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During
the past few years, Indian companies have seen a spate of
Mergers and Acquisitions (M&As). Companies have different
considerations for adopting M&A strategy. The primary
aim of M&A is to expand a company's business and earn
profits. Acquisitions help in expansion and growth as they
bring in more customers and business, which in turn brings
in more money for the companies. More and more companies are
on the expanding spree for a fast-paced growth. The need for
taking over global and domestic outfits for fulfilling business
needs has now transformed into aggressive growth plans for
acquiring more and more market share. Companies have taken
merger or acquisition as one of the fastest ways to set up
overseas business as it helps in gaining access over the customer
base and also the existing market share of the acquired company.
And more importantly, it conquers the inefficiencies involved
in starting business from the scratch.
In
India, the merger of Reliance Petrochemicals Ltd., with Reliance
Industries Ltd., (RIL) in 1992 started the trend. This was
followed by the three-way merger, again involving the Reliance
group, of Reliance Polypropylene, Reliance Polyethylene and
RIL in 1995. Then came the mega-merger of Hindustan Lever
Ltd., (HLL) with Brooke Bond Lipton India Ltd., (BBLIL) in
1996. The Indian banking sector too has witnessed a period
of consolidation through the M&A route, notable among
them has been the merger of Times Bank with HDFC Bank and
reverse merger of ICICI with ICICI Bank. Recently, the merger
deals of Bank of Punjab and Centurion Bank as well as the
IDBI and IDBI Bank set the tone for the sector. The banking
industry is all set for consolidation with both the private
sector banks and public sector banks on the lookout for acquisition
of foreign banks. Some of the PSU banks are planning to merge
with their peers to consolidate their capacities. |
