m & a fisrt draft

8/12/2019 m & A fisrt draft

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MERGER ANDACQUISITION

CA Manish Jain

[email protected]

9831657801

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SYLLABUS

Corporate Restructuring : An overview

Basic Structure of Merger and Acquisition

Takeover Process and SEBI Code

Valuation

Buy-out and Spin offs

Cross Broader Deals

Accounting for Merger

Ethical Issues of Merger and Take-over

Post Restructuring Issue

Case Study


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Announced Mergers & Acquisitions:

Worldwide, 1985-2013

Source: Thomson Financial, Institute of Mergers, Acquisitions and Alliances (IMAA) analysis

(C) 2014 IMAA

0

1.000

2.000

3.000

4.000

5.000

6.000

0

10.000

20.000

30.000

40.000

50.000

60.000

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

VauleofTran

sactions

(inbil.U

SD)

NumberofTra

nsactions

Year

Number of Deals Value


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Announced Mergers & Acquisitions:

India, 1999-2013

Source: Thomson Financial, Institute of Mergers, Acquisitions and Alliances (IMAA) analysis

(C) 2014 IMAA

0

10

20

30

40

50

60

70

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

VauleofTransactions

(inbil.USD)

NumberofTransactions

Year

Number Value


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Worldwide : Top 10 deals of M & A in worldRank Year Acquiror** Target**

Transaction Value

(bil. USD)

Transaction Value

(bil. EUR)

1 1999 Vodafone AirTouch PLC Mannesmann AG 202.8 204.8

2 2000 America Online Inc Time Warner 164.7 160.7

3 2007 Shareholders Philip Morris Intl Inc 107.6 68.1

4 2007 RFS Holdings BV ABN-AMRO Holding NV 98.2 71.3

5 1999 Pfizer Inc Warner-Lambert Co 89.2 84.9

6 1998 Exxon Corp Mobil Corp 78.9 68.4

7 2000 Glaxo Wellcome PLC SmithKline Beecham PLC 76.0 74.9

8 2004 Royal Dutch Petroleum Co Shell Transport & Trading Co 74.6 58.5

9 2000 AT&T Inc BellSouth Corp 72.7 60.2

10 1998 Travelers Group Inc Citicorp 72.6 67.2


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PwC

Section 1

India Economic Overview

Slide 2


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PwC

Emerging markets will continue to enjoy the best growthprospects

Slide 3

Source: PwC Global Economic Outlook, National statistical authorities, Thomson Datastream and IMF

Outlook2013 2014f 2015f

GDP growth

UK

China

Key Australia

Japan

Italy

Ireland

Greece

-3.8 0.2 1.8

1.6 .3 2.5

1.9 3.0 3.0

US

Brazil

Canada

1.6 3.2 3.7

Mexico

2.3 1.8 2.5

France

0.1 0.9 1.2 0.1 2.1 1.8

Spain

-1.2 0.6 0.9

1.9 2.6 3.2

South Africa

-1.8 0.4 1.0 2.4 2.7 3.0

India

4.8 5.4 6.4

7.7 7.5 7.2

1.6 1.5 1.1

1.6 2.0 2.9

Russia

1.7 2.6 2.4

Germany

0.5 1.7 1.9

Saudi Arabia

3.8 4.4 4.2


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PwC

..and India is expected to touch new economic highs in thecoming decades

Slide 4

Source: U.S. Census Bureau, India Urbanization Econometric Model

Source: IMF (2012), World Bank (2012) PwC estimates for 2030Market Exchange Rate** Expected

2012 2030

Rank Country GDPUS$bn

Country ProjectedGDP

US$bn

1 US 15,684 China 24,356

2 China 8,358 US 23,376

3 Japan 5,960 India 7,918

4 Germany 3,400 Japan 6,817

5 France 2,613 Brazil 4,883

6 UK 2,435 Germany 4,374

7 Brazil 2,252 Russia 4,024

8 Russia 2,014 France 3,805

9 Italy 2,013 UK 3,614

10 India 1,842 Mexico 2,830

1 Regulatory impetus oninfrastructure

Economic growth going forward would bedriven by

2 Economic Reforms

3 Increasing Foreign Trade


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PwC

Indian rupee has improved in the recent past, on the back ofof improvement in the political climate

