Symbiont - A Newsletter on Mergers & Acquisitions - January 2010

8/14/2019 Symbiont - A Newsletter on Mergers & Acquisitions - January 2010

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Mergers and acquisitions

are inevitable in any in-

dustry. They are indeed

essential for business tosee an upward growth.

Before moving ahead with

the decision of a merger

and acquisition it is very

important for the com-

pany to conduct due dili-

gence. Due Diligence is

important to make sure

that all the disclosures

regarding corporate merg-ers and acquisitions so

that there is no problem in

the business in the future.

Due Diligence is usually

handled by teams in the

midst of the business ac-

quisitions.

They are composed of

people who are special-ised and have expert

knowledge in the field of

mergers and acquisitions.

Members of the team of-

ten have expertise in the

areas of Accounting, Risk

management, Tax, Human

resources ,Legal, Environ-

ment etc .They are usually

employees of the compa-nies handling these criti-

cal mergers and acquisi-

tions, unless the expertise

they need is not available

internally. These teams get

documents from various

departments on the basis of

which they will be able to

extract the required infor-

mation. Hence with a good

due diligence team mergers

and acquisitions will go on

smoothly and within the

boundaries of the law.

Due Diligence requires 4

steps

1.Identification-In which

information is gathered and

risks are identified. Here the

risk management team will

view the activities of the

r i s k m a n a g e m e n t

department.

2. Legal All pending andprior litigation the company

is undergoing needs to

be identified and as-

sessed. Insurance needs

to be renewed .All lossesneed to be assessed be-

fore undertaking the

merger and acquisition.

3. Summarization-It in-

volves summarizing of

all the data. It is analysed

and compared to the ex-

isting coverage by insur-

ance. Recommendationsif any can be given to the

due diligence team.

4. Post Merger-It refers

to post merger proce-

dures. It involves visiting

new location, consolida-

tion of insurance pro-

grams and fixing any

administrative or legalissues that might have

arisen during the busi-

ness acquisitions.

Hence if all the above

steps are performed the

merger and acquisition

will proceed smoothly

hence leading to less

complexities.

DUE DILIGENCE AND ITS INEVITABILITY IN M&A

SYMBIONTJetstar and AirAsia form

a deadly alliance

3

Airtel picks up 70% in

Warid Telecom

4

INOX India acquires

stake in CVA (US)

5

Himadri Chemicals ontriple acquisitions Spree

6

Mahindra enters

Aerospace Industry

7

Panasonic steers acqui-

sition of SANYO

8

Cadbury Accepts Kraft

takeover

9

Marico enters Malaysia,

acquires Code 10

10

IDBI Bank in talks to

buy a private bank

11

Ranbaxy acquiresBangalore based Biovel

12

Quiz 13

Know Thy Words 13

Crossword 15

Whats Inside

By Andrea Rosario

28thJANUARY2010


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Jetstar and AirAsia form a deadly

alliance

Jet star and Air Asia came together onJan 6th 2010 to form an alliance that isseen as one of its kind that could com-

pletely change the Asian Budget Mar-ket. The non- equity arrangement isexpected to save hundreds of millionsof dollars in costs. The deal is primar-ily entered into for the purpose of pas-senger handling and aircraft mainte-nance. Thus the alliance is aimed atreduction in costs that would result incheaper fares for both carriers.

The agreement that has been signed

between Jet star and

Air Asia stops short

of equity participa-

tion, it will also notinvolve code sharing

which is a revenue

generating arrange-

ment under which

airlines book passen-

gers directly onto

each others flights.

The agreement in-

volves the develop-

ment of cooperationin five areas, they are- joint fleet

specification for future narrow bodied

aircraft, joint procurement of engi-

neering and maintenance supplies

and services, co-operation on airport

passenger and ramp handling ser-

vices, shared aircraft parts and pooling

inventory arrangements for aircraft compo-

nents and spare parts and finally passenger

disruption arrangement.

Jetstar is a subsidiary of Australian flag

carrier Qantas and Jet star is a Malaysiabased carrier. The two are considered asthe largest low cost carriers in Asia Pacific.According to the carriers this deal will givethem a natural advantage in one of theworlds most competitive aviation markets.The agreement will reduce costs and pool

their expertise, and result inlower fares for customersthroughout the Asia Pacific.This is the first time two ma-

jor low-cost carriers are co-operating on such a largescale. The arrangement willhelp the airline maintain its

position as the lowest-costairline in the world, despiterising costs associated withthe fledgling global economicrecovery.

