Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Mergers and Acquisitions in India

5 October 2022 – Vanessa Galhardo-Galhetas

M&A’s or Mergers and Acquisitions are a much talked about topic in the United States and Europe, but also in Asia. In India, the concept of a merger is called “Amalgamation”, by which two or  more companies join hands to form a new company or business entity. India, the fastest growing economy of Asia after China and Japan went through lot of economic reforms over the past decades. 


What is a Legal Due Diligence?

Before reforms in the 1990’s, Indian economy was under strict control of the government. Following the reforms, local corporations as well as foreign corporations adopted different growth and expansion strategies to avail the opportunities provided by the government to grow the Indian economy. 


Conglomerate mergers

This growth and expansion strategy models include mergers and acquisitions. The mergers can be categorized into: (1) Horizontal mergers, (2) Vertical mergers and (3) Conglomerates mergers. Conglomerate mergers are transactions whereby two or more companies operating in different industries join each other. The new economic reality has led local corporations targeting foreign markets, as well as foreign corporations, to increase their market share. The entry of foreign companies in the Indian market has led to positive competition, and opened gates to have new business ventures in the form of
M&A’s transactions, which created win-win situation for corporations as well as economy at large.

Conglomerate mergers are a very hot topic in India and some of the major Indian groups, like for example TATA group, are showing increased interest in this type of mergers. Recently, it seems that TATA group is interested in a conglomerate merger with Taiwanese companies to work together for the manufacturing of semiconductor chips and also to initiate R&D in India. 


The most significant recent mergers and acquisitions in India

The most significant recent mergers and acquisitions in India include :      

1. Vodafone and Idea Merger :  With the Indian telecom business becoming increasingly competitive, Vodafone India and Idea Cellular Limited, two of the then biggest companies, struggled. Both these companies decided to merge into one single entity. It was a beneficial agreement for both Idea and Vodafone. Vodafone and Idea launched its new corporate identity, ‘Vi,’ which marked the culmination of the two businesses’ unification. This merger is estimated to be worth $23,000,000,000/- (United States Dollar twenty-three billion only).

2. Bank of Baroda and Vijaya Bank and Dena Bank merger :  Vijaya Bank and Dena Bank merged with Bank of Baroda in 2019. Bank of Baroda, in December 2020 said that it had successfully integrated 3,898 (three thousand eight hinders and ninety eight) branches of Vijaya Bank and Dena Bank.

3. Hindustan Unilever Limited’s and GlaxoSmithKline Consumer Healthcare Ltd Merger :  Hindustan Unilever Limited (“HUL”) is the country’s leading fast-moving consumer goodscompany. HUL announced its merger with GlaxoSmithKline Consumer Healthcare Ltd in December 2018. The merger is in line with HUL’s aim of exploiting the megatrend of health and wellness. The overall business is valued at INR 3,17,00,00,00,000/- (Indian Rupees three hundred and seventeen billion only) in this transaction.

4. Zee Entertainment – Sony India Merger :  Two of India’s largest media companies, Zee Entertainment Enterprises Limited and Sony Pictures Networks India, have agreed to a multibillion-dollar merger. The arrangement has the potential to turn the merged entity into one of the largest in India. Both companies are expected to benefit from the merged entity and the synergies produced between them, which will not only accelerate business growth but will also allow shareholders to participate in its future success.


Legislation governing M&A in India

Laws governing M&A in India are: (1) The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, (2) The Companies Act (Section 390 to 395 of act 1956), (3) The Indian Stamp Act, 1899, (4) The Indian Income Tax Act, 1961 (5) Competition Act, 2002 (Section 5 with “Combinations of entities) (6) Insolvency and Bankruptcy Code,2016 and (7) Foreign Exchange Management Act,1999. 


Do you want to learn more about Mergers and Acquisitions?

Then check out our online training on Legal M&A : Neva Consulting – Legal M&A