Prepshot #3
The year 2021: Merger & Acquisitions
According to a recent Bain & Company research titled “India M&A: Acquiring to Transform”, M&A activity in India reached an all-time high in 2021, driven mostly by first-time buyers. According to the Bain analysis, 85 strategic agreements worth more than $75 million would be completed in India in 2021, with first-time buyers accounting for 80% of the volume.
The uncertainties caused by the Covid-19 outbreak boosted the acquisition trend in India, where businesses have been turning to acquisitions to ensure better growth rates.
Key Terminologies:
1. Merger: When two different entities join hands to form a new, combined entity, this is known as a merger.
2. Acquisition: The takeover of one company by another is referred to as an acquisition.
3. Partnership: A partnership is a legal structure in which two or more persons share ownership of a firm. This means that the entire company is shared for the duration of its existence. Both partners invest money, effort, and skills to help the business succeed.
4. Strategic Alliance: A strategic alliance is a contract between two or more firms that allows them to share access to their technology, trademarks, and other assets. A strategic partnership does not result in the formation of a new firm.
Top M&A deals in India in 2021
1. ZEEL - SPNI Merger: ZEEL announced its merger with and into SPNI on December 22, 2021. Sony will control 50.86 percent of the combined company, while the Essel Group, which founded Zeel, will own 3.99 percent. Punit Goenka will serve as CEO and MD of the firm.
2. Tata Group - Air India Acquisition: In the “Homecoming Of 2021”, Tata Sons has agreed to buy Air India for Rs 18,000 crore in a share purchase deal. Air India was sold as part of the Indian government’s strategic disinvestment strategy.
3. Tata Digital - Bigbasket Acquisition: Tata Digital purchased India’s largest grocery delivery startup, BigBasket, in order to establish its own SuperApp.
4. Aakash Educational Services-BYJU’s Partnership: Aakash Educational Services Limited (AESL), a pioneer in test-prep services, has established a strategic alliance with BYJU’S, India’s biggest ed-tech business.
5. Wipro-Capco Acquisition: According to Reuters, Wipro Ltd has announced the purchase of British consultancy Capco for $1.45 billion in cash, as the Indian software giant seeks to expand its capabilities for the financial services industry, which accounts for the majority of its revenue.
6. Tata Digital - 1mg Acquisition: Tata Digital Ltd paid an unknown sum for a controlling share in the online pharma firm 1MG. Similar firms like CureFit and BigBasket were previously funded by Tata Digital.
7. HDFC Life - Exide Life Insurance Acquisition: Exide Industries sold HDFC Life a 100 percent investment in Exide Life Insurance for Rs. 6,687 crores in exchange for the issuing of 8,70,22,222 shares at an issue price of Rs. 685 per share and a cash distribution of Rs. 726 crores.
8. Amazon acquired Perpule: In an all-cash purchase, Amazon Technologies paid $14.7 million (about Rs 107.5 crore) for Perpule. According to IANS, the business is expected to pay an extra $5 million (Rs 36.5 crore) to compensate Purple.
9. Piramal Group acquires DHFL at US$4.7 billion: Piramal Group finalized the US$4.7 billion acquisition of Dewan Housing and Finance Limited (DHFL) in 2021, which included cash and non-convertible debentures.
10. Prosus acquires BillDesk ay US$4.7 billion: The largest merger and acquisition deal in the Indian fintech industry was the acquisition of Indian payments behemoth BillDesk by technology investors Prosus NV (who also owns fintech company PayU). With a presence in over 20 regions and a total payments volume (TPV) of over US$4 billion, this purchase will help PayU become one of the biggest online payment providers in the world.
11. Adani Green Energy Limited (AGEL) acquires SB Energy India: SB Energy Holdings Limited (SB Energy India) was acquired by AGEL in an all-cash deal of US$3.5 billion in May 2021. This is India’s largest purchase in the renewable energy industry.
12. PharmEasy acquires Thyrocare at US$610 million: PharmEasy has become the first Indian start-up to acquire a publicly listed company Thyrocare, which runs a chain of diagnostic and preventive care laboratories.
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