According to Qantas CEO

Alan Joyce, the aviation mar-

ket in Asia is a growth mar-

ket and it has proven resilient

over the past year, despite the tough operat-

ing environment. There is significant

growth in passenger numbers forecast in

this region. The partnership between the

two will ensure that both airlines can capi-

talize on these growth opportunities

DATE January 6,2010

ACQUIRER Jetstar

ACQUIREE AirAsia

DEAL VALUE Not disclosed

DEAL

NATUREMerger

PURPOSE Reduction ofcosts to pass oncheaper faresto customers

FACTFILE

AirAsiaisthefirstai

r-

lineintheregiontoim

-

plementfullyticketle

ss

travelandunassigned

seats.However,asof

5

February2009

,AirAsia

hasimplementedallo-

catedseatingacrossa

ll

AirAsiaflights,inclu

d-

ingintheirsisterair-

lines,IndonesiaAirA

sia

andThaiAirAsia.

The very best financial presentation is one that's well thought out and anticipates any

questions... answering them in advance.- Arthur

Both the airlines aim to gain cost benefit

By Anjali and Chinnu

DEAL SYNOPSIS

SYMBIONT JAN 2010
http://thinkexist.com/quotation/the_very_best_financial_presentation_is_one_that/219762.htmlhttp://thinkexist.com/quotation/the_very_best_financial_presentation_is_one_that/219762.htmlhttp://thinkexist.com/quotation/the_very_best_financial_presentation_is_one_that/219762.htmlhttp://thinkexist.com/quotation/the_very_best_financial_presentation_is_one_that/219762.html


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India's largest telecom firm, BhartiAirtel Ltd, has affirmed its ambitions toexpand beyond India by buying a 70%stake in Bangladesh's fourth largesttelecom firm, Warid Telecom Interna-tional Ltd.

Declining revenue per sub-scriber has forced BhartiAirtel to look for firms inoverseas markets with higheraverage returns. Last year, ittried to buy South Africa'sMTN Group Ltd, but failed

Warid will be Bharti's sec-ond operation outside India.The firm launched servicesin Sri Lanka last January. Ithad at least one million cus-tomers in the island nation by June.

Bharti will initially invest $300 million(Rs1, 362 crore) in Warid to expand itsoperations. The firm will gain controlof Warid's board and daily operations,while current owners, the DhabiGroup, will hold the remaining 30%stake.

With 116 million subscribers, Bharti is the10th largest telecom firm in the world.Warid has 2.9 million subscribers, which isas much as Bharti adds every month inIndia.

But Bangladesh has one of the lowest tele-com penetration rates in theworld--only 32% of its 160million population, or 51.2million, is connected to a tele-

phone. India, with a 1.1 billionpopulation, ended Novemberwith a tele-density of 46.32%,far below the global averageof 80%.

The deal underlines Bharti'sintent to expand in interna-tional markets. Last year,

Bharti called off its negotiations with MTN

for a $23 billion merger. The two firms hadextended negotiations twice, but called thedeal off reportedly due to hurdles posed bythe South African government. At the time,many analysts said Bharti had to expandglobally to maintain growth momentum.But they also said Bharti should buy li-censes in countries rather than merge withtelecom firms.

Airtel picks up 70% in Warid Telecom

DATE January 13, 2010

ACQUIRER Bharti Airtel Ltd.

ACQUIREE Warid Telecom International Ltd.

DEAL VALUE $300 million

DEAL NATURE Acquisition

PURPOSE Cost and position leveraging

InMay10th,20

07,

WaridTelecom

launched its co

m-

mercialoperatio

ns

inBangladeshw

ith

a network enco

m-

passing26 distr

icts.

ByNovember2007,

the network

had

been expanded

to

cover 61 distri

cts

andbeingusedb

y2

millioncustomers

.

My definition of financial freedom is simple: it is the ability to live the lifestyle you

desire without having to work or rely on anyone else for money.T.HARV EKER

As a part of its International reach strategy

By Kamnashish and Nirmoy

FACTFILE

After the MTN deal

fell through in Octo-

ber, Bharti has been

on the lookout for

smaller acquisitions in

the South Asia region.

