merger and aquisition part 2
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TABLEOFCONTENTS
1. INTRODUCTION...7 1.1
INTRODUCTION71.2 LARGE MERGERS AND ACQUISITIONS IN THE WORLD.............91.2.1 LARGE MERGERS AND ACQUISITIONS OF INDIAN
COMPANIES......91.3 MERGER AND ACQUISITIONSTRATEGY..10
1.3.1 FIRM DIVERSIFICATION..........101.3.2 CROSS BORDER MERGER ANDACQUISITIONS.........10
1.! AIMS AND OB"ECTIVES OF THE RESEARCH....111.!.1 AIM OF THERESEARCH...........11 1.!.2OB"ECTIVES OF THE RESEARCH...11
1.#HYPOTHESISOFTHERESEARCH...........111.$ MOTIVATIONOFTHERESEARCH..111.7 STRUCTUREOFTHEDISSERTATION............121.% FURTHERRESEARCH............1!
2. LITERATUREREVIEW..............1# 2.1
DEFINITION..1#2.2
TYPESOFMERGERS&ACQUISITIONS.............1$2.2.1 HORI'ONTALMERGERS.1$2.2.2 VERTICALMERGERS...1$2.2.3 CONGLOMERATEMERGERS..........172.2.! FINANCIALACQUISITIONS1% 2.3MOTIVESFORMERGERS.1%2.3.1 SYNERGY1%2.3.1.1 OPERATIONALSYNERGY.192.3.1.2 FINANCIALSYNERGY...20
2.3.1.3 MANAGERIALSYNERGY..........212.3.2GROWTH..212.3.3 DIVERSIFICATIONANDRIS(MANAGEMENT...222.3.! TA)ADVANTAGES...........222.3.# MANAGERIALHUBRIS.232.3.$ INCREASEDMANAGERIALCOMPANSATIONANDREWARDS2!
2.3.7 IMPROVEDMAR(ETSTANDING...........2#2.3.% EMPIREBUILDING2#2.3.9 FREECASHFLOW....2$ 2.!
PREVIOUSEPIRICALSTUDIESREGARDINGPOSTMERGERPERFORMANCES2$2.!.1 EVENTSTUDIES272.!.2 ACCOUNTINGSTUDIES...2%
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3
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2.!.3 E)ECUTIVESURVEYS..2%2.!.! CLINICALSTUDIES....29
2.#CAUSESOFFAILURES...............30
2.#.1 OVERPAYMENT.302.#.2 INTEGRATIONISSUES..302.#.3 PERSONALMOTIVESOFE)ECUTIVES312.#.! SELECTINGTHETARGET31
2.#.# STRATEGICISSUES...........31
3. RESEARCHMETHODOLOGY..323.1 RESEARCH....323.2 RESEARCHPROBLEM............333.3 RESEARCHDESIGN............33
3.3.1 "USTIFICATIONFORUSINGRESEARCHDESIGN..........3!3.! DATACOLLECTION...3#
3.!.1 PRIMARYDATACOLLECTION...........3#3.!.2 "USTIFICATION PRIMARYDATA3$3.!.3SECONDARYDATACOLLECTION.............3$3.!.! "USTIFICATION SECONDARYDATA..37
3.# SAMPLING............3%3.$ STEPSINSAMPLINGPROCESS............3%
3.$.1 DEFININGTHETARGETPOLPULATION...............3%3.$.2 DEFININGTHESAMPLINGFRAME............3%
3.$.3 TECHNIQUESOFSAMPLING...........39
3.$.3.1 PROBABILITYSAMPLINGTECHNIQUE.393.$.3.2 NONPROBABILITYSAMPLINGTECHNIQUE*
"USTIFICATION39 3.$.!SAMPLESI'E..39
3.7 DATAANALYSIS............!0
4. DATAFINDINGSANDANALYSIS..!1!.1 AVIATIONINDUSTRYOVERVIEW...............!1 !.1.1(INGFISHERAIRLINESANDAIRDECCAN
MERGER...!3 !.1.2 "ETAIRWAYSANDAIRSAHARAMERGER.!$ !.2
BAN(INGINDUSTRYOVERVIEW...!%!.2.1 HDFCBAN(ANDCENTURIONBAN(OFPUN"AB
MERGER...!9 !.2.2ORIENTALBAN(OFCOMMERCEANDGLOBALTRUST BAN(
MERGER...#3!.3OILANDGASSECTOROVERVIEW.............##!.3.1 RELIANCEINDUSTRIESLIMITEDANDIPCLMERGER.#$ !.3.2INDIANOILCORPORATIONLIMITEDANDIBPMERGER..........................................................................................
