Merger and acquisition (M&A) is a corporate strategy that involves the
combination of two or more companies into a single entity. This strategy is
typically used by companies looking to expand their operations, increase market
share, or gain access to new products or technologies.
Mergers involve the combination of two or more companies into a single entity,
while acquisitions involve one company purchasing another. M&A activities can
take many forms, including horizontal mergers (combining companies in the same
industry), vertical mergers (combining companies in different stages of the same
industry's supply chain), and conglomerate mergers (combining companies in
M&A activities can be complex and involve a wide range of legal, financial, and
strategic considerations. They often require extensive due diligence to assess
the financial and operational performance of the companies involved, as well as
potential risks and opportunities. M&A transactions can also have significant
impacts on employees, customers, and other stakeholders, and require careful
planning and communication to minimize disruption and ensure a smooth
There are several types of M&A transactions, including:
Meaning of Merger & Acquisition
- Merger: A merger involves the combination of two or more companies to
form a new entity. In a merger, the companies involved typically have
similar sizes and strengths, and they share control of the new entity.
- Acquisition: An acquisition involves one company purchasing another
company. The acquiring company typically assumes control of the acquired
company's assets, employees, and operations.
- Takeover: A takeover is a type of acquisition in which one company
acquires another company against its will. This can be accomplished through
a hostile takeover, in which the acquiring company bypasses the target
company's management and goes directly to the shareholders to acquire a
controlling interest and etc.
In India, merger and acquisition (M&A) refers to the process of combining two or
more companies through various strategies such as mergers, acquisitions,
amalgamations, and takeovers. M&A activity in India has been increasing in
recent years as companies seek to expand their market share, diversify their
product offerings, or gain access to new technologies or talent.
The Indian government has also taken steps to liberalize regulations and
simplify procedures for M&A transactions in order to promote investment and
economic growth. For instance, the Competition Commission of India (CCI) was
established to regulate competition in the Indian market and ensure that M&A
transactions do not result in anti-competitive practices.
In addition, India has seen a rise in cross-border M&A activity, with foreign
companies looking to enter the Indian market or acquire Indian companies to gain
a foothold in the region. The Indian government has also been encouraging
foreign investment through initiatives such as Make in India and Start-up India.
M&A transactions in India can involve both domestic and international companies,
and can be structured in a variety of ways depending on the specific goals of
the companies involved. For example, mergers can be horizontal (between
companies in the same industry), vertical (between companies in different stages
of the supply chain), or conglomerate (between companies in unrelated
M&A activity in India has increased significantly in recent years, driven by
factors such as the country's growing economy, liberalized business environment,
and increasing foreign investment. Some notable M&A deals in India include the
Acquisition of Flipkart by Walmart, the merger of Vodafone India and Idea
Cellular, and the acquisition of Ranbaxy Laboratories by Sun Pharmaceuticals.
However, M&A transactions in India can also face various challenges, including
regulatory hurdles, cultural differences, and corporate governance issues. Due
diligence and careful planning are essential to ensure that M&A transactions are
structured in a way that benefits all parties involved and minimizes risks.
Challenges in India for Merger & Acquisition Activity
Mergers and acquisitions (M&A) can face various challenges in India, which can
complicate the transaction process and affect its success. Some of the key
challenges faced by M&A activity in India include:
- Regulatory challenges: M&A transactions in India are subject to various
laws and regulations, which can pose challenges for companies seeking to
complete the deal. For example, regulatory approvals may be required from
multiple authorities, including the Competition Commission of India (CCI),
the Reserve Bank of India (RBI), and the Securities and Exchange Board of
- Cultural differences: India is a diverse country with different
cultural, linguistic, and social norms. Companies may face challenges in
integrating employees and operations from different regions or cultural
- Corporate governance issues: Corporate governance practices in India are
still evolving, and companies may face challenges in aligning the interests
of stakeholders, ensuring transparency, and maintaining compliance with laws
- Valuation challenges: Valuing companies in India can be challenging due
to factors such as a lack of reliable data, variations in accounting
standards, and differences in market conditions.
