What are Mergers?

A merger is a combination of two or more businesses into

one business. Laws in India use the term 'amalgamation' for

merger. The amalgamation is basically the merger of one or

more companies with another or the merger of two or more

companies to form a new company, in such a way that all

assets and liabilities of the amalgamating companies

become assets and liabilities of the amalgamated company.

• Types of mergers:

1. Merger through Absorption :- An absorption is a

combination of two or more companies into an 'existing

company'. All companies except one lose their identity in

such a merger.

2. Merger through Consolidation :- A consolidation is a

combination of two or more companies into a 'new

company'. In this form of merger, all companies are legally

dissolved and a new entity is created. Here, the acquired

company transfers its assets, liabilities and shares to the

acquiring company for cash or exchange of shares.

Tata Corus acquisition

Brief description about the acquisition

On 20 October 2006 the board of directors of Anglo-Dutch steelmaker

Corus accepted a $7.6 billion takeover bid from Tata Steel, the Indian

steel company. The following months saw a lot of negotiations from

both sides of the deal. Tata Steel's bid to acquire Corus Group was

challenged by CSN, the Brazilian steel maker. Finally, on January 30,

2007, Tata Steel purchased a 100% stake in the Corus Group at 608

pence per share in an all cash deal, cumulatively valued at USD 12.04

Billion. The deal is the largest Indian takeover of a foreign company and

made Tata Steel the world's fifth-largest steel group.

Profile of the Organizations

TATA STEEL (TISCO)

Tata Steel , formerly known as TISCO' (Tata Iron and Steel Company

Limited), was the world's 56th largest and India's 2nd largest steel

company with an annual crude steel capacity of 3.8 million tones. It is

based in Jamshedpur, Jharkhand, India. It is part of the Tata Group of

companies. Tata Steel is India's second-largest and second-most

profitable company in private sector with consolidated revenues of Rs

1,32,110 crores and net profit of over Rs 12,350 crore during the year

ended March 31, 2008.. The company was also recognized as the world's

best steel producer by World Steel Dynamics in 2005. The company is

listed on BSE and NSE; and employs about 82,700 people.

CORUS

The London-based Corus Group is one of the world's largest producers

of steel and aluminium. Corus was formed in 1999 following the merger

of Dutch group Koninklijke Hoogovens N.V. with the UK's British Steel

Plc on October 6, 1999. It employs 47,300 people worldwide and 24,000

people in the United Kingdom.

It is listed on the London Stock Exchange, Euro next Amsterdam and the

New York Stock Exchange.

Corus has four divisions: strip products division,  long products division,

distribution and building systems division, and aluminium division.

Corus has an annual turnover of $18 billion.

New Board formulation

A new board was formulated with representation from both the

companies to provide a common platform for strategy and integration.

Mr. R.N. Tata will be the Chairman of Tata Steel and Corus

Mr. Jim Leng will be the deputy chairman of Tata Steel and Corus

Mr. B Muthuraman, Mr. Ishaat Hussain and Mr. Arun Gandhi to

join the Corus board

Position of the organization before acquisition.

There were a lot of apparent synergies between Tata Steel which was a

low cost steel producer in fast developing region of the world and Corus

which was a high value product manufacturer in the region of the world

demanding value products. Some of the prominent synergies that could

arise from the deal were as follows:

Tata had self sufficiency in raw material and Corus was fighting to

keep its productions costs under control and was on the lookout for

sources of iron ore.

Tata had a strong retail and distribution network in India and SE

Asia. This would give the European manufacturer a in-road into

the emerging Asian markets. Tata was a major supplier to the

Indian auto industry and the demand for value added steel products

was growing in this market. Hence there would be a powerful

combination of high quality developed and low cost high growth

markets

Need of change

There is little doubt that the Tatas wanted Corus badly. Sources say that

the group was willing to go as high as 630 pence per share in the nine-

round bidding auction. Corus makes nearly four times more steel than

Tata Steel. Together, the combine becomes the fifth largest producer in

the world and the second in Europe. Corus’s current EBITDA of $1.45

billion covers the interest outgo more than comfortably, but a significant

drop in steel prices would adversely impact it and its ability to service

debt. . The merger will also give it access to the important markets of

Europe. All that will benefit Corus is the management expertise of the

Tatas and their cost advantage in producing steel. With their acumen

they will bring down the production cost of Corus. Tata Steel expects to

earn $300 million per year through cost savings.

