and attack its competitors(Hero Group, TVS, Bajaj Auto etc) with its Competitive Advantage.
Honda Group has Advantages even after ending up the Joint venture with Hero Group. Few are,

• Got Brand Identity.
• Technology as an Competitive Advantage.
• Market Presence in this huge Two-wheeler market.
• Good Reputation/Goodwill as a brand.

But the company doesn't have a strong production and distribution channels compare to its competitors because of which it only takes orders and then produce a vehicle. 

Hero Group Logo

Impact on Hero Group after the Split up and current situation:

The company has posted a 16.2% decline in Net Profit (Quarter-4 ended March 2011) this is because of two reasons.

• Because of rising Input cost, as Raw materials like steel, non-ferrous, and Rubber based components are not showing any signs of easing and
• Higher Advertising spending during the World Cup Cricket.

Direct Impact:

The Hero Group has to pay total Royalty of Rs.2479 crores to Honda Motors (which includes Rs.550 crore for export license) for the purpose of producing, Selling and Servicing current products.

The company has roped Law and Kenneth(L&K) as an Creative partner to launch and establish a New Brand for the company.

Company is in search for hiring an International Brand and Innovator Specialist.

Strengths of Hero Group:

• Market Leader in Two wheeler category.
• Strong Distribution channel across the length and breadth of the country.
• Huge Production units.
• The company has increase its production capacity this year from 5.5Million to 6.15Million units with an initial investment of Rs300crores.
• Brand Loyal Customers( this acts also like an threat, because people now are familiar with the name HeroHonda rather than Hero)
• Good Product Mix as an Portfolio.
• Enriching its R&D capabilities as an part of its long term plan.

Huge Opportunity: The company has got an huge opportunity to remain as an Market leader for longer time by holding majority of the Market share.  In addition because of the Increase of the Bank Interest rate the sales of the Car has been decreased and an increase in the sales of Two-wheelers/bikes is expected.

Because most of the Cars are bought on Equal Monthly Installment(EMI) basis and have to opt for an loan, but whereas  for bikes 70% of purchases are done through Cash payments. This will create and huge opportunity to grab it. 

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Role of Investment Bankers in Merger and Acquisition.

Investment banker plays an Important role in M&A.  They help the merging companies in many ways like.

• They help in organising mergers.
• They help target companies to develop and implement defensive tactics.
• They help in valuing the target company.
• They help in financing mergers and,
• They invest in stock of firms which are likely to merge.

Investment bankers gain huge profits through these merger related activities.

1. Organizing Mergers: Suppose steel manufacturers interested in merging with one of its suppliers such as iron or coal mining firm.  Investment bankers help steel manufactures to acquire its suppliers.
2. Developing Defensive Tactics: In order to avoid takeover by big firms, a target firm make use of Investment banking firm and a law firm.  Some of the defensive strategies are Golden parachutes, Poison pills, white square, white Knights etc.
3. Establishing a Fair Value.
4. Financing Mergers: If acquiring firms do not have enough fund of cash, then there is need for searching source of funds. (FYI: Earlier in 1980, Junk bonds were the only source for financing mergers and the primary developer for those were Drekel Burnham Lambert)
5. Arbitrage Operations: Here it refers to buying and selling of securities in different markets at different prices and taking risk free return.

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Acquisition of Plant/Unit - Corporate Restructuring

As corporate restructuring is developing, purchase and sale of divisions or plants is becoming common in present conditions. A company can purchase an asset or it can divestiture its asset depending on the need.  


Some important examples of purchase of division/plant in recent past years are.

1. Cement plant of TISCO(A plant is situated in East Madhya Pradesh and the slag cement grinding facility is located in southern Bihar) is purchased by Lafarge Cement India.
2. SRF Limited become the owner of nylon tyre cord division of CEAT.
3. Heinz India limited purchased the foods division of Glaxo India Limited.
4. Hindustan Sanitaryware Industries Limited(HSIL) bought the Chrome Fitting bathroom division at Bhiwadi, of Havells Group India limited as a part of its diversify portfolio strategy.

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Article Summary: Impact of Mergers and Acquisitions on Corporate Performance in India

This is to summarize the article, “The impact of mergers and acquisitions on corporate performance in India" written by “Satish Kumar and Lalit K. Bansal ”. The objective of this summary is to explain the changes occurred post M&A of the firms and financial performance of the firms and to find out whether merger or acquisition is suitable to increase the different perspectives of the organization performance.  

The main reason for this kind of move by the corporate  are to gain greater market power, gaining the new innovations thus reducing the risks associated with the development of a new product or service, increasing the efficiency with the help of economies of scale. Usually

corporate sector personal has tightened their belts in restructuring the company so that it can face the cut throat competition from MNC’s and also will helps in exploring new opportunities.