The Warid deal is the

first step in that strat-egy, Manoj Kohli,

chief executive of

Bharti

SYMBIONT JAN 2010


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These two complementary core compe-tencies made the deal synergetic andwill strengthen the position of marketleadership, technical know-how and

product range for the joint entity. Boththe companies will continue to offertheir product and services. Mr. ChrisCarr, Mr. Hector Villarreal and Mr.Dean Corbin, the owners of CVA, willcontinue to play leadership roles inCVA after the acquisition.

The acquisition covers two manufactur-

ing units of CVA for cryogenic trans-

portation equipment at Mont Belvieu in

Texas as well as its operations in Can-

ada and joint ventures in China and Tur-

key. INOX has funded the transactionfrom internal accruals of its group busi-

ness with a small amount of acquisition

debt.

Indias largest cryogenic engineering

company INOX India Ltd, a part ofINOX Group of Companies, has acquiredmajority stake of more than 51 % (exactfigure undisclosed) for about $140 mil-lion in US based Cryogenic Vessel Alter-natives (CVA), the world's largest manu-facturer of cryogenic transportationequipment.

Vadodara based INOX India is a 250 Crcompany under the umbrella of INOXGroup and enjoys more than 70% marketshare in India. The revenue mostly (about60%) comes from the export businessand they have a market presence innearly 100 countries across the World.On the other hand, Texas based CVA, a

270 Cr company, specialized in largecryogenic transport tanks and mobile oiland gas field pumping units.

They have presence across Canada,China and Turkey apart from US. InCryogenic transportation equipment mar-ket CVA enjoys around 65% marketshare.

INOX India acquires majority stake inCryogenic Vessel of US

Rich people do not back away from problems, do not avoid problems, and do not com-plain about problems. Rich people are financial warriors.T. HARV EKER

To strengthen its current position around the world

By Surajit and JimmyDEAL SYNOPSIS

Mr. Chris Carr, CEO of CVA commented that,

Together we are a balanced company, strategi-cally well placed to compete at the leading edge

of a rapidly growing cryogenic industry.

DATEDecember 21, 2009

ACQUIRERINOX India

ACQUIREECryogenic Vessel Alterna-

tives (CVA), US

DEAL VALUE$140 million

DEAL NATURE-Acquisition

PURPOSETo strengthen the Global

position

SYMBIONT JAN 2010


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Himadri Chemicals , the producer

of coal tar pitch in India that also

makes products like creosote oil is

planning to buy three overseas

firms for around $400 million ( Rs

1848 crore ).The firm has recently

sold a stake of 15.39% to Bain

Capital India Investments for

Rs 252.4 crores with a view tomobilize capital for its foreign

acquisition strategy ,along

with this the firm plans to

raise the rest of the capital by

using borrowed funds se-

cured by assets of the target

companies, the company

wants to maintain its debt

equity ratio equal though

they plan to expand with

these deals.

The major aim of the ac-

quisitions is the expansion

that the company wants to

achieve in phases, they also

realize that the expansion

will not materialize immediately & are

currently conducting due diligence of

these firms. The firm also plans to spend

equal amount in the next four years to

scale up the production in India and builda coal tar distillation plant in Chinas

Shandong Province.

Himadri Chemicals is the biggest manu-

facturer of coal tar pitch in India. It is one

of the world's 3 players to have devel-

oped Zero QI grade coal tar pitch, which

is used in graphite industry. With a pro-

duction of 169,000 tonnes of coal tar

pitch a year, it has already capturedaround 70% of the market share & the

rest is controlled by the unorganized sec-

tor & enjoys a sort of monopoly in the

market.

Globally as well there are very few play-

ers in this business & gives Himadri an

effective advantage to acquire foreign

firms. With this strategic decision being

disclosed in the market, Himadri Chemi-

cals shares had shot up to Rs458 apiece

after the deal with Bain Capital was an-

nounced on 31 December.