Problems faced by the organization while managing change:

First, Chinese proved to be babes-in-the-wood in navigating the

Byzantine corridors of Washington's power, and underestimated a

relentless backlash that unwound the deal. While politics and steel are

not alien to each other, there is nothing in Tata-Corus like the level of

political concern in the CNOOC-Unocal situation.

Second, TCL acquired Thomson's assets from a position of weakness.

In contrast, Tata Steel is one of the most profitable, if not the most

profitable, steel companies in the world, and is acquiring from a position

of strength amid a boom in the world steel market. This will buy it

valuable experimenting time and learning space.

Third, there was much difficulty in integrating Chinese and French

management. Some of this surely stemmed from language

considerations. To an extent, the Indians' greater command of the

world's lingua franca will lubricate the inevitably-difficult integration

process.

Fourth, the Tatas have built up some experience in the past few years

with cross-border

Cross-border experiences with integrating diverse management teams,

communicating across borders and time zones, and integrating

compensation practices, are not as new to the Tata group as they might

well have been to the hapless TCL management team.

Reasons for success:

Tata Steel is India's second-largest and second-most profitable company

in private sector with consolidated revenues of Rs 1,32,110 crore and net

profit of over Rs 12,350 crore

The London-based Corus Group is one of the world's largest producers

of steel and aluminium.

Therefore tata corus has become the worlds top most company of low

cost steel manufacture company. There was a strong culture fit between

the two organizations both of which highly emphasized on continuous

improvement and ethics. Tata steel's Continuous Improvement Program

‘Aspire’with the core values :Trusteeship,integrity,respect for individual,

credibility and excellence. Corus's Continuous Improvement Program

‘The Corus Way’ with the core values : code of ethics, integrity, creating

value in steel, customer focus, selective growth and respect for our

people.

Kurt Lewin (Change Management Model)

Kurt Lewin proposed a three stage theory of change commonly referred

to as Unfreeze, Change, Freeze (or Refreeze). Any change program has

these three stages .

Unfreezing : Due to the acquisition off Tata over corus the company

and as well as employee has to unfreeze that is they have to set

themselves according to the new company formed that is Tata Corus

limited (TCL).Some employees have to go to the new plants of the

company and set themselves according to that climate. Other employees

that are from the corus group have to do work according to the new

policies of the organization.

Movement:

After the acquisition the company has to make the movement of the

employees and the management. They have to make new policies for the

new company and employees have to shift to the other places of the new

formed company Tata Corus.

Refreezing:

They make the employees feel happy and belongingness for the

organization by giving them extra incentives, like British Steel Pension

Scheme and the Corus Engineering Steels Pension Scheme and their

advisers regarding the future funding and security of those schemes. The

resulting memorandum of understanding has now been approved by the

full trustee boards of both schemes, subject to completion of detailed

legal documentation and reasonable due diligence. The memorandum

confirms Tata Steel’s support for the schemes. Tata Steel has offered to

fund, upfront, the IAS 19 deficit on the Corus Engineering Steels

Pension Scheme, by paying £126 million into the scheme and to increase

the contribution rate on the British Steel Pension Scheme from 10 per

cent. to 12 per cent. of pensionable earnings until 31 March 2009. The

schemes will have a security and guarantee structure similar to that of

the new Debt Facilities but will in certain respects be limited in time,

amount and enforcement rights.

Burk Litwin Model:

In this change program there is first order change and second order

change

In first order change the short term or low level changes are done and in

second order change high or major changes are done. In first order

change program in this stage the decided the about the employees that

who will go there and at which place in second order change program.

They have made these changes in the management policies.

