Mergers and aquisitions in India:motives,barriers and outcomes

Shah, Siddharth (2012) Mergers and aquisitions in India:motives,barriers and outcomes. [Dissertation (University of Nottingham only)] (Unpublished)

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This paper examines the various factors that need to be accounted for while analysing a company undertaking a merger or an acquisition. From the motives behind the decisions to enter into a Merger or Acquisition to the barriers it faces during the process to the immediate as well as future outcomes have been projected in this research.

Four case studies have been analysed showing the overall picture of the deal, the cases were: The TataCorus acquisition, The BhartiAirtel and Zain acquisition, The Tata Motors and Jaguar Land Rover acquisition and The Jet Airways attempted acquisition of Air Sahara. The analysis was broken into two components: qualitative and quantitative.

For the qualitative component I have used SWOT analysis to describe the companies and then used the Ansoff’s matrix to depict the various motives to engage in mergers. The quantitative component is analysed by using financial ratios such as Return on assets, Return on equity, Profit margin, Debt equity, Price earning, Earnings Per Share, Market Price and Interest coverage along with a share price analysis against the BSE and an event study showing if there is any abnormal returns that occur on or around the announcement date of the acquisition.

Through the analysis I found that most companies have a common motive to engage in mergers and acquisitions which is the market development strategy to expand globally through cross border Mergers and Acquisitions, to create global brand names or to take advantage of low cost operations. Also it was seen that in the barriers faced by the company there were counter bids from potential acquirers along with government refusal, integration problems and cultural differences. The outcomes depends on how the company has funded the Merger/Acquisition, i.e. whether it was an all-cash deal or was through loans raised, which affect the financials of the company increasing its debt or lowering its equity and also affects the profit earning capacity of the Merged/Acquired company it was also observed that there were abnormal returns on and around the announcement date and this was shown to be negative for the acquiring company.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 01 Aug 2014 10:19
Last Modified: 17 Jan 2018 15:20

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