Himadri chemicals to spend $400

million on acquisitionsDATE January 2,2010

ACQUIRER Himadri

Chemicals

ACQUIREE Three

overseas

firms

DEAL

VALUE$ 400

million

DEAL

NATUREAcquisi-

tion

PURPOSE Phased

global

expansion

FACTFILE

HimadriGroup ofInd

ustries

hassevenpubliclimite

dcom-

paniesunder itsbann

erwith

anetworthofmoreth

anRs.

2.20billion,with inter

ests in

chemicals,coldstorag

e, iron

andsteel andfinance

. Hi-

madriCredit&Financ

eLtd.,

withinterestsinfinancialac-

tivitieshasitssharesli

stedin

allthemajorstockexch

anges

ofIndia.

The single biggest difference between financial success and financial failure is how well you

manage your money. Its simple: to master money, you must manage money.T.HARV EKER

The major aim of the acquisitions is the expansion that the companywants to achieve in phases

By Dilip and Chippy

DEAL SYNOPSIS

SYMBIONT JAN 2010


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Mahindra is the first Indian Company to have access

to aircraft making technology, though many of its co-players are already into component manufacturing.The company would initially manufacture sheetmetal aero-structures and over a period would investmore to make components, sub-assemblies andeventually aircraft in India and Australia.

It is setting up manufacturing facility in Bangalore.Mahindra Aerospace is already in contract with

NAL to make two to five seater planes. Over fiveyears MAPL looks to build 475 aircraft in the 2-20-

seater range, expecting revenue of about Rs. 650-crore.

The company is all set to enter into the 2-20 seaterturbo prop market, which is the fastest growing seg-ments in general aviation. This market serves cus-tomers at the lowest cost per passenger seat kilome-

ter. The segment builds light civilian passenger air-

crafts, best adaptable to tough conditions in India.MAPL also has the opportunity to play in the defenceoffsets space. It also plans to service the global mar-ket.

The company is looking ahead to get into joint ven-tures with international companies like the BAE sys-tems, largest defence company in UK. The globalaerospace industry is a market for 4,000 planes.

The acquisition will give Mahindra access to orders

from Boeing Co., European Aeronautic Defence andSpace Co. and other companies bidding for defense

contracts in India. Under Indian law, foreign compa-

nies selected for defense contracts have to spend part

of the project value to source from local vendors.

Mahindra enters burgeoning

Aerospace Industry

DATE December 15, 2009

ACQUIRER Mahindra Aerospace Pvt. Ltd.

ACQUIREE Aero staff Australia Gippsland Aeronautics

DEAL VALUE $ 37.5 million


PURPOSE Turbo prop 2-20 seat aircrafts and allied components

The by-product is that they more people you help, the richer you become, mentally,

emotionally, spiritually, and definitely financially.

Mahindra and Mahindra along with Kotak Private Equity, acquired75.1 percent stake in two Australian aerospace firms, making its entryinto the aerospace business

By Jose and Neha

SYMBIONT JAN 2010


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Panasonic has completed its purchaseof a 50.2% majority stake in Japaneseelectronics rival Sanyo. The conclu-sion of the $4.6bn deal comes 13

months since Pana-sonic first announcedits interest in the deal.Panasonic was mostinterested in Sanyo'smanufacture of hybridcar batteries, a field inwhich both firms arestrong.

Panasonic Corporation

based in Osaka, Japan,is a global leader inthe development andmanufacture of elec-tronic products for awide range of con-sumer, business, andindustrial. The com-

pany's shares are listedin many stock ex-changes like Tokyo,Osaka, Nagoya and New York.

Despite Sanyo's success in the manu-facture of car batteries, it has faced

problems in recent years in its con-sumer products division As a result ithas cut thousands of jobs, and soldoff unprofitable operations.

Recently Sanyo - which is more reliantupon exports than Panasonic - has beenhit by the strength of the yen and risingmaterial costs. It was also forced to

change its top manage-ment after an accountingscandal over falsifying

past earnings. Sanyo'smost recent financialresults showed that itmade a net loss of30.6bn yen in the half-year to the end of Sep-tember, compared with a8.7bn yen profit a year

earlier.

The new Panasonic

Group will strive to real-

ize synergies as early as

possible by bringing to-

gether the technologies

and manufacturing ex-

pertise each cultivated

over the years and lever-

age the group synergies to the fullest

extent to hone the competitive edge in

the global market. To accomplish this

goal, Panasonic should outline new

business strategies for the new Pana-

sonic Group in its new mid-term busi-

ness plan in the next fiscal year.