Final deal structure

$3.5–3.8bn infusion from Tata Steel ($2bn as its equity

contribution, $1.5–1.8bn through a bridge loan)

$5.6bn through a LBO ($3.05bn through senior term loan, $2.6bn

through high yield loan)

New Board formulation

A new board was formulated with representation from both the

companies to provide a common platform for strategy and integration.

Mr. R.N. Tata will be the Chairman of Tata Steel and Corus

Mr. Jim Leng will be the deputy chairman of Tata Steel and Corus

Mr. B Muthuraman, Mr. Ishaat Hussain and Mr. Arun Gandhi to

join the Corus board

Strategic and Integration Committee

A 'Strategic and Integration Committee' was formulated to develop and

execute the integration and further growth plans. Appropriate cross

functional teams were formed under this committee to look into specific

issues.

Conclusion:

With Corus in its fold, Tata Steel can confidently target becoming one

of the top-3 steel makers globally by 2015. The company would have an

aggregate capacity of close to 56 million tones per annum, if all the

planned Greenfield capacities go on stream by then.

We can conclude that if the acquisitions well planned , Executed and the

necessary precautions taken for the deal a company can achieve its

strategic objectives and thus ensure its growth through Acquisition.

Vodafone and Hutch

Vodafone Group plc (LSE: VOD, NASDAQ: VOD) is a global telecommunications company headquartered in Newbury, United Kingdom. It is the world's largest mobile telecommunications company measured by revenues and the world's second largest measured by subscribers (behind China Mobile) with 347 million proportionate subscribers as at 30 June 2010. It operates networks in 31 countries and has partner networks in a further 44 countries It owns 45% of Verizon Wireless, the largest mobile telecommunications company in the United States measured by subscribe.

The name Vodafone comes from voice data fone, chosen by the company to "reflect the provision of voice and data services over mobile phones".

Its primary listing is on the London Stock Exchange and it is a constituent of the FTSE 100 Index. It had a market capitalization of approximately £80.2 billion as of August 2010, making it the third largest company on the London Stock Exchange. It has a secondary listing on NASDAQ.

Vodafone Group

Newbury: New Vodafone Headquarters. This HQ is situated in the north western section of the grid square and the picture was taken from the west side of the building. Most of this square is residential with some farmland and some commercial activity.

In 1980, Sir Ernest Harrison OBE, chairman of Racal Electronics plc's, the UK's largest maker of military radio technology, agreed a deal with Lord Weinstock of General Electric Company plc to allow Racal to access some of GEC's tactical battlefield radio technology. Briefing the head of Racal's military radio division Gerry Whent to drive the

company into commercial mobile radio, Whent visited GE's factory in Virginia, USA in 1980.

In 1982, Racal's newly formed subsidiary Racal Strategic Radio Ltd under CEO Whent, won one of two UK cellular telephone network licences; the other going to British Telecom The network, known as Racal Vodafone was 80% owned by Racal, Millicom with 15% and Hambros Technology Trust 5% respectively. Vodafone was launched on 1 January 1985. Racal Strategic Radio was renamed Racal Telecommunications Group Limited in 1985.On 29 December 1986, Racal Electronics bought out the minority shareholders of Vodafone for GB£110 million.

Under stock market pressure to realise full value for shareholders (the mobile unit was being valued at the same amount as the whole Racal group), in September 1988, the company was again renamed Racal Telecom, and on 26 October 1988, Racal Electronics floated 20% of the company. The flotation valued Racal Telecom at GB£1.7 billion. On 16 September 1991, Racal Telecom was demerged from Racal Electronics as Vodafone Group.

In July 1996, Vodafone acquired the two thirds of Talkland it did not already own for £30.6 million.On 19 November 1996, in a defensive move, Vodafone purchased Peoples Phone for £77 million, a 181 store chain whose customers were overwhelmingly using Vodafone's network. In a similar move the company acquired the 80% of Astec Communications that it did not own, a service provider with 21 stores.

In 1997, Vodafone introduced its Speechmark logo, as it is a quotation mark in a circle; the O's in the Vodafone logotype are opening and closing quotation marks, suggesting conversation.