- Infrastructure and logistics: India's infrastructure and logistics
network are still developing, which can create challenges in transporting
goods and managing supply chains.
- Political instability: Political instability and policy uncertainty can
create risks for M&A transactions in India. Changes in government policies,
laws, or regulations can affect the business environment and investment
- Tax implications: M&A transactions can have significant tax implications
in India, particularly in terms of capital gains tax, stamp duty, and
transfer pricing. Understanding and managing these tax implications is
critical to the success of the transaction.
Despite these challenges, India remains an attractive destination for M&A
activity due to its growing economy, expanding consumer market, and increasing
foreign investment. Companies that carefully plan and execute M&A transactions
in India can unlock significant growth opportunities and strategic advantages.
Future Perspectives of Merger & Acquisition in India
The future of merger and acquisition (M&A) activity in India looks promising,
driven by factors such as the country's growing economy, increasing foreign
investment, and favorable regulatory environment.
Here are some future perspectives of M&A in India:
- Consolidation in key sectors: M&A activity in India is likely to
continue in key sectors such as banking, insurance, telecommunications, and
e-commerce. Consolidation in these sectors can help companies achieve
economies of scale, increase market share, and gain access to new technology
- Focus on digital transformation: As India continues to digitize and
adopt new technologies, M&A activity in the digital space is likely to
increase. Companies are likely to acquire or partner with technology
startups to enhance their digital capabilities and improve customer
- Cross-border deals: Cross-border M&A activity is likely to increase as
Indian companies look to expand their operations overseas and foreign
companies look to invest in India. The recent liberalization of foreign
investment rules is expected to further facilitate cross-border deals.
- Focus on sustainable growth: With increasing environmental and social
concerns, M&A activity in India is likely to focus on sustainable growth and
ESG (Environmental, Social, and Governance) considerations. Companies that
prioritize sustainability and ESG factors in their M&A activities are likely
to attract greater investor interest and create long-term value.
- Increased scrutiny on antitrust regulations: The Competition Commission
of India (CCI) is expected to increase its scrutiny of M&A transactions to
ensure that they do not result in antitrust violations or harm competition.
Companies need to carefully consider the antitrust implications of their M&A
activities and ensure compliance with CCI regulations.
Overall, M&A activity in India is likely to continue to grow in the coming
years, driven by factors such as favorable government policies, increasing
foreign investment, and the country's expanding economy. Companies that
carefully plan and execute their M&A activities with a long-term perspective can
create significant value and achieve strategic advantage.
Scope of Merger & Acquisition in India
The scope of merger and acquisition (M&A) activity in India is significant,
given the country's growing economy, liberalized business environment, and
increasing foreign investment. Here are some of the key areas where M&A activity
is expected to have a significant scope in India:
- Banking and finance: The Indian banking sector is undergoing significant
consolidation, with several mergers and acquisitions taking place in recent
years. M&A activity is expected to continue in this sector, as banks look to
strengthen their balance sheets, increase market share, and gain access to
- E-commerce and technology: The Indian e-commerce and technology sectors
are experiencing rapid growth, driven by factors such as increasing internet
penetration, rising consumer spending, and favorable government policies.
M&A activity in these sectors is expected to continue, as companies look to
expand their customer base, acquire new technologies, and increase market
- Healthcare and pharmaceuticals: The Indian healthcare and pharmaceutical
sectors are undergoing significant transformation, driven by factors such as
increasing demand for healthcare services, rising healthcare costs, and
technological advancements. M&A activity in these sectors is expected to
continue, as companies look to expand their product portfolios, increase
market share, and gain access to new technologies.
- Infrastructure and energy: India is investing heavily in infrastructure
development and renewable energy projects, which is creating opportunities
for M&A activity. Companies are looking to acquire or partner with firms
that have expertise in areas such as renewable energy, smart cities, and
�Consumer goods and retail: The Indian consumer goods and retail sectors are
experiencing significant growth, driven by rising disposable incomes and
changing consumer preferences. M&A activity in these sectors is expected to
continue, as companies look to acquire or partner with firms that have strong
brands, distribution networks, and customer loyalty.