Panasonic steers acquisition of

SANYO

DATE December

10th 2009

ACQUIRER Panasonic

(Japan)

ACQUIREE SANYO

DEAL

VALUE

$ 4.59

billion

DEAL

NATURE

Acquisition

PURPOSE

To become

potentially

competent

in

Electronic

Industry

SANYO strives todevelop and dis-s e m i n a t e"environmentally-conscious products"to reduce the envi-ronmental impactvia reduction of en-ergy consumption,

reduction of usageof chemical sub-stances with envi-ronmental impact,efficient usage ofrecycled materials,outstanding productdurability, and con-structing productsin a way that facili-tates recyclability.

If you want to create wealth, it is imperative that you believe that you are at the steeringwheel of life, especially your financial life. - T HARV EKER

SANYO has become a consolidated subsidiary of Panasonic and willcontinue pursuing its business as a Panasonic Group Company

By Sudhakar and Elvy

SYMBIONT JAN 2010


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Ending months of hostility, the firmannounced that it had approved a re-vised takeover bid from U.S. food gi-ant Kraft linking Cadbury's DairyMilk chocolate to Kraft's Philadelphiacream cheese in a $19.5 billion deal.This comes just months after it dis-missed an initial $16.3 billion ap-

proach from Kraft as "derisory." Butwhen Kraft sweetened the terms of adeal by raising the amount of cash itwas offering alongside its own sharesit proved too difficult for Cadbury toresist.

The British business boasts dominant

positions, strong emerging market ex-posure and the potential for massivemargin improvements. Kraft will

benefit from all of Cadbury's strengthsand at a knockdown price. Bagging thefirm for a value equivalent to 13 times,Cadbury's profit before tax and otherdeductions amounts to the cheapestfood-industry takeover in more than a

decade.

Establishing a rival to Mars as theworld's largest confectioner does notcome without challenges, though. Hav-ing borrowed heavily to buy Cadbury,Kraft will be under pressure to cut costsand raise margins at the British com-

pany. The British trade union Uniteclaimed earlier this month that some7,000 Cadbury workers would be underthreat if the proposed takeover wentthrough.

Keeping those things in mind may bemore important than in most take-

overs..It may be vital for Kraft to beviewed as respectful of Cadbury's Brit-ish valuesespecially in the U.K., theworld's second largest candy market.Overseas buyers must be aware of sen-sitivities of the brand and preserve it tosell the product successfully.

Cadbury accepts Kraft takeover

This comes just months after it dismissed an initial $16.3 billionapproach from Kraft as derisory

By Praveen and Siddharth


ACQUIRER Kraft Foods Ltd.

ACQUIREE Cadbury Plc

DEAL VALUE $19.5 billion (proposed)

DEAL NATURE Proposed

PURPOSE Bank on Cadburys enduring

popularity in the UK

The very best financial presentation is one that's well thought out and anticipates any questions... answer-ing them in advance. ARTHUR

TRIVIA

The firm was

k n o w n a s" C a d b u r ySchweppes plc"from 1969 untilits demerging inMay 2008, sepa-rating its globalconf ect ionerybusiness from

its US beverageunit, which hasbeen renamedDr PepperSnap-

ple Group Inc.

SYMBIONT JAN 2010
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IDBI Bank, an India-based commercial public sector

bank is said to have been narrowed down on the

Federal Bank, a Kerala-based private sector lender,

for acquisition. Reportedly, with 641 branches, Fed-eral Bank has a total business of around $590bn and

deposits of $334bn in South India. IDBI Bank ze-

roed in on the Federal Bank after assessing its finan-

cial strength and possibilities of integration in terms

of work culture.

The deal, if materialises, is expected to enable IDBI

to

strengthen its position among public sector banks by

increasing branch network and human resources be-

sides bolstering its deposit-base. However, IDBI

Bank, which was earlier a financial instition, willhave to take government aid for equity capital unless

the deal is an all-cash transaction. The government

owns above 52% in it.

