Top 12 Indian Merger and Acquisition Deals

Just like Charles Darwin’s theory of ‘Survival of the Fittest,’ only the stronger companies survive in the end. The weak ones cease to exist. Sometimes, they join forces to take on a stronger threat to their existence. Animal Spirits drive the companies, too.

Mergers and Acquisitions are an inevitable part of a company’s lifecycle. This piece talks about the best M&A deals in the Indian market. They affect not only Indian companies but also Indian consumers.

The Top-12 M&A Deals of the 21st Century

These are some of the most significant trades in recent human history. All of them are pretty neat so the list is in no particular order.

1. Banking Behemoth

This $40 billion mega-merger created India's largest financial services company by combining the country's leading private sector bank (HDFC Bank) with its biggest housing finance company (HDFC Ltd).

This strategic move created a one-stop shop for financial services, offering everything from banking products to long-term home loans under one roof. The combined entity boasts a wider customer base and stronger financial muscle.

Know more about the outstanding M&A by reading the article on HDFC Bank Merger.

2. Maharaja Returns Home

Tata Group, India's largest conglomerate, acquired Air India, the national carrier, in a historic deal. After nearly 70 years under government ownership, Air India returned to private hands with its acquisition by the Tata Group.

The Tata Group, already a major player in airlines (Vistara) and aviation services, aimed to revitalise Air India and restore its past glory. The deal held immense sentimental value for Indians, symbolising a return to private ownership and a new chapter for the airline.

3. The E-Commerce Flip

Flipkart is the other e-commerce giant in the Indian market. The Singapore-based firm acquired the fashion and lifestyle website ‘Myntra’ in 2014 for ₹2000 crores. Just as Flipkart moved from selling books to other consumer stuff, Myntra catapulted it into the clothing e-commerce domain. Acquiring ‘Jabong’ (in 2017) and ‘Myntra’ has made it India’s top apparel e-commerce company.

The following year, in 2018, Wal-Mart took over Flipkart in a deal of $16 billion (about ₹1.32 lakh crore), defeating Amazon. This deal gave Wal-Mart a fresh lease of life. It got a chance to compete with Amazon in its field. Readers should know that Amazon already hit hard the retail chain market of Wal-Mart.

Had Amazon won the deal, given its deep pockets, Amazon would have had a virtual monopoly in Indian e-commerce. Hence, the deal fared well for Indian consumers.

4. The Retail Future

Future Group owns its retail subsidiary under the name of ‘Future Value Retail Ltd. In 2016, this group bought ‘Heritage Foods.’ Heritage got a 3.95% share in Future Retail in the deal. The valuation of Heritage shares was ₹295 crores, which currently values over ₹600 crores!

Future Retail also entered in a deal with Amazon in 2019. Amazon has bought minority shares, with an option to purchase promoters' shares in the company after three years.

Wish to know more about the ordeal? Read: Amazon and Future Retail Partner Strategically Against Jio Mart

Future Retail is planning to expand on ‘Easy Day’ with both these ventures.

5. The Start-up Stories

Zomato recently acquired Uber Eats India for ₹2492 crores. Such mergers are quite common in start-ups. The reason is that most of the Indian start-ups are backed by deep pockets and depend so much on investors. If the funding stops, start-ups end up in the lurch. Some other deep pockets would go ahead and buy them. Zomato hence acquired its competition, Uber Eats India and is contesting another competitor, ‘Swiggy,’ in the bid.

This is similar to how Ola once bought ‘TaxiForSure.’ TaxiForSure ran out of money. It increased fares. Ola arrived in the market with fresh funding and hence offered cheap tickets. It later bought ‘TaxiForSure’, with the only competition surviving being Uber.

6. The Vehicle Rover

In 2008, Ford Motors was running its luxury subsidiary ‘Jaguar-Land Rover (JLR)’ in a loss of $520 million. Nobody was ready to buy such an indebted car company that was consistently losing its market.

Then Tata arrived at its rescue. It not only bought the JLR for $2.3 billion, but it also reported a $3400 million profit in the year 2019. 

Merger markets have much folklore. One says that Tata once wanted to sell off Tata Motors to Ford Motor Company around 1998. Ford humiliated the Asian giant. Tata backed off. Ten years later, when Tata Motors was capable enough of the deal, Ford expressed its gratitude to Tata that they were buying it.

7. The Steel Melting Pot

India is one of the biggest Steel markets in the world. India is one of the largest consumers and producers of Steel. Three major M&A deals happened in three different scenarios.