On 29 June 1999, Vodafone completed its purchase of AirTouch Communications, Inc . and changed its name to Vodafone Airtouch plc. Trading of the new company commenced on 30 June 1999.To approve

the merger, Vodafone sold its 17.2% stake in E-Plus Mobilfunk. The acquisition gave Vodafone a 35% share of Mannesmann, owner of the largest German mobile network.

On 21 September 1999, Vodafone agreed to merge its U.S. wireless assets with those of Bell Atlantic Corp to form Verizon Wireless. The merger was completed on 4 April 2000.

In November 1999, Vodafone made an unsolicited bid for Mannesmann, which was rejected. Vodafone's interest in Mannesmann had been increased by the latter purchase of Orange, the UK mobile operators. Chris Gent would later say Mannesmann's move into the UK broke a "gentleman's agreement" not to compete in each other's home territory. The hostile takeover provoked strong protest in Germany, and a "titanic struggle" which saw Mannesmann resists Vodafone's efforts. However, on 3 February 2000, the Mannesmann board agreed to an increased offer of £112bn, and then the largest corporate merger ever.The EU approved the merger in April 2000. The conglomerate was subsequently broken up and all manufacturing related operations sold off. On 28 July 2000, the Company reverted to its former name, Vodafone Group plc. In April 2001, the first 3G voice call was made on Vodafone United Kingdom's 3G network. On 17 December 2001, Vodafone introduced the concept of "Partner Networks", by signing TDC Mobil of Denmark. The new concept involved the introduction of Vodafone international services to the local market, without the need of investment by Vodafone. The concept would be used to extend the Vodafone brand and services into markets where it does not have stakes in local operators. Vodafone services would be marketed under the dual-brand scheme, where the Vodafone brand is added at the end of the local brand. (i.e., TDC Mobil-Vodafone etc.)

Vodafone purchased stake in hutch (Hutchison telecom international for usd 11.08 billion

Background - Vodafone (voice data fone) Founded-1983 as Racal telecom, telecom, independent 1991. Group- Vodafone Plc.Headquarters – Berkshire, Uk Key people- Vitoria Callao, CEO &Sir john Bond, Chairman Industry- Mobile Telecommunications. Presence – Equity interest in 25 Countries & network Partner in 42.Strength – 2, 30,000 (Employees) .Revenue – £ 35,478 Million (14.1% Growth Net Income -£ 10,047 Million (10.1% Growth) EPS-7.51 Pence Dividend per Share (11.1% Growth).

Background of hutch and essar

Operations: 1992

Circles: 16 + license for 6 circles

Revenue: $ 1,282 Million

EBITDA: $ 415 Million

Operating Profit: $ 313 Million

Subscriber Base

: 29.2 Million

ARPU: Rs. 340.15

Growth of Hutchison Essar

1992- Hutchison Whampoa and Max Group established. Hutchison Max. In 2000- Acquisition of Delhi operations Entered Calcutta and Gujarat markets through ESSAR acquisition. In 2001: Won auction for licenses to operate GSM services in Karnataka, Andhra Pradesh and Chennai. In 2003: Acquired AirCel Digilink (ADIL - Essar Subsidiary) Which operated in Rajasthan, Uttar Pradesh East and Haryana telecom circles and renamed it under Hutch brand. In 2004: Launched in three

additional telecom circles of India namely Punjab, Uttar Pradesh and West Bengal. In 2005: Acquired BPL, another mobile service provider in India 2007: Vodafone acquired HTIL stake in Hutchison- Essar .In 2008: Vodafone acquired Dishnet Wireless, a service provider in Orissa and has successfully launched its services in the following circle. Vodafone launched the Apple I Phone 3G to be used on its 17 circle 2G network.

Reasons of Hutchison’s Exit

Urban markets in the country had become saturated. Future expansion would have had to be only in the rural areas, which would lead to falling average revenue per user (ARPU) and consequently lower returns on its investments HTIL also wanted to use the money earned through this deal to fund its businesses in Europe .The sale of its interests in India will enable Hutchison.Telecom to become one of Asia’s best capitalized companies .Relations between Hutchison Telecom and the Essar group of India will be key to the sale of Hutch's 67% stake in Hutch-Essar

Why & How the deal came through....