The government will have to infuse money without

which it will be difficult for the bank to go ahead

with such a proposal under normal circumstances as

the value of this buy will be huge. The bank's credit

is picking up, with good growth in retail and

housing segment and it is confident of achieving

the 20 percent loan growth target for FY10. The

bank also does not plan to merge its home loanfinance arm with itself or offload stake in it.

IDBI Home Finance is a wholly-owned subsidi-

ary of the state-run bank and it was earlier plan-

ning to sell stake to Dewan Housing Finance

Corp Ltd.

However, the government had opposed the

move. The bank also planned to raise capital and

said it was considering a rights issue of shares or

a follow-on public offer.

The bank had earlier said it planned to raisearound 20 billion rupees through a rights issue of

shares. After the rights issue the government's

stake would be maintained at 52 percent.

But Federal Bank has not received any formal

proposal for a possible takeover. It will also help

increase Federal Banks national reach.

IDBI Bank in talks to buy a

private bank


ACQUIRER IDBI Bank

ACQUIREE Undeclared (Reportedly Federal Bank)

DEAL VALUE Undisclosed Amount


PURPOSE Achieving the 20% loan growth target for FY10

Good growth in retail and housing segment alluring

By Surya and Abhishek

You become financially free when your passive income exceeds your expensesT. Harv Eker

SYMBIONT JAN 2010


12/17

12

Ranbaxy Laboratories Limited an-

nounced the signing of agreements

with Biovel Lifesciences Private

Limited, Bangalore, India, provid-

ing for the acquisition of product

rights and a manufacturing facility,from Biovel.

The proposed transaction will give

Ranbaxy access to all of Biovels

products, pipeline, IP, Know-How

and manufacturing facility, located

in Bangalore, India. Ranbaxy has

created modern manufacturing in-

frastructure and a robust product

pipeline. Ranbaxy, with its globalmarket reach, quality and manufac-

turing expertise, will be able to lev-

erage this to its full potential, and

create a business of scale.

The products that are part of the

transaction include Typhoid Vi an-

tigen and Hib conjugate vaccines,

for which, Biovel has received

regulatory approval for India; aswell as Biovels development pipe-

line, comprising a range of vac-

cines, biotherapeutics and other

products. In 2008, the global vac-

cines market was approximately

USD 21 billion. It is estimated to

grow at a rate of 9%, to reach USD

34 billion by 2014. The Indian vac-

cine market valued at Rs. 3,600

Crores, in 2008, is growing annually

at 10%..

Ranbaxy Laboratories Limited, In-

dia's largest pharmaceutical company,is an integrated, research based, inter-

national pharmaceutical company

producing a wide range of quality,

affordable generic medicines, trusted

by healthcare professionals and pa-

tients across geographies.

Ranbaxy ranks second in domestic

sales among drug companies and it is

the largest in total sales. It has been

strengthening its biotech business

through a string of small scale acqui-

sitions in recent years. The company

has a majority stake in Hyderabad-

based Zenotech and an investment in

Krebs, a biotechnology company.

Ranbaxys continued focus on R&D

has resulted in several approvals in

developed markets and significant

progress in New Drug Discovery Re-search. The Companys foray into

Novel Drug Delivery Systems has led

to proprietary platform technologies,

resulting in a number of products un-

der development.

Ranbaxy acquires Bangalore based

BiovelIt enables Ranbaxy into the vaccine line

By Elizabeth and Seetha

You become financially free when your passive income exceeds your expensesT. Harv Eker

DATE

January 20, 2010

ACQUIRERRanbaxy Laboratories

ACQUIREEBiovel Lifesciences

DEAL VALUE

Undisclosed Amount

DEAL NATUREAcquisition

PURPOSEExtra platform to enter

vaccine sector

DEAL SYPNOPSIS

SYMBIONT JAN 2010


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By: Prathibha, Sai and Akshay

1. Canadian Mining company Glieichen Resources Inc. plans to buy the remain-ing stake of which Mexican Gold project, of which it already owns 78.8% stake?

2. One means for a company to go private is __________.

3. What is the deal size for the acquisition of Warid Telecom by Airtel?

4. The public sale of common stock in a subsidiary in which the parent usually re-tains majority control is called ______________.