Slide 5

Source: Reserve Bank of India; Rates at the last day of each month, Bloomberg

53.28 53.77 54.38 54.2156.49

59.6961.11

66.57

62.7861.63

62.9 62.18 61.48 61.88 61.2 60.3 59.4 59.3

40

45

50

55

60

65

70

Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14

Rupee Vs USD

17000

20000

23000

26000

23-May-13 23-Jul-13 23-Sep-13 23-Nov-13 23-Jan-14 23-Mar-14 23-May-14

BSE Index


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PwC

Section 2

M&A Activity in India

Slide 6


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PwC

Economic uncertainty in last few years have affected the dealmarket sentiment

Slide 7

Source: Deal Tracker

Decrease in M & A dealvolume in 2013 Vs 2012

Reduction in Total Dealvalue in 2013 Vs 2012

20.3%16.4%

5.0 6.1 5.7

10.3 8.6 9.2

28.7

6.08.6

14.84.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2011 2012 2013

M & A Value (US$ bn)

Domestic Outbound Inbound Mergers & Internal Restructuring

35.4

28.2

44.1

216 234 220

146 122

82

142 140139

140102

59

0

100

200

300

400

500

600

700

2011 2012 2013

M & A Volume

Domestic Outbound Inbound Mergers & Internal Restructuring

598

500

644


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The deals in the last few years have got smaller

Slide 8Source: Deal Tracker

Quarterly M&A Deal Trends

48

183 178

147

113

160

131 126120

7.4 7.3

18.4

4.45.4

7.2

4.6

9.310.0

0

2

4

6

8

10

12

14

16

18

20

0

20

40

60

80

100

120

140

160

180

200

Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013

Number of deals Value in USD billion

192 184 182 119

Average Deal Size USD mn

2010 2011 2012 2013


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PwC

Deal activity in 2013 has been led largely by Pharma & Oil &Gas Transactions

Slide 9

Source: Deal Tracker

Outbound M&A Top 5 Sectors(USD mn)

0

1,000

2,000

3,000

4,000

5,000

6,000

Oil & Gas Automotive Pharma Real Estate Telecom

2012 2013

Inbound M&A Top 5 Sectors(USD mn)

0

500

1,000

1,500

2,000

2,500

3,000

Pharma Telecom Manufacturing IT & ITES Power

2012 2013


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PwC

...however with Modi Effect we expect it to improve

Slide 10

Pharma

Technology

Aviation

Telecom

Sectors to watch for

Modi factor helps stockmarket cap cross $1.5 trlnSource: Reuters

Banking on Modi, foreigninvestors to pour $60 bninto IndiaSource: The Hindu

Business Community PinsHope on ModiSource: Indian Express


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PwC

Section 3

Key considerations for M&A in India

Slide 11


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PwC

Key considerations for M&A

Slide 12

Family run businesses

High value expectations

Tax and regulatory complications

Inadequate investments in controls, systems and people

Reliability of financial statements

Availability of adequate information during the diligence process

Longer deal cycle

Issues relating to post closing integration


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PwC

In Summary

Slide 13

Difficulty understanding financial information prevents necessarydisclosure

Risks are not given enough weight

Large gaps in expectation between buyer and seller Difference between expected performance and actual performance.

Tax compliance Labour practices & Compliances

Third party claim against the asset Enforceability of agreements Local negotiating practices

Conflicting views over strategy Conflict of interest outside the venture Cultural differences

Source: Getting on the right side of the delta January 2012

Lack of transparentfinancial

information2

Justifyingvaluations1

Non compliantbusiness practices4

Negotiating andContracting3

Partnering conflicts

5


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PwC Slide 14

Thank you


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KNOWLEDGE OF AREA FOR

UNDERSTANDING M & A Companies Act

Contract Act

Competition Act

SEBI Take Over Code

Income Tax Act

Valuation

Accounting Standard

FEMA

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