.#9 !.!STEELINDUSTRYOVERVIEW.$3
!.!.1 STEELAUTHORITYOFINDIALIMITED+SAIL,ANDIISCOMERGER...$3 !.!.2
"SWANDSISCOLMERGER..$$
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5. CONCLUSION.$9
!
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REFERENCELIST.............73
APPENDI).............
%!
LIMITATION.%9
ChapterOne
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Introduction
T- / / - / / 4 56 5 - 8 // 56 :- 4- :5; 6 5=@ 4 5 - > / 5 > 5 / 684 /- -5 ? / 68 4 ; / 56/. M ? / 68 4 ; / 56/ / 6 6 < ? 5: -
/ ? - / ? 6 8 / ; = 4 ;/ 5 64 / 8 8 ?;< 56 56
? 5 6 > 8 ;> 5
68 58;4 5 5< 5/ 6 6 : > / 68 4 ; 4-65 56 ? ? / 68 4 ; / 56/ = 6
6 8 6 5 5 656 > 6? /56/ . . 5 @;/ =; 6 / 5 < 68 / ? .
C56/5< 8 56 6 - 5 > 5 > ? / 68 4 ; / 56/ - / = 6 : 6 // 8
5;68 - :5 5= . S5> 5 - = ?? / > ? / 6
; 5>5= < < D >< *B 6 68 C- /< < 6 / A F 64 68 (LM 68
< 45> SBC 68 AT&T - 56 / :- 4- - :5 6 ? > 6 56 - 68 5 = 6 / :- 4- 8 8 5; 5
> ? / 5 =5 - - 4 ; 6? 68 ? 45> 6 - 4;/ 5> / 68 -
/54 < ? . H5: 56 5 - >5/ : 8 < ;/ 8 6 / ? 56/ - /
= 6 6 5 - /- -5 > 56 5; 5 > ? / 68
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1.2.1LargeMergers and Acquisitions of Indian Companies
T- 6 :/ =5; I68 6 45> 6 / 4 ; 6? 5 ?6 = / 8 45> 6 / : /
6 : : / = 4 =; - / 6 > / - 4- 6? 8. T- / ; 56
=5; I68 6 45> 6 / 6 ; 6? = 5 8 68 6? 5 ?6 45> 6 /
- / = 45> ; 6 . S5> 5 - : 5;/ - :5 ? 5 T S < 68
C5 ;/ G 5; . S 4568 = ?? / > ? : / = : 6 - > < ? 6
H 68
(5 : / - - 8 < ? / 5 / / 8 4 ; 4 < / 4 5
D54 5 R 88 / L =5 5 / 4 ; 8 B - > 5> G > 6 . T- 5
> ? / 68 4 ; / 56/ 5 ? 6 6? 5> I68 / <
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O6 5 - = ?? / > ? / 5 / / 6 < / 5> -
< 45>>;6 4 56 / 4 5 . T- I68 6 < 45> ? 6 B- A < / 6 < /
5 > ? : - S5; - A 4 6 MTN. T- / > ? :5;;6 4 56 > . S5 6 - / $ >56 -/ 5 2009
I68 6 =5;68 > ? / 68 4 ; / 56/ = 5 8 - 56< = 6R/
20= / :5;;< < < 4 / :- 4- - >
4 8 56 - 5;?- - 8 / 4 56 5; :- 4- :5;. H5: 8 6? < / 6 > ? / 68
4 ; / 56/ / - / 5 4568;4 / 5:6 / 56 / 6? - 68 : 6 // /
= 5 /.
1.3.2Cross#$order Mergerand Acquisitions
I6 6 56 < 56 / 5 6 / ? / :- 4- >/
85 6? 6 58 / > 5 / 8 / 5 56/ 6 5 ?6 45;6 /.
C 5// =5 8 4 ; / 56/ 5 4 ; / 56/ 856 = 6 45> 6
: - - 8 ; / 6 56 45;6 68 > ? 6 8 K 6 45;6 /.
D5> / 4 > ? / / 5 4; = 4 ;/ 5 - > < 56 5
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=5 - - 6 5< 8 45> 6 / - < :/ 54 8; / 68 5 - /;4- 4 5 /
-5: 6 4 / 5 6 6 56 < > ? / - 5;/ 45> < /
9
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6 5< 8 +I < 68 68 H5 //56 200#,. T- /56 5 >/ 5 6? 5
4 5// =5 8 > ? / 68 4 ; / 56/ / = 4 ;/ / > 456/;> 6?