None of its recent global acquisitions, including those of the German business of Mannesmann, telecom businesses in Japan and Belgium, were performing up to the mark Markets, including the US, were maturing and were not growing in a big way Stiff competition among almost all major players in the industry, including global telecom majors like BT, O2 of UK.Verizon from the US, Maxis Telecommunications of Malaysia, Orascom from Egypt, the Hinduja group, Reliance and Bharti Airtel from India.

Merger

Deal size and stake -0 Fourth largest deal of the year 2007 (to date) at $13.3 bn ($11.1 bn plus $2 bn debt). Hutchison Essar valued at $18.8 bn.

Regulatory Approvals – Vodafone acquisition is subject to a number of approvals including from the department of telecommunications and the government (FIPB)

Foreign investment Promotion Board- Application for an approval from the FIPB still not been approved due to issues relating to the total direct and indirect foriegn holding in Hutchison Essar.Foreign Investment Policy-Press npte 5 of 2005 provides that indirect foreign shareholding in a telecom company cannot exceed 74%.

Principal Benefits for Vodafone

Accelerates Vodafone’s move to a controlling position in leading operator in the attractive and fast growing Indian mobile market .India is the world’s 2nd most populated country with over 1.1 billion inhabitants. India is the fastest growing major mobile market in the world, with around 6.5 million monthly net adds in the last quarter India benefits from strong economic fundamentals with expected real GDP growth in high single digits Increases Vodafone’s presence in higher growth emerging markets. Potential for Hutch Essar to bring Vodafone’s innovative products and services to the Indian market, including Vodafone’s focus on total communication solutions for customers Vodafone and Hutch Essar both expected to benefit from increased purchasing power and the sharing of best practices.

Need of the change

Post Hutch becoming Vodafone, the operator logo on my Nokia N70 has automatically changed to Vodafone .But I find that that all mobiles do

not change automatically to the Vodafone logo. Same was the case when Orange changed to Hutch in Mumbai. You of course have the option of sending “Vodafone” as a sms to 56565 and receiving the operator logo image which says “Vodafone IN”. But this is a picture logo which gets pasted on the phone…its not a real logo. Plus this image does not work on non Nokia mobiles and even on some Nokia mobiles like 9300.I have discovered the following: If you want your phone to display Vodafone automatically without downloading any logo, then you need to have a comparatively newer model of Nokia AND you also need to connect to GPRS. Nokia mobiles like 6630, N70, N72, N73, 6233, 6270, etc. automatically display the new Vodafone logo IF you connect to GPRS and stay connected for a while.Older Nokia mobiles like 6600 do not automatically show the new Vodafone logo even if you connect to GPRS. Other Non-Nokia mobiles do not change to the new logo no matter what.

Kurt Lewin Model

Unfreezing- Faced with a dilemma or disconfirmation, the individual or group becomes aware of a need to change. Action research is depicted as a cyclical process of change. The cycle begins with a series of planning actions initiated by the client and the change agent working together

Movement-They know that traditional notions of how and where we work are changing. This increase in home and mobile working points to a radically different model for tomorrow’s business.

Pre freezing-Vodafone sells apple iPhone in India. Vodafone Australia’s OH&S procedures recognize the methods and systems utilized by Vodafone to manage H&S issues arising from or related to our business activities in Australia. To manage any health and safety risk our business

creates, Vodafone Australia has developed and implemented a H&S Management System that aims to:

Ensure compliance with H&S-related legislation; Comply with H&S Policies and Standards established by Vodafone

Group; and

Encompass five (5) basic principles of effective OHS management

Burke Lit win Model

Transactional - Vodafone announces that Verizon Wireless ("VZW"), its affiliate in the US, has agreed to acquire Alltel Corp. (“Alltel”) (the “Transaction”) for a total enterprise value of US$28.1 billion in cash and assumed debt. Alltel is the 5th largest mobile operator in the US, with over 13 million customers across 34 states in the US.

