WELCOME TO PRESENTATION OF

MERGER AND AQUICISION

Merger

• Merger is define as combination of two or more companies into a single company where as one survives and other losses its their corporate existence. The surviving company acquires all the assets as well as liabilities of the merged companies. Generally , surviving company is the Buyer.

Acquisition•Acquisition is general sense is acquiring the ownership in the property.

•An Acquisition is the purchase by one company of a controlling interest in the share capital of another existing company.

•When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition.

•Acquisition is generally considered negative in nature

WHAT IS MERGER & ACQUISITION ?

Takeovers

• A corporate action where an acquiring company makes a bid for an acquiree . If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.

Takeover might be :

Hostile Takeover A takeover attempt that is

strongly resisted by the target firm

Friendly Takeover Target company's

management and board of directors agree to a merger or acquisition by another company.

SYNERGIES RELATED TO ACQUISITION

• Staff reductions• Acquiring new technology• Improved market reach and industry visibility

WHY SHOULD FIRMS TAKEOVER?

• To gain opportunities of market growth more quickly.

• To seek to gain a more dominant position in a national or global market

• To acquire the skills or strengths of another firm.• To acquire a speedy access to revenue• To diversify its product or service range to protect

itself against downturns in its core markets

12

Major M&A Deals Undertaken Abroad by India Inc.

USD 12.1 billion

USD 12.1 billion Tata Steel buys Corus PlcTata Steel buys Corus Plc

USD 6 billion USD 6 billion Hindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.

USD 2.3 billion

USD 2.3 billion Tata buys Jaguar and Land RoverTata buys Jaguar and Land Rover

USD 1.6 billion

USD 1.6 billion

Suzlon Energy Ltd. acquires REpower

Suzlon Energy Ltd. acquires REpower

USD 1.58 billion

USD 1.58 billion Essar Steel acquired Algoma Steel Essar Steel acquired Algoma Steel

TATA MOTORS, JAGUAR & LAND ROVER OVERVIEW

OVERVIEW OF TATA AND FORD MOTORS

Jamsetji Nusserwanji Tata Henry Ford

• TATA GROUP is 150 year old, Previously Tata Engineering and Locomotive Company, Telco.

• India's largest passenger automobile and commercial vehicle.• Tata Motors was established in 1945• Listed on the New York Stock Exchange in 2004. • It is the 5th largest medium and heavy commercial vehicle

manufacturer in the world. listed in BSE, NSE & NYSE.Subsidiaries- • JAGUAR CARS• LAND ROVER• TATA DAEWOO COMMERCIAL

TATA MOTORS OVERVIEW

JAGUAR OVERVIEW

• JLR was a part of Ford's Premier Automotive Group (PAG) and were considered to be British icons.

• Jaguar was involved in the manufacture of high-end luxury cars• Jaguar Cars Ltd. ( better known simply as Jaguar) is an

automaker from England,United Kingdom that manufactures luxury and executive motor car.

• Sir William Lyons founded jaguar as the Swallow Sidecar Company in 1922, originally making motorcycle sidecars before switching to passenger cars.

• The name was changed to Jaguar after the second world war due to the unfavorable connotations of the SS initials.

LAND ROVER OVERVIEW

• British car manufacturer founded in 1948 as a marquee of the Rover Company.

• Known for superior off-road and road performance

• 1976 – 1 million cars running on the road

• In 1994 Rover Group is taken over by BMW

• Sold to FORD MOTORS for $ 2.75 b in 2000.

• Used by military for projects and expeditions, Safe but less reliable, Makeover in recent times

• Land Rover manufactured high-end SUVs.

WHY IS FORD SELLING?

• Reports said losses at Jaguar stood at USD 715 million in 2006.

• Jaguar was not able to provide any profit for ford because of the high manufacturing costs provided in the United Kingdom.

• Rover's profit, on the other hand, was driven by the record sale of 2.26 lakh vehicles, an 18% YoY growth in 2007.

• Ford was combining both the brands since the products and manufacturing of vehicles for Land Rover and Jaguar was so intertwined.