Thanks to liberalization measures where the Government controls where, regulations and restrictions have been reduced, has helped the corporate houses to expand, diversify and modernize the operations by resorting to M&A.           

The study was conducted with the help of six ratio used for the comparison purpose between the pre and post merger of the organization, which are done on five parameters six ratios, where Liquidity position, operating efficiency, overall efficiency, debt to equity ratio, return on net worth and earnings per share are been found out.

Out of 22 merger cases 13 merging firms are showing increase in working capital. Out of these 13 firms, six firms are showing a huge increase in working capital which indicates that the current assets have gone up compared to current liabilities of the company.  A sharp decrease is observed in three of the firms in its working capital post merger. In the case of Acquired firms, out of 52 acquisition cases 37 acquiring firms are showing an increase in working capital and 15 acquiring firms are showing a decrease in working capital, in which only three where shown an steep decrease.

In operating efficiency, if a comparison is made between merger and acquisition cases, merger cases are more successful in proportion of total cases of the same type. If a comparison is made between merging and acquiring firms on the basis of increase in working capital then more number of acquirers has increased their working capital.  While considering the return on network, both merger and acquisition has shown a significant amount of increase in the return on net worth which shows that the firms are better in efficient at generating profits from every rupee of net assets, and a company is better in using the owners’ funds to generate earning growth.

It can be concluded that, the financial performance has improved significantly post-merger of more than half of the companies and in acquisition deals, more than half of the cases showed an improvement in the financial performance.  In both mergers and acquisitions the financial performance has improved but at the same time both working capital and debt-equity ratio are also increasing.  Because of which it can be observed that the financial burden of the firm has gone up as the current assets may turned into non-earning assets and the explicit costs are increased. But when compared to the pre merger and after merger period, there were no sign of increase of profits in after merger time, but anyhow the Indian companies had maintained a constant dividend to satisfy its shareholders, irrespective of the profits being constant. 

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Mergers and Acquisition(M &A) Deals of India in 2010

There is been lots of Mergers and Acquisition(M & A) is carrying on in India from the past few years. There is been a great significant growth which can be observed on comparing with the previous years data. There has been total number of 116 Mergers and Acquisition(M & A) only in the month of January (56) and February (60) 2010' successfully with an value of about $3.86 billion, whereas in 2009 in total there has 330 number of deals which was valued about $11.96 billion  are registered.

Here are the list of Total Mergers and Acquisition(M & A) of Domestic deals, 2010 in India.

Acquirer	Target	Sector	Deal
Domestic Deals in January, 2010: 32 Deals of value $2.16 Billion
Penta Homes	Agro Dutch Industries	Agriculture	S ($4.26 mn, up from 32.5% to 57.7%)
ACC	Encore Cement and Addictive	Cement	A
Dalmia Cement	Orissa Cement	Cement	S ($37.66mn, 45.4%)
Crompton Greaves	Brook Crompton Greaves	Electricals	M
Havells India	Standard Electricals	Electricals	A ($25.53mn)
Srei-led Consortium	DPSC	Energy	S ($36.6mn, 57%)
Greenko Group Plc	20.25 MW hydro power assets	Energy	A ($32.98mn, 57%)
Avantha Power and Infrastructure	Malanpur Captive Power (subsidiary of crompton greaves)	Energy	S ($10.94mn, 59%)
Almondz Global Securities	Almondz Insurance Brokers	Financial Sector	S (51%)
Infrastructure Development Finance Company(IDFC)	IDFC – SSKI Securities	Financial Sector	S (from 80% to 100%)
Indian Infoline (Orient Global Tamarind Fund)	Indian Infoline Investment services	Financial Sector	S ($72mn, 22%)
Edelweiss Capital	Anagram Capital	Financial Sector	A ($34.89mn)
Vista Vyapaar	Mathew Easow Research Securities	Financial Sector	S ($0.84mn,69.2%)
Ruchi Soya Industries	Solvex, General Foods, Param Industriess	FMCG, Food Processing	M
WF	Henkel India Brands ‘Aramusk’ and ‘Moloy’ soaps and ‘Mahabringol’ hair oil	FMCG, Food Processing	S ($9.57mn, 50%)
Gitanjali Gems	Morellato India	Gems and Jewellery	A ($1.06mn)
Ranbaxy Laboratories	Biovel Lifesciences	Health care	A
Delta Corp	Advani Pleasure Cruise	Hospitality	S (50.99%)
Titagarh Wagons	Titagarh Steels and Biotec	Manufacturing	M
Aptech	Maya Entertainment	Media	A ($16.17mn)
SK Bangur Group	Rama Newsprint	Media	S ($8.09, 16.84%)
ICL Financial Services	Indo Zinc	Metals	S (61%)
ABG Shipyard	Great Offshore	Oil and Gas	S ($62.56mn, 15.23%)
Harrisons Malayalam	Harrisons Malayalam Financial Service	Others	M
Srei Infrastructure Finance	Quippo Infrastructure	Real Estate and Infrastructure	M
DLF	DLF-Liand O Rourke	Real Estate and Infrastructure	S ($10.64mn, 100%)
McNally Bharat Engineering	Buildmet	Real Estate and Infrastructure	A ($7.87mn)
Spice Retail	Global Access	Retail	A
Spice Mobiles	Spice Televentures	Telecom	M
GTL Infrastructure	Aircel’s 17,500 telecom towers	Telecom	A($1.78bn)