Anticipated benefits of the Transaction include:

Reinforces VZW’s position as the leading mobile operator in the US market with 80 million customers and pro-forma CY2007 revenues of US$52.7 billion

NPV of cost and capex synergies expected at over US$9.0 billion, after integration costs. Significant value creation arises from the in-market nature of the transaction. Annual run-rate of synergies of US$1.5–1.7 billion by CY2011

Accelerates VZW's EBITDA, earnings and free cash flow growth as a result of these synergies

Along with the spectrum acquired in the recent US spectrum auctions, strengthens VZW's spectrum position leaving it well-positioned to capitalise on the continued growth of the US mobile market, the largest in the world by revenues.

Expected to immediately enhance Vodafone’s adjusted earnings per share1 before intangible asset amortisation and integration costs

Transformational – Vodafone series in which we are delighted to be joined by Nokia and Nokia Siemens Networks in this collaboration on mobile transactions. The partnership is particular apt since mobile transactions is a prime example an issue that requires effective cross-industry cooperation.

Vodafone aim in these papers is to provide a platform for leading experts to write on issues in public policy that are important to our industry. These are the people that they are listening to, even they don’t always agree with them. These are their views, not ours

Conclusions

The great hopes transformational potential of mobile transactions. This report is intended to contribute to the policy debate by analyzing the potential hurdles to the extension of mobile transactions from the present small base, and thereby suggesting possible actions to lower the barriers to transformational m- transactions. It is the fact mobile telephony has spread so rapidly does not automatically mean transactions services spread by mobile can penetrate low income markets just as fast.

ABN Amro and royal bank of scotland

The history of ABN Amro Bank dates back to the year 1924, when King

Williem – I issued a Royal Decree declaring the establishment of the

Nederlandsche Handel-Maatschappij (Netherlands Trading Society,

NTS). The NTS had been established with an aim to promote the trade

between the Netherlands and the Dutch East Indies.

On the 3rd of October, 1964, NTS merged with the Twentsche Bank,

and the new name it was given was Algemene Bank Nederland (ABN

Bank). Further, on the 22nd of September, 1991, ABN Bank merged

with the Amro Bank in Amsterdam. Henceforth, the new entity came to

be known as ABN AMRO Bank.

Recent Developments

In the month of October 2007, a consortium of RBS, Fortis and

Santander acquired ABN AMRO which is termed as the biggest banking

acquisition ever happened in the financial history of the world. Because

of the worldwide financial crisis of the year 2008, the Dutch state

decided to nationalize the Fortis stake in the ABN AMRO, and

according to an announcement made by the state on the 3rd of October

2008, the Dutch state acquired Fortis Bank Nederland. This acquisition

includes the stake of Fortis in ABN AMRO.

As of April 2009, the ABN AMRO is being owned by RFS Holdings

B.V., which comprises of the Dutch state, Banco Satander and the Royal

Band of Scotland Group (RBS). The financial crisis being faced by the

bank led the RBS to announce its plans to fire over 9000 staff members

of ABN AMRO. This announcement was made by the RBS on the 7th of

April, 2009.

The total assets of the bank stood at 912 Billion Euro in June 2008,

while it churned a profit of 10 Billion Euro in the year 2007. The

working strength of the ABN AMRO Bank was 102,556 employees at

the end of the year 2007.

Presence in India

The ABN AMRO Bank registers a comprehensive presence in India,

with its offices located in all the prominent cities of the country. The

Corporate and Institutional Banking and Private Banking services of the

bank are managed by its office located at Nariman Point, Mumbai, while

the Personal and Business Banking related matters are governed by its

New Delhi office located at Barakhamba Road. The bank also offers

specialized services to international diamond and jewellery merchants,

and its Mumbai office serves as the regional office for catering to the

needs of diamond and the jewellery merchants in the Indian Sub-

continent.

The bank also provides a diverse range of high quality Portfolio

Advisory Services along with a comprehensive transaction execution

platform in India. ABN AMRO (India) has branches in many cities of

India, such as Bangalore, Baroda, Chennai, Delhi, Gurgaon, Hyderabad,

Kolkata, Lucknow, Mumbai, Noida, Pune and Surat.

