An Overview

Nilotpal Biswas
M.B.A (F), Dept. of Commerce
Roll No: 23

Mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.   Mergers and acquisition, now a day’s has become a well practiced phenomenon in the Indian corporate sector. In 2007, there were a total of 676 M&A deals and 405 private equity deals, in 2007, the total value of M&A and PE deals was USD 70 billion, Total M&A deal value was close to USD 51 billion, Private equity deals value increased to USD 19 billion. The growth in mergers and acquisition
Came because of three reasons,
  (a) Globalisation and increased competition
  (b) Concentration of companies to achieve economies of scale
  (c) Cash Reserves with corporate
This Merger and acquisition is seeing a major change in trend and now a day’s Cross-border deals are growing faster than domestic deals. And of course Private Equity (PE) houses have funded projects as well as made a few acquisitions in India.

In year 2008, M&A deals in India in 2008 totaled worth 19.8 bn $, less compared to last year which stood at 33.1 bn $. Decline of M&A activity was in line with the global activity. Cross border M&A totaled 8.2 bn $ compared to 18.7 bn $. But one deal of acquisition happened that year which took the world by storm. That is Tata Motor’s acquisition of Jaguar-Land Rover. On March 26, 2008, Tata Motors entered into an agreement with Ford for the purchase of JLR. Tata Motors agreed to pay US$ 2.3 billion in cash for a 100% acquisition of the businesses of JLR. As part of the acquisition, Tata Motors did not inherit any of the debt liabilities of JLR - the acquisition was totally debt free.