Mergers and Acquisitions are an inevitable part of a market place, and by extension businesses. One of the main reasons for this can be the fact that usually, a symbiotic synergy between two market participants can have more value added, then both of them individually, a fact that echoes throughout this article. So, let’s take a sneak peek into some of the Top 10 Biggest Mergers & Acquisitions in India.
Top 10 Mergers & Acquisitions in India
In a merger, two companies come together to form such synergistic alliance. While the amount of control of retained by both of the firms can be debatable, but both companies still exist post-merger. In an acquisition, however, the acquiring company retains all of the control and the acquired company ceases in existence. Here are few of the top mergers and acquisitions in India
|Particulars||Acquiring Company||Merging Company||Compensation|
|Merger||Future Group||Heritage Foods||3.95% shares in FG|
|Merger||Mittal Steel||Arcelor Steel||$33.1 Billion|
|Merger||Vodafone||Idea||Post Merger Stake|
|Merger||Bank of Baroda||Vijaya Bank, Dena Bank||NA|
|Acquisition||Flipkart||Myntra||INR 2000 CR|
|Acquisition||Zomato||Uber Eats||INR 2492 CR|
|Acquisition||Tata Motors||Jaguar||$2.3 Billion|
|Acquisition||Aditya Birla Group||Jaypee Cements||INR 16189 CR|
|Acquisition||UPL||Arysta LifeScience||$4.2 billion|
10 Biggest Mergers & Acquisitions in India
Let’s have a detailed analysis of the famous and the Biggest Mergers & Acquisitions in India:
1. Future Group-Heritage Foods
In 2016, Future Group, the parent company of the famous ‘Big Bazaar’ retail group of stores merged operations with the Heritage Foods group. This deal had two fold effects, providing Heritage valuable supply chain of Future Group, while Future Group received yet another product to increase its product offering. Before this, Heritage Group’s valuation was around 295 crores, which shot up to a whopping 600 crores post-merger.
However, this wasn’t a cash deal, as the compensation was in stock payments, where Heritage group received 3.95% of Future Value Retail Ltd.
2. Mittal Steel-Arcelor Steel
This is one of many recession mergers and acquisitions. The financial crisis’s cascading effect had echoed throughout the global economy, cementing the words ‘Butterfly effect’ forever. Europe was no exception to this. During this recession hit economy, a lot of companies were undervalued, which meant for cash-rich companies to go on a buying spree.
India based Mittal steel, in this spree, merged with Arcelor Steel in a deal valued at $33.1 Billion. The post-merger company, ArcelorMittal is one of the largest steel companies in the world right now.
A lot of things can be attributed to the probable reason of this one, while the industry by itself was facing am ton of challenges operating in India, the advent of Jio was like the final nail in the coffin for both the company’s individual ventures.
Vodafone was still fighting the tax case with India back then, a while both companies were still reverberating from the 2G scam. The combined entity, Vodafone-Idea stood second only to Airtel now. In terms of compensation, the companies both hold an almost equal stake in the post-merger company, while Idea holds 54.9%, Vodafone holds 45.1%.
4. Bank of Baroda-Vijaya Bank-Dena Bank
In what could be termed as the first three-way amalgamation in India, Vijaya Bank and Dena Bank both merged with Bank of Baroda, effective from April 1, 2020, resultantly forming the third largest bank in India.
Since all three of the banks happen to be at least semi-government owned, compensation here is not applicable, but the government did infuse Rs 5042 Cr to enhance Bank of Baroda’s capital base and help it meet the new expenses.
Flipkart, the proud Indian e-commerce giant funded by Singapore based companies, acquired the fashion label ‘Myntra’ in 2014 whose product offering spanned across fashion and life-style products. This deal was made for a whopping Rs 2000 crores, however Myntra still continues to operate as a fashion apparel wing of Flipkart.
Flipkart, like its peer Amazon had started with selling books online and then proceeded to various other products. This could be termed as a product extension, however Flipkart continues to have its ‘Flipkart fashion’ wing, its products available both on the site itself and Myntra. Flipkart was later acquired by Walmart in 2018, beating Amazon to it and removing its chances of a potential monopoly in Indian E-commerce market.
6. Zomato-Uber Eats
In January 2020, Zomato acquired Uber Eats beating the only competition Swiggy to it, for a deal of Rs 2492 crores. Uber Eats, along with being late to the market, also didn’t have any exclusive point that made it stand out, resultantly had meagre success in the Indian market.
At the same time, both Zomato and Swiggy’s steep competitive drives resulted in huge profits for both of them, along with eating up market shares for any potential competitions. In the deal, however, Zomato received already established clientele and supply chains, and Uber Eats, well effectively cashed out.
7. Tata Motors-Jaguar
There is a popular story attached to this one! It is said that a decade before this deal, Tata expressed interest in selling off Tata Motors to Ford. However, Ford not only declined but proceeded to humiliate the company as well. However, with subsequent losses in its luxury line of cars i.e. Jaguar, Ford was forced to sell the subsidiary to Tata Motors for $2.3 billion in 2008.
Over and above that, Jaguar had been reporting losses before the said acquisition. But a decade after the acquisition, in 2019, it not only recovered these losses but also reported a profit of $3400.
8. Aditya Birla Group-Jaypee Cements
In 2016, the company Jaypee Cements had a lot of debt accumulated with them, a reason why they also had to let go of their IPL team ‘Deccan Chargers’ in 2012. The obvious answer was to declare insolvency and go through the then newly crafted NCLT procedure of insolvency.
However, a deal was struck with Aditya Birla group, which closed in early 2017, in which Jaypee cashed out by selling all of its assets to Ultra Tech, another cement company, in a deal of Rs 16189 Cr. While Jaypee avoided the cheap valuation in NCLT trials, Ultra Tech had an added 21 million ton capacity of production.
9. UPL-Arysta LifeScience
UPL was looking for diversification of its product line and increasing its market reach, when in 2018 Arysta LifeScience expressed an intention to sell. While before this deal, UPL was majorly an agro product manufacturing company.
However, post-acquisition, the product range was not only widened to farm pesticides from agrochemical products, it also provided UPL access to new markets of Africa, Latin America and China. The deal was valued at $4.2 billion, and has subsequently resulted in UPL becoming fifth largest agrochemical company in the world.
10. HUL- GSK Consumer Healthcare
In April 2020, Hindustan Unilever Limited merged GSK Consumer Healthcare of GlaxoSmithKline (GSK). This is one of the biggest examples of synergistic alliances we discussed earlier. While this deal provided HUL the products of Horlicks and Boost, another product line extension, GSK used these funds to establish its production in Bangladesh, following the western practice.
Since these two companies happen to be two of the biggest giants in FMCG sector, an approval was sought from National Company Law Tribunal as well, following which, the deal was closed in April 2020.
Top Mergers & Acquisitions: Key Takeaways
Mergers and acquisition play a vital role in facilitating economic operations, be it adding more production space or getting access to newer markets.
Watch this space for more such lists about mergers and acquisitions. Did we miss to include any famous merger and acquisition in our list? Feel free to add your views.