Microfinance Program

The ABN AMRO Bank has also initiated its Microfinance program in

India, which is the largest one among the same being offered by foreign

banks in the country.

Under the program, the bank deploys intermediary agencies called

microfinance institutions for delivering micro loans less than USD 200

to its target consumer group of poor women with rural background. Till

the month of April 2009, more than 390,000 customers spanning across

16 states in India were receiving micro financing small loans through its

26 Micro Finance Insritutions.

About Royal Bank Of Scotland (RBS)

By 1969 economic conditions were becoming more difficult for the

banking sector. In response, the National Commercial Bank of Scotland

merged with the Royal Bank of Scotland. The resulting company had

662 branches. The merger resulted in a new holding company, National

and Commercial Banking Group Ltd. The English and Welsh branches

were reorganised, until 1985, as Williams & Glyn's Bank, while the

Scottish branches all transferred to the Royal Bank name. The holding

company was renamed Royal Bank of Scotland Group in 1979.

Organisational Structure

In the organisational structure of the ABN AMRO Group, a distinction

is made between Client Centres and Support Centres. There are two

Client Centres: Retail and Private Banking (R&PB) and Commercial &

Merchant Banking (C&MB). In addition, there are various Support

Centres including Finance, TOPS (IT, Operations, Facility Management

and Procurement Services), Risk Management & Strategy, ICC

(Integration, Communications, Compliance, Legal and HR). All

members of the Managing Board have a relatively large span of control

in order to enable an efficient organization.

Position of ABN amro before merger

ABN AMRO had come to a crossroads in the beginning of 2005. The

bank had still not come close to its own target of having an ROE that

would put it among the top 5 of its peer group, a target that the CEO,

Rijkman Groenink had set upon his appointment in 2000. From 2000

until 2005, ABN AMRO's stock price stagnated.

Financial results in 2006 added to concerns about the bank's future.

Operating expenses increased at a greater rate than operating revenue,

and the efficiency ratio deteriorated further to 69.9%. Non-performing

loans increased considerably year on year by 192%. Net profits were

only boosted by sustained asset sales.

There had been some calls, over the prior couple of years, for ABN

AMRO to break up, to merge, or to be acquired. On February 21, 2007,

the call came from the TCI hedge fund which asked the Chairman of the

Supervisory Board to actively investigate a merger, acquisition or

breakup of ABN AMRO, stating that the current stock price didn't

reflect the true value of the underlying assets. TCI asked the chairman to

put their request on the agenda of the annual shareholder’s meeting of

April 2007.

Events accelerated when on March 20 the British bank Barclays and

ABN AMRO both confirmed they were in exclusive talks about a

possible merger.

Organizational Structure

ROYAL BANK OF SCOTLAND AND GREENWICH

SUBSIDIARIES. GREENWICH CAPITAL MARKETS, INC.,

(hereinafter GCM) IS A WHOLLY OWNED SUBSIDIARY OF

ROYAL BANK OF SCOTLAND.

Position of RBS before merger

In 1967, RBS became the first Scottish bank to install an Automated

Teller Machine, and by 1980 the service, known as Cashline had become

the busiest ATM network in the world. Today it is now the largest

privately owned ATM network in the UK, it is also a member of the

LINK ATM network. In 1997, RBS was the first bank in the world to

make its ATMs available to all cardholders. The word Cashline, in

Scotland at least, has become a generic term for an ATM.

In August 2005, the bank expanded into China, acquiring a 10% stake in

the Bank of China for £1.7 billion. A new international headquarters was

built at Gogarburn on the outskirts of Edinburgh, and was opened by

Queen Elizabeth II and prince philip Duke of Edinburgh in 2005. The

St Andrew Square office still remains the official registered head office.

The bank was the 2005 recipient of the Wharton Infosys Business

Transformation Award, an award given to enterprises and individuals

who use information technology in a society-transforming way. The

Group was part of a consortium with Belgian bank Fortis and Spanish

bank Banco Santande that acquired Dutch Bank ABN AMRO a on 10

October 2007. Rivals speculated that RBS had overpaid for the Dutch

bank although the bank pointed out that of the £49bn paid for ABN

AMRO, RBS's share was only £10bn (equivalent to £167 per citizen of

the UK). Coutts Bank's international businesses were renamed RBS

Coutts on 1 January 2008.

