Briefly discuss the merger and acquisitions in India.
Ans. Mergers and Acquisitions (M&A) are both aspects of strategic management, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child éntity or using a joint venture. In the recent years, India has showed tremendous growth in the M&A deal. It has been actively playing in all industrial sectors. The increasing volume is witnessed in various sectors like that offinance; pharmaceuticals, telecom, FMCG, automobiles and metals. In fact, the number of acquisitions abroad has increased considerably in the past few years. Indian multinationals appear to be on a shopping spree. They have acquired 120 foreign firms between 2001-03 for a consolidated amount of $1.6 billion and are further expanding their mergers and acquisition activities to Spain, Brazil, the rest of South America and Europe. The volume of M&A transactions in India has apparently increased to about 67.2 billion USD in 2010, from 21.3 billion USD in 2009. At present, the industry is witnessing a whopping 270 per cent increase in M&A deal in the first quarter of the financial year 2009-10. Some of the major factors resulting in this sudden growth of merger and acquisition deal in India are favourable government policies, excess of capital flow, economic stability, corporate investments, and dynamic attitude of Indian companies. This increasing percentage is mainly attributed to the increasing cross-border M&A transactions. Over that increasing interest of foreign companies in Indian companies has given a tremendous push to such transactions. With Indian corporate houses showing sustained growth over the last decade, many have shown an interest in growing globally by choosing to acquire or merge with other companies outside India. The recent merger and acquisitions in 2011 by Indian companies worldwide include Tata Steel acquiring Corus Group, a UK based company with a deal US$12,000 million and Hindalco acquiring Novelis from Canada for US$ 6,000 million. Tatas also acquired Jaguar and Land Rover in a significant cross-border transaction. With these major mergers and many more on the annual chart, M&A services in India are taking a revolutionary form.
Creating a niche on all platforms of eerporate businesses, merger and acquisition in India is constantly rising with édge over competition. Whereas both transactions involved the acquisition of assets in a foreign jurisdiction, both transactions were also governed by Indian domestic law.
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