Amidst a recession, various European Steel companies were going bankrupt. Indian companies felt they had the right time to buy. Mittal Steel merged with the Luxembourg-based steel giant ‘Arcelor Steel.’ The deal was valued at a whopping $33.1 billion. The new company, ‘ArcelorMittal,’ has now become the world’s biggest steel company.

Must Read: ArcelorMittal Essar Steel Acquisition: All You Need to Know

Another deal came from Tata Steel. It went ahead and bought UK-based Corus Steel. Tata bought Corus for $8.1 billion (about ₹67,230 crore) and later renamed it Tata Steel Europe. Unfortunately, the deal did not fare the desired results for Tata Steel, and many of its officials call it a not-so-wise move.

Tata Steel recently acquired ‘Bhushan Steel’ for ₹35200 crores through the Insolvency proceedings under the National Company Law Tribunal (NCLT). Though the deal looks good for Tata, it is yet to be seen if ‘Tata Steel BSL’ follows in the footsteps of ArcelorMittal or Tata Steel Europe.

8. Cementing The Deal

Jaiprakash Group’s ‘Jaypee Cements’ accumulated a lot of debt for itself. It even had to let go of its holding in the IPL team ‘Deccan Chargers.’ Circumstances were forcing JayPee to go under the hammer at the NCLT through the newly litigated insolvency process. Jaypee was concerned that they would not get a reasonable price in NCLT because everyone would know that they were desperate to be sold. 

They chose a win-win formula. They went to the Aditya Birla Group, which owned the successful ‘UltraTech Cement’ (acquired from the L&T group). The deal would not only give a geographical expansion to UltraTech Cement; it would also get access to high-end contracts like Expressways that were under Jaypee Associates. The deal was worth ₹16189 crores and added 21 million tonnes of capacity to the UltraTech cement.

9. The Agro Chemical Reaction

In 2018, India’s UPL Ltd acquired Arysta LifeScience Inc. of the US. The deal was worth $4.2 billion (around ₹34,860 crore). While UPL Ltd is in the business of crop protection and agrochemical products, it acquired the farm pesticide business of Arysta.

This diversified UPL's range of products, and the acquisition has made UPL the fifth-largest agrochemical company in the world. This also gave it massive market access in Africa, Latin America, and China.

10. The Consumer Giants Merge

Hindustan Unilever Limited (HUL) acquired GSK Consumer Healthcare of GlaxoSmithKline (GSK). The deal worth ₹27750 crores would give away products like Horlicks and Boost in HUL’s basket. Since this deal would affect the competition in the Indian FMCG market because the two companies are giants of the game, approval from NCLT was needed.

While the amalgamation mainly benefits HUL because it gets a new range of renowned products, GSK would take all this money to establish its original production in Bangladesh. This is not a good sign for Indian business.

11. An Idea for Vodafone

The Telecom Sector has been in a grave crisis for a long time. From the day the 2G Scam accusations surfaced, government policies and market dynamics have hampered this sector severely.

The ‘pimple on ulcer’ moment was the advent of Jio. The predatory pricing led to the two giants of telecom coming together to take on the new rival. The Vodafone-Idea group is the second-largest telecom network in India after Airtel.

Unlike other mergers, this is the merger of equals. In the new company named Vodafone-Idea, Vodafone holds 45.1%, while Aditya Birla Group and Idea shareholders hold 54.9%.

12. Public Sector Usurping

Governments in India have milked ‘Public Sector Undertakings’ (PSUs) at their will. Mergers and Acquisitions in PSUs mostly happen to suit the government. The incorporation of PSU banks is just one example. Recently, the Life Insurance Corporation of India (LIC) was forced to buy the underperforming IDBI Bank.

LIC is a cash-rich arm of government. IDBI losses became unbearable for the government. Its NPAs crossed 31%. Privatisation of IDBI would have invited ruckus from employee unions and customers while would have raised market eyebrows over the health of other PSU banks as well.

Ultimately, LIC bought a 51% stake in IDBI. The Insurance Regulatory and Development Authority of India (IRDAI) allows only a 15% acquisition of any company. Despite this, the mechanisms channelised so that the deal goes through.

Similarly, ONGC acquired a 51% stake in Hindustan Petroleum (HPCL).

The Bottom Line

The piece talked about the ten different sectors, where significant mergers and acquisitions took place in the 21st Century. All these acquisitions affect us in consumer choice.

One notable point is that when two giants come together, the market is worried about a possible monopoly. Monopolies reduce competition and leave less space for consumers to demand.

However, mergers and acquisitions would continue for a plethora of reasons.