Need of change

During the late 1970s and early 1980s the Royal Bank was the subject of

three separate takeover approaches. In 1979, Lloyds Bank, which had

previously built up a 16.4% stake in the Royal Bank, made a takeover

approach for the remaining shares it did not own. The offer was rejected

by the board of management on the basis it was detrimental to the bank's

operations. However when the Standard Chartered Ban proposed a

merger with the Royal Bank in 1980, the board of management

responded favourably to the offer. Standard Chartered Bank was

headquartered in London, although most of its operations were in the Far

East, and the Royal Bank saw advantages in creating a truly

international banking group. Approval was received from the Bank of

England, and the two banks agreed a merger plan that would see the

Standard Chartered acquire the Royal Bank and keep the UK operations

based in Edinburgh. However the bid was scuppered by the Hongkong

and Shanghai Banking Corporation (HSBC) which tabled a rival offer.

The bid by HSBC was not backed by the Bank of England, and was

subsequently rejected by the Royal Bank’s board of management.

However the British government referred both bids to the Monopolies

and Mergers Commission; both were subsequently rejected as being

against the public interest. The Bank did obtain an international

partnership with Banco Santander Central Hispano of Spain, each bank

taking a 5% stake in the other. However this arrangement ended in 2005,

when Banco Santander Central Hispano acquired UK bank Abbey

National – and both banks sold their respective shareholdings.

Problems

Is Royal Bank of Scotland's horrendously damaging acquisition of

Dutch rival ABN Amro in 2007 the worst ever M&A deal? According to

academics, it seems maybe not. Indeed, mergers and acquisitions seldom

live up to their promise of delivering strategic benefits, easy growth and

a boost in the value of the acquirer's shares. To be sure, some do work.

According to academics, as many as 35 per cent do. But that still means

more than 60 per cent of deals fall flat chasing the elusive goal reached

by a minority. "Over the three to five years after the deal on average, the

share price of the acquiring company tends to drop," said Paul Guest, a

researcher at Judge Business School, Cambridge University. There are

many reasons deals fail. Buyers can get carried away and overpay at the

top of the market, shortly before a crash, as is the case with RBS.

Alternatively, even if a deal is well-priced, the difficult part is often not

so much the agreement but the integration. Buying a company can lead

to top staff leaving unless an acquirer is careful. It can also lead to two

separate businesses continuing to run in parallel, undermining cost cuts

and the spread of know-how that are part of a deal's objectives.

Failure or a success

It is true that we have lost some senior people. However, each of the

individuals who left created a very strong talent pipeline. People leaving

the bank created opportunities for others down the chain. Hence, it is

business as usual and the succession has been very smooth.

Conclusion

I believe that RBS have deliberately, and perhaps criminally, misled

shareholders which resulted in our investing further in the RBS rights

issue.

Kurt-Lewin Model

1. Unfreezing - I t means to move away from our comfort zone. In

case of merger of RBS & ABN Amro Bank the employees has to

face the place shifting and some of the senior employees also lose

their jobs, so they also have to be away from their comfort zone.

2. Movement - It means to move from one place to another. We can

say that in this merger movement take place when the employees

move to one place to another.

3. Re- freezing - In this case of merger employees got that friendly

environment again that they were following earlier. and they will

do work according to their comfortness. They are again back to

their comfort zone.

Burke Lit-win Model

A Causal Model of Organizational Performance and Change, or the

Burke & Litwin Model, suggests linkages that hypothesize how

performance is affected by internal and external factors. It provides a

framework to assess organizational and environmental dimensions that

are keys to successful change and it demonstrates how these dimensions

should be linked causally to achieve a change in performance.

1. External environment2. Mission and strategy

3. Leadership

4. Organizational culture

5. Structure

6. Management practices

7. Systems

8. Work unit climate

9. Task and individual skills

10. Individual needs and values

11. Motivation

12. Individual and organizational performance