Overall, the scope of M&A activity in India is vast and covers a wide range of
sectors and industries.
Recent Big Deals in Merger & Acquisition in India
Here are some recent big deals in merger and acquisition in India:
- Walmart Flipkart Acquisition: In 2018, US retail giant Walmart acquired
a 77% stake in India's leading e-commerce platform Flipkart for $16 billion.
This is one of the largest M&A deals in India's history and has helped
Walmart gain a significant presence in India's e-commerce market
- Tata Group-Bhushan Steel Acquisition: In 2018, Tata Group acquired
Bhushan Steel, one of India's largest steel manufacturers, for $5.5 billion.
This acquisition has helped Tata Group become one of the leading players in
India's steel industry.
- Reliance Retail-Future Group Deal: In 2020, India's largest retailer
Reliance Retail acquired the retail, wholesale, logistics, and warehousing
businesses of Future Group for $3.4 billion(Rs. 24,713 crore). This deal has
helped Reliance Retail strengthen its position as the dominant player in
India's retail industry.
- Adani Group's Acquisition of Mumbai Airport: In August 2021, the Adani
Group acquired a 74% stake in Mumbai International Airport Limited (MIAL)
for Rs. 16,000 crore ($2.2 billion). The acquisition makes the Adani Group
the largest private airport operator in India, with control over six
airports in the country.
- Tata Group's Acquisition of BigBasket: In May 2021, the Tata Group
acquired a majority stake in online grocery delivery platform BigBasket for
$1.2 billion. The acquisition strengthens the Tata Group's presence in the
e-commerce sector and provides it with access to BigBasket's extensive
- Walmart's Majority Stake in Flipkart: In July 2021, Walmart announced
that it was increasing its majority stake in Indian e-commerce platform
Flipkart to 77%. The deal was valued at $1.2 billion and is expected to
strengthen Walmart's position in the Indian market.
- Blackstone's Acquisition of Embassy Industrial Parks: In March 2021,
Blackstone announced that it was acquiring Embassy Industrial Parks, a
developer of industrial and warehousing spaces in India, for $1.2 billion.
The acquisition strengthens Blackstone's position in the logistics sector in
India and provides it with access to Embassy Industrial Parks' extensive
network of properties.
- HDFC LTD/HDFC Bank Merger: India's largest housing finance company, HDFC
Ltd and the largest private sector bank, HDFC Bank, merged in 2022 in one of
the biggest financial deals in India. The $40 billion deal will result in a
single entity, but the services of HDFC Ltd and HDFC Bank will continue to
be provided separately.
In conclusion, merger and acquisition (M&A) activity in India has been steadily
increasing in recent years, driven by factors such as favorable government
policies, growing investor interest, and the need for companies to expand their
businesses and gain a competitive edge in the market. While there have been
several challenges to M&A activity in India, including regulatory hurdles,
cultural differences, and the complexity of deal structures, companies continue
to see the potential for growth and expansion in the country's economy.
While there are challenges to M&A activity in India, such as regulatory and
legal hurdles, cultural differences, and complex business environments,
companies are increasingly finding ways to overcome these challenges and pursue
strategic acquisitions and partnerships. The recent big deals in M&A in India
highlight the growing interest of domestic and international players in the
country's economy and its potential for growth.
Looking ahead, the future of M&A activity in India looks promising, with
opportunities across a wide range of sectors and industries. As the Indian
economy continues to grow and evolve, companies will be looking to acquire new
technologies, expand their product portfolios, and gain access to new markets.
Additionally, the government's push for infrastructure development, renewable
energy projects, and the Digital India initiative is expected to drive more M&A
activity in the years to come.
Overall, the potential for M&A activity in India is significant, and companies
will need to be strategic in their approach to deal-making, taking into account
the unique challenges and opportunities that the country presents. With the
right approach and the right partners, M&A activity in India can be a powerful
tool for growth and success in the dynamic and fast-growing economy.
Written By: Sanjay Kumar Sah
- Mergers Acquisitions From A to Z Book: Andrew J. Sherman