THE DEAL PROCESS

• 12 Jun 2007- Announcement from Ford that it plans to sell Land Rover and Jaguar.

• Aug 2007 - Major bidders are identified • Likely buyers: Tata Motors, M&M, Ceribrus capital

Management, TPG Capital, Apollo Management • India’s Tata Motors and M&M arrive as top bidders ($

2.3b & $ 1.9b) • 03 Jan 2008 – Ford announces Tatas as the preferred

bidders • 26 Mar 2008 - Ford agreed to sell their Jaguar Land

Rover operations to Tata Motors. • 02 Jun 2008 – The acquisition is complete

THE DEAL100% stake in Jaguar & land Rover Business

TATA Motors has acquired the business & initially they will be operated independently of the partner.

3 Plants in UK These are well invested plants

2 advanced design & engineering center

4-5000 engineers engaged in testing ,prototype design & powertrainEngineering , development & integration

26 National sales company

Both existing national sales companies of jaguar/land rover & also those that are carved out of current Ford operation

Intellectual property rights

This covers all key technologies to be transferred to JLR & perpetual royalty free license on technologies shared with Ford

Support from Ford Motor Credit

Ford Motor Credit will continue to support the sales of JLR for around next 12 months

Pension Contributed by Ford

Ford will contribute $ 600 mn of the Pension Fund

WHY TATA BUYING?

• Tata wanted to make a global impact and it thinks that buying these brands at a lower rate now, will give better value later on.

• This acquisition also eases the entry of Tata in European market which it has been eyeing for long.

• Reduce the company dependence on the Indian market which accounted for 90% of its sales

• Opportunity to spread its business across different customer segment

• At the price staring from 63 lakh and going upto 93 lakh, it seems Tata has just got the right place to compete with the current market leaders in luxury brands – BMW, Audi, Mercedes

• Publicity on an international scale• Access to large distribution network• JLR had many new models lined up for next 3 years, so no much

work just profits• Strong R & D culture and facilities

POST MERGER

• 'We have enormous respect for the two brands and will endeavor to preserve and build on their heritage and competitiveness, keeping their identities intact,' – Ratan Tata

Cultural Factors

• “Change of ownership has little to do with the changing of culture”• The essence of this method lay in respecting the existing culture rather than imposing a

foreign culture. • TATA, in contrast with Daimler, decided to leave the existing management structure intact

There wasn’t any attempt to impose Indian managers on JLR. All the key personnel retained their positions.

• TATA didn’t just leave the current managers on their own. TATA managed to motivate them through constantly challenging them and working with them.

• TATA managed to inspire trust in JLR. The fact that most of JLR’s personnel were left on their positions showed that TATA trusts JLR, and believed that it is capable of solving their problems

• TATA kept an open-mind and never hesitated to listen to feedback from subordinates. TATA’s top level officials often make trips to their factories and dealerships outside India and collect feedback from local employees. These opinions are being used in the developing company’s strategy.

Following Cost Rationalization initiatives were taken to improve cash flows:

• Single shifts and down time at all three UK assembly plants.• Supplier payment terms extended from 45 to 60 days in line with industry standard. • Receivables reduced by £133 million from 38 to 27 days.• Inventory reduced by £217m between June 2008 and March 2009 from 70 to 50 days .• Labor actions –

- Voluntary retirement to 600 employees. - Agency staff reduced by 800.

-Offered leaves to 300 workers of Bromwhich and solihull plant.-Additional 450 job cuts including 300 managers.

• Agreement with Unions to implement pay freeze and longer working hours (equivalent to

approximately 20% reduction in labor costs.)

• Engineering and capital spending efficiencies.

• Fixed marketing and selling costs reduced in line with sales volume.

• Reduction in all other non-personnel related overhead costs.

CONCLUSION

• The merger seemed poorly timed then • Demand for luxury cars collapsed as a result of

financial crisis• Refinancing from CITI group and JP MORGAN• Started making profits in 2010 upto 41 %• Now an example of a successful merger• Entered CHINA in march 2012 with a joint venture

with Chery automobiles • Recent announcement for investment in Middle East