Next: Domestic Deals in February:
Inbound Deals in 2010
Outbound Deals in 2010
Top 10 Merger and Acquisitions(M&A) of 2008 and 2009
Top 10 Outbound Merger and Acquisitions(M&A) deals in India All time.

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The Top 10 Biotechnology/Pharmaceutical Deals

Pharmaceutical companies are usually always in news. Stil the top slot of companies are taken by Johnson & Johnson, Pfizer, Roche, and GlaxoSmithKline in the world.


Here are the Top 10 Biotechnology/Pharmaceutical Acquisition Deals of All time.

Acquired Company (Origin)	Targeted Company (Origin)	Deal Amount
Pfizer (United States)	Wyeth (United States)	$68 billion in cash and stock
Roche (Switzerland)	Genentech (United States)	$47 billion
Novartis (Switzerland)	Alcon  (United States)	$39.3 billion
AstraZeneca(United Kingdom)	MedImmune(United States)	$15.2 billion
Abbott(IL, USA)	Solvay Pharmaceuticals(Belgium)	$6.2 billion
Johnson & Johnson (United States)	Centocor Ortho Biotech, Inc(United States)	$4.9 billion in stock-for-stock exchange
Sanofi-aventis(Paris, France)	Merck & Co.(United States)	$4 billion
Abbott(United States)	Piramal Healthcare(India)	$3.72 billion for 4 years
GlaxoSmithKline(United Kingdom)	Stiefel Labs(United States)	$3.6 billion.
Warner Chilcott(United States)	Procter & Gamble's(P&G)(United States)	$3.1 billion

Further Info, Recently, the Abbott, US based company and India’s second largest Pharmaceutical company acquired the Indian Pharmaceutical company Piramal Healthcare Inc for a deal of $3.72 billion which includes the company get $400

million from Abbott for the next 4 years for providing an readymade presence to Abbott. 

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Top 10 Outbound Merger and Acquisitions(M&A) deals in India All time.

Top 10 Outbound Merger and Acquisitions(M&A) deals in India All time.

India had very less cases of Merger and Acquisitions(M&A) earlier. But in past four years, things have changed and there is an very increase in Outbound Merger and Acquisitions(M&A). Outbound M&A means, the Companies which has origin in India and making and initiative in investments in the foreign based companies.  A major landmark was booked by the Tata Steel Limited by acquiring the UK based company, Corus Group in 2007 for a whopping amount of $12.2 Billion.   

Due to the Global financial crisis the Inbound Merger and Acquisitions(M&A) was dropped by approximately 85%, which is said to be Increases in the coming years to an great extent.

The Indian entrepreneurs are on spree in Merger and Acquisitions(M&A) both for outbound as well as attracting the Inbound M&A, which looks to be an good sign for an Economy boom.

Acquirer Company	Targeted Company	Deal Value (In Billions)	Industry
Tata Steel	Corus (UK)	$12.2	Steel
Hindalco Industries	Novelis Inc (USA)	$6	Aluminium
Oil & Natural Gas Corp(ONGC) Videsh Ltd	Imperial Energy PLC (UK)	$2.8	Oil & Gas
Tata Motors Ltd	Jaguar & Land Rover Operations  (UK)	$2.3	Automotive
Suzlon Energy Ltd	RE Power (Germany)	$1.7	Power & Energy
Essar Steel Holdings Limited	Algoma Steel Inc (Canada)	$1.58	Steel
United Spirits	Whyte & Mackay (UK)	$1.11	Breweries & Distilleries
Tata Power	PT Kaltim Prima Coal; PT Arutmin Indonesia (30% Stake - Indonesia)	$1.10	Power & Energy
GMR Infrastructure Ltd	InterGen NV (50% -  Stake Netherlands )	$ 1,10	Power & Energy
Tata Chemicals Limited	General Chemical  (USA)	$1	Plastic & Chemicals

Top 10 Merger and Acquisitions(M&A) of 2008 and 2009 

Mergers and Acquisition(M &A) of Domestic Deals in 2010

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