Biggest Mergers and Acquisitions Examples

Biggest Mergers and Acquisitions Examples

If you're wondering what mergers and acquisitions are and why they're important, look no further. 

This article covers the basics of M&A, its benefits and drawbacks. Learn about some biggest successful mergers and acquisitions examples. 

Mergers

For two businesses to merge, they must combine into one new entity. Mergers don't cost any money to complete. 

They lessen the power of each company. When this Mergers and Acquisitions Examples occurs, new shares are in the new company's name.

Mergers lower operating expenses, expand into new markets and increase sales and profits. Mergers involve businesses of about the same size and scope and are voluntary.

Acquisitions

In acquisitions, the acquired company does not become a new one. Instead, the smaller business and its assets get transferred to the bigger business. 

An Acquisition is when one company assumes full operational management responsibility for another. Acquisitions need large sums of money.

Acquisitions occur to increase economies and buy suppliers, lowering the cost per unit. 

Businesses increase their market share, cut expenses, and diversify into new product categories. Also, getting the target company's technologies avoids years of costs and R&D.

Mergers and acquisitions

It is the coupling of businesses or assets by transactions in the business world. 

M&A activity can take a variety of shapes. But generating value for the participating companies' shareholders is always the shared purpose. 

There are many reasons why businesses engage in M&A activity. The following are the most frequent ones: 

1. To increase market share: 

A business can increase its market share by purchasing a rival.

2. To bring in new products or technology: 

A typical goal for pharmaceutical and healthcare organisations.

3. To realise scale economies: 

Larger businesses can often cut costs by combining their operations. 

4. To expand into new markets:

Companies often hire other companies to establish a presence in a new market.

5. To boost shareholder value: 

By building a bigger, more effective business.

Failure of a merger or acquisition can have serious repercussions, including: 

  • Mass layoffs
  • Serious harm to a brand's reputation
  • A decrease in consumer loyalty
  • Lost profits, increased expenses
  • Permanent closure of a company. 

The Process of Mergers and Acquisitions (M&A)

  1. Making a plan
  2. Selecting Targets
  3. Information Transfer
  4. Valuation
  5. Offers
  6. Due Diligence
  7. Agreement
  8. Closing the Deal and Integration

Advantages of mergers and acquisitions

Many businesses worldwide are up for Mergers and Acquisitions because they know the multiple benefits of it and how they can help their business grow and become successful.

The following are a few benefits of mergers and acquisitions:

  • Greater financial scale.
  • Reduced labour costs.
  • Increased market share
  • Increased economic means.
  • Bigger distribution capacities

Disadvantages of mergers and acquisitions

As beneficial and important as Mergers and Acquisitions can be, they can also come with pretty serious drawbacks and losses.

The following are some instances of possible drawbacks related to mergers and acquisitions:

  • Rising legal fees
  • Expenses related to the transaction
  • Missed opportunities

Biggest Mergers and Acquisitions Examples

These Mergers and Acquisitions examples have a well-known legend which will tell you about the importance of M&A.

1. Future Group-Heritage Foods

The Heritage Foods Group and Future Group, the parent company of "Big Bazaar", combined in 2016. This deal had two benefits: 

It gave Heritage access to a priceless supply chain of Future Group products

It gave Future Group yet another product to expand its line of goods.

Before this, Heritage Group was around 295 crores, but after the merger, it became 600 crores. The compensation was in stock payments instead of cash.

2. Mittal Steel-Arcelor Steel

This merger and acquisition were one of many during the recent recession. This led cash-rich businesses to go on a buying spree. 

The Indian company Mittal Steel merged with Arcelor Steel for a $33.1 billion price. The biggest steel producer in the world today is the post-merger company ArcelorMittal.

3. Vodafone-Idea

The introduction of Jio was like the last straw for both of the company's individual ventures. 

The industry as a whole was facing a lot of difficulties operating in India. The 2G scam was still reverberating for both companies at the time. 

Vodafone was still engaged in the tax dispute with India. The combined company, Vodafone-Idea, was now only second to Airtel.

4. Bank of Baroda-Vijaya Bank-Dena Bank

With effect from April 1, 2020, the Bank of Baroda merged with Vijaya Bank and Dena Bank. This created the third-largest bank in India. Also, the country's first three-way amalgamation. 

5. Flipkart-Myntra

In 2014, Flipkart, Indian e-commerce, purchased "Myntra," the fashion label. This transaction cost a staggering Rs. 2000 crore. 

Yet, Myntra still runs Flipkart's division for fashion apparel. Flipkart still maintains its "Flipkart fashion" division, available on Myntra as well. Walmart bought Flipkart in 2018, beating Amazon to the deal.

6. Zomato-Uber Eats

Zomato purchased Uber Eats for Rs. 2492 crores in January 2020, outbidding its lone rival, Swiggy. 

Uber Eats also lacked a unique selling proposition by entering the market late. Swiggy and Zomato both experienced profits as a result of their fierce competition. 

Zomato received established customers, supply chains, and Uber Eats to make money.

7. Tata Motors-Jaguar

This one has a well-known legend associated with it! According to reports, Tata was interested in selling Ford a part of it a decade before this agreement. 

Ford humiliated the business by declining. As a result of Jaguar's losses, Ford was compelled to sell the subsidiary to Tata Motors for $2.3 billion in 2008. 

Additionally, Jaguar had been reporting losses before the remote acquisition. But in 2019, ten years after the acquisition, it made up for these losses and reported a $3400 profit.

8. Aditya Birla Group-Jaypee Cements

The company Jaypee Cements had a significant debt with them in 2016. The obvious solution was to declare insolvency. 

But, Jaypee was able to cash in on a deal with the Aditya Birla group. This led to selling all its assets to Ultra Tech, another cement company, for Rs. 16189 Cr in 2017.

9. UPL-Arysta LifeScience

Arysta LifeScience announced its intention to sell in 2018. At that time, UPL was looking to expand the market reach of its product line and diversify its revenue. 

Before this transaction, UPL manufactured agricultural products. After the acquisition, the product line expanded. UPL is now the fifth-largest agrochemical company in the world, thanks to the $4.2 billion deal.

10. HUL- GSK Consumer Healthcare

Hindustan Unilever Limited merged with GlaxoSmithKline's (GSK) Consumer Healthcare in April 2020 (GSK). 

GSK used these funds to establish its production in Bangladesh under western customs. 

HUL received the Horlicks and Boost products by this agreement, expanding its line. These two businesses are among the biggest players in the FMCG industry.

National Company Law Tribunal approval was important before the deal in April 2020

Conclusion

M&A are very common in the business world and can change the course of your business, as you saw in the above Mergers and Acquisitions examples.

This was all the important information that you had to know about Mergers and Acquisitions. 

Especia provides the best M&A services and helps you perform a successful M&A. To learn more about the benefits and drawbacks of M&A and due diligence in M&A., Visit Especia now!

FAQs

1. What are the types of Mergers?

  • Conglomerate merger
  • Horizontal merger
  • Market extension merger
  • Vertical merger 
  • Product extension merger.

2. What are the types of acquisitions?

  • Horizontal Acquisition
  • Vertical Acquisition
  • Congeneric Acquisition
  • Conglomerate Acquisition Type

3. Why are mergers and acquisitions said together?

Given the rarity of mergers and the negative perception of takeovers, the two terms are increasingly combined and used interchangeably.

4. What is the difference between mergers and acquisitions?

When two independent organisations come together to form a single, new organisation, it is called a merger. The taking over of one entity by another is referred to as an acquisition.

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