5 56 5 6 68 / ; 5 56/ 6 5 ?6 45;6 . A 68
45/ / / 8 6 =; 6/ : < - 5 4 ; 6?/- -5 ? / 68 4 ; / 56/ 56 -
5 6? 5 > 64 5 - > 6 I68
? T5 / ? 4 5 / - 5 6? 5 > 64 68 /- -5.
1.+Moti!ation of the(esearch
T- / 4- 6 - / 6 4 - / 54;/ 8 5: 8/ < 6 6? /5> - 6?
=5; 6 64 . I6 - / 6 @5; 6 6 / ;8 6? =5; 6 64 68 -
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> / / / ;8 6 I
0*
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- < 6 =5; > 6 45> 6 / > ? 6? 68 ? 4 ; 8 6 I68
- 5;?- - > 8 ;> 5 6 :/ 4- 66 8
? / 8; 6 56 5 > ? / 68 4 ; / 56/ :- 4- 64 / / -
4; 5/ 5 65: >5 =5; /;4- - 6 6?/. O - / I - / 6
> 6 > ? / - 6 6? 6 I68 4 5// 8 68;/ /. B 4 ;/ 5 - /
/56 > ? / 68 4 ; / 56/ / /;=@ 4 - / = 6 4
- . A - / 5 6 6 > 4 I > >5 8 5 / ;8 =5; > ? /
68 6 4 ; / 56 - 6 6? 6 I68 68 - > 4 - / 56 -
5 6? 5 > 64 68 /- -5. I -
65 4 8 - 65 ? / - = 6 /;44 // ;< 68 - /- -55/ 5 - > ? / - > / 8. M > 6
>5 56 < 4 5 5 85 6? - / / 4- 45> / - :- I : 6 5
;68 / 68 :- > 4 85 / 5/ > ? 68 4 ; / 56/
-5.
1.,Structureof the issertation
T- / ;4 ; 5 - - / / :5;
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1*
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Chapter1
C- 56 :5; 6 - > 5 - / 4- :5; 8 ; 5/ 5 - / 4- 68 ; ; 5 - / 4-.
Chapter2
C- T:5 :5; 4 :- 4- > ? / 68 4 ; / 56/
- 56 - : < -5 - /- -5
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- ?-< ?- / =5; - >.M 6> ? / :- 4- - - 6 8 : - 6 -
/ 4 5 :5; 5
2*
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3*
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Chapter /o
Literature (e!ie/
2.1 e"nition0#
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68 4 ; / 56/. T:5 5 ? 6 / 56/ : - 5 6 8 K 6 45 5
/56 < / 4;< ; / 68 / =5;?- 5? -
+S;8 / 6 > 2003,. T- >/ > ? / 68 4 ; / 56/ 5 6 ;/ 8
6 4- 6? =< . I6 < < 64 =5 - : 8 / - / > . H5:
4 8 > 4/ - 5 6 8 5; : 8 K 64 / - - < 8 > 6
:- - 4;< 4 / > ? 5 6 4 ; / 56.
A 4;< 4 / 4 ? :- 6 45 5 56/ 45> 5? - 5
45>= 6 68 /- - /5; 4 / 5 4- 45>>56 5=@ 4 /. I6
> ? =5 - >/ 45>= 6 5 5 > - 8 6 68 - 5:6 / 5 =5 -
- 45>= 6 6? >/ > 6 / @5 6 5:6 / 5 - 6 :
6 +S;8 / 6 > 199#,.
A6 4 ; / 56 45; 6 /
456 5 < ? < /;=/ 8 5 65 -
> 5 / < 4 8 // / 5 65 - >. T- / > 6 5< - ; 4- / 5
65 - > / // / 5 / 54
( D56 - < / 200%,. A4 ; 6? 65 /- -5
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- > 65 /- -5 6 / > 6 ? > 6 . I6
> ? / 68 4 ; / 56/ /4 6 5 - >/ > ? / 4 ; / 56/
5 456/5< 8 56 68 >
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: 6 // 8 ; : /;4- > ? / < - ( 6? /- < 6 A D 44 6
> ? 68 - " A : / A S - > ? . T- T C ;6 4 56/ > ? : / 56 = ? -5 56 < > ? 6 -< 45>>;6 4 56 / 4 .
2.2.25ertica Mergers
A 4 < > ? / - 45> 6? 5? - 5 45> 6 / 8 K 6 / ? / 5
< 58;4 5 / 4 . G 6 6 5=@ 4 5 /;4-
> ? / / 5 6/; - /5; 4 / 5 /; < +B =; 200#,.
I6 4 < > ? / - > 6; 4 ; 68 8 / =; 5 5 > 6 /- .
