In the recent past there has been a rise in the merger and acquisition activities in India. In the year 2007, India Inc spent a total of USD 33 billion on overseas mergers and acquisitions. According to a leading global consultancy firm, India Inc had 92 merger and acquisition deals in the first two months of the year 2008. Among developing countries, India is termed as the most acquisitive nation. Indian companies want to merge with or acquire foreign companies as they see this as an opportunity to leverage international brand names for their own brand building, obtaining economies of size and scale of operations besides having access to high growth markets, technology and knowledge.
An example of this trend is the Polaris – Orbi tech merger. This merger gave rise to several opportunities for both the companies. Firstly it increased the employee strength. Post the acquisition of Orbi tech’s orbi suite framework of banking solutions, Polaris had six major customer wins. One of the major reasons for these companies to merge was the enhancement of skill sets. Polaris combined Orbi suite’s framework with its service expertise and thus managed to grab a greater market share.
Some other post merger wins for Polaris include ABN – AMRO bank, Kuwait Commercial Bank and Deutsche Learning.
A few examples of major global acquisitions made by Indian companies:
- United Breweries Limited’s acquisition of Glasgow based Scotch maker Whyte & Mackay for USD 1.2 billion
- Tata Motors Limited bought Ford’s Jaguar and Land Rover brands for more than USD 2 billion
- Reliance communications acquired Uganda based telecommunications company, Anupam Global Soft
- Siva Ventures Limited picked up JB Ugland Shipping of Norway for USD 302 million
The largest acquisition by an Indian firm has been TATA Tea’s acquisition of 30% stake in Energy Brands Inc, USA which specializes in mineral water and energy drinks. This transaction has been done under TATA Tea, Great Briton which handles the Tetley tea business globally. The acquisition of Energy Brands Inc has given TATA an opportunity to have its presence felt in the American market.
The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, is planning to increase its investments in India. The sectors that look attractive for investments, according to the IFC are pharma, IT, infrastructure, automation and biotech. The pharma and biotechnology sector have tremendous potential for investments.
An example from the banking industry is the merger of Centurion Bank and Bank of Punjab which decided to merge to create a synergy in terms of product offerings as well as regional presence. This merger resulted in a single entity named Centurion Bank of Punjab. The Bank of Punjab has a strong presence in the northern part of India while Centurion bank has a strong presence in the western and southern parts of India. Due to this merger, the Centurion Bank of Punjab has managed to strengthen its presence across the country.
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