T- / > / 8 4;< 5 45> 6? 45> 6 / 5 /; 8; 5 -
8 6 ? / 5 - > ? . T- 8 / =; 5 6 8 65 88 56 < 45/ / 5
- /; < / - =5 - 65: 5 - / > 6
+< 6> ? /.45>,. S;4- 64 / 8 / 6 ? / > - =;/ 6 //
> < 5 =< 68 8 5; 45> 56.
P; 4- / 5 ; 5>5= < 8 < / = > 6; 4 ; / < F5 8 68 V ; - < / 5 4 < > ? /. F5 8 / 4 ; / 56 5 H / 6 > ? +G 88 / 200$,. T- 4 ; / 56 5 F< ? T < 45> =
I68 6 < 45> 45> 6 R < 64 C5>>;6 4 56/ L 8: / / ?6 4 6
4 < > ? .
2.2.3Cong omerate Mergers
C56? > ? / 544; = : 6 >/ - ;6 < 8 = 56. C56? / 5 > 8 : - - = < -
56 4 6 < 5 4 :5;
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/ 8 / 4 56 / -
/;44 // ;< 5 > / = < 64 - = 8< 5 > 6? /;=/ 8 / 5 - ? 5;
4B 6C5 < 2000,.
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C56? > ? / 4 6 ? = : 6
45> 6 / :- 4- 65 45> 5 / 68 >56< 8 /4;// 8 :- < 4< // 6?> ? / 68 4 ; / 56/. S;4- 4 ; / 56/ 8 6 = - 6 64 6 / +( ;/- < 199#,.B;/ 6 //
O ? 6 56< ; - / 8 6 8 :545>>56 /56/
:- 4- 8 85; 5 > ? / 68 4 ; / 56/ . . 4 64 ? 668/ ? 4 56 < +N 200!,.E 4 64 ? 6> 6/ - > ? :5; 5 4565> / 5 /4 < 68 4565> / 5 /45 .
E4565> / 5 /4 < 68/45 4- 8= 4 ;/ 5 - 6 ? 565 -
5 / 68 4 64 / 5 =5 - - 45> 6 / ;
5? - .S 4568< - / ? 4 56 < / 8 8 5> - 5 6 -
> ? / 68 4 ; / 56 4 :5;= 6 8 6 :- 4- :5; 4 56
- 5 / 5 - >.
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7*
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H5: : /- ? / 68 4 ; / 56/. T- / 4 5 / 8 /4;//8= 6 199%,. I
> < / - - 45>= 6 8 - 68< 6? 5 8 K 6 4 / 6 / 6?= 6 8 5 ? 6 / 56 / = < ? 5 ? - 6 :- :5; / 5> G :5 8 - > 6/ 5 45*5 5
:5 5? - +B ;6 200!,. M ? / - 5 4 4564 :- :5 45 5 56/ : - 45> 5? - 68 55< 6 -
/ 68 /5; 4 / 5 5 > = . E/ > 6? / 6 ? / 68 /
K 4 / 6 > 5 6 8 4 / 56 6 - > ? 54 // > < 5 5;
/56/. F / < > ? / > 6 5 6 ? / 6 8 5 8 /4 5 6 . L / < 5 6 5 8 ? 6 ? 56 / ? / +B ;6
200!,. H5: > 5 6 = 4 4 6 / 4 ; 6 ? 8 6? - 5=@ 4 / 5 - 8 < 5 /5< - 5/ 4/ > < .
S 6 ? / 4 6 = ; - 8 /4;// 8 / = 6? 6 64 < 5 6? 5
> 6 ? < / 6 ? /.
2.3.1.1Operationa Synergy
O 56 < / 6 ? / 5 -5/ 4< // / 5 /5; 4 / - < 8 5
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58;4 56 68 5 8> 6 / 4 64 / +P 4 T > < 2002,. P 58;4
< 8 8 / 4 56 5
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> ? / 5 6 4 8 5; 6? 5 56 < / 6 ? / 6 > 68.
T- / / 6 ? / - < >/ = 6? 85:6 ;6 45/ / 8; 5 58;4
< 86 //. C5>>56 4-65 6? 4-6 ; / < 45>>56 = 68/ 68 > 6; 4 ; 6? 4 < / < 45>>56
= 6 56 5 4565> / 5
/4 < :- 4- :5;5 4 6 ;/
5 /5; 4 / 68 4565> / 5 /45 :- 4- :5; 6 8 5 5> - / > >5;6 5 6 ; / +B H 6 200!,.
2.3.1.2Financia Synergy
F 6 64 < / 6 ? / 5 - > 4 5 > ? / 68 4 ; / 56/ 56
? 8 5 6 :< 5 > 8 6
+D P > - < / 200#,. F 6 64 < / 6 ? / < 8 5 8;4 8 45/ 5 4
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