5 Oracle Coorperation won European Union approval for it $7b takeover of whichcompany?

6. Forfaiting most closely resembles ____________.

7. National Australia Bank is eyeing to clinch a deal of $12 billion with which fi-nancial Cooperation?

8 Ranbaxy Laboratories Ltd has announced a deal with which Bangalore basedPharma company for acquiring latters product rights and a manufacturing

facility?

QUIZ

TESTTHEM&

AWATERS

Know Thy Words

Mergers and Acquisitions Terminologies

Macaroni Defense

Macaroni Defense is a strategy that is taken up to prevent any hostile takeovers. The issue of

bonds that can be redeemed at a higher price if the company is taken over does this.

Poison Pill or Suicide Pill Defense

This is a strategy that is taken by the target company to make itself less appealing for a hostiletakeover. The bondholders are given the right to redeem their bonds at a premium should atakeover occur.

Dawn Raid

This is a process of buying shares of the market prices may fall till the acquisition iscompleted.


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Asset Stripping

When a company acquires another and sells it in parts expecting that the funds generated

would match the costs of acquisition, it is known as asset stripping.

Bear hug

Acquirer mails letter to directors of target firm announcing intentions and requiring a quick de-

cision on bid.

Saturday night special

Offer made to stockholders just before the markets close on Friday. It takes maximum advan-

tage of stockholder greed.

Covenant Not To Compete

An agreement often signed by an employee or a selling shareholder whereby they agree not to

work for competitor companies or form a new competitor business within a specified period

after termination of employment or the closing of the acquisition. It is also called a "Non-

Competition Agreement

Amalgamation

It is blending of two or more companies. The shareholders of each company would become theshareholders of the company which is undertaking the activity. It is similar to a merger.

Crown Jewels

Sec 23 of SEBI Takeover Regulations indicates that the company calls its precious assets as

crown jewels to depict the greed of the acquirer under the takeover bid. These precious assets

attract the raider to bid for the companys control. The company sells these assets at its own

initiative leaving the rest of the company intact. (Instead of selling the assets, the company

may also lease them or mortgage them so that the attraction of free assets to the predator issuppressed.)

Reconstruction

In this, a company transfers its undertaking and its assets to a new company in consideration ofthe issue of the new companys shares to the first companys members. And if the first com-

pany members debentures are not paid off, the new company should give the debentures to therespective holders and thus the first company would lose the identity.


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Across2. Which mutual fund did Franklin Templeton Mu-

tual Fund acquire in 2002? (7)

6. Which word was derived from the French wordBougette meaning 'Little Bag'? (6)

9. Connaught Plaza Restaurants and Hardcastle Res-taurants have had the responsibility for the entryof Which MNC to India ? (9)

12. Name the term used for depreciating a company'sintangible assets (12)

13. Which is India's first Equipment Bank launchedrecently by SREI International Finance Ltd.? (5)

16. This famous Japanese corporation first started asa tiny cork manufacturer in Hiroshima in 1920,

and was known as Tokyo Cork Togyo Co Ltd.How it is known today? (5)

17. Which UK confectionary major was rumored tobid for Cadbury along with Kraft Foods? (7)

18. This Company was created to facilitate themerger of the two main state-owned airlines inIndia: Air India, with Indian Airlines (5)

19. Procter and Gamble purchased this high valuedshaving brand in 2005 (8)

Down1. Which is the only country having paper cur-

rency and have no coins and it introduced

cheque only in 1997? (7)3. Daimler-Benz took over this company in 1999

(8)4. What is the rate of interest at which short-term

funds are exchanged between banks in Londoncalled?(5)

5. Which famous corporate was founded in 1894in Zlin and made its presence in India in 1931and commenced the manufacturing of shoes atBatanagar plant in 1936? (4)

7. Big Blue is IBM. Which corporate is referred as

'Big Black' ? (3)8. This term is derived from the Greek word

'Oikanomia' means "House Management". Whatis it? (7)

10. Which multinational owns the brands Georgia(Ice Coffee), and Aquaris (Isotanic drink)? (8)

11. Where is the European Central Bank located?(9)

14. What is the exchange rate of one currency foranother over a fixed period of time called? (4)

15. What is known as the purchase of insurance

against losses because of currency fluctuations?(7)

By Puneet, Shweta and Shilpa


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Page 16

CROSSWORD ANSWERS

QUIZ

ANSWERS

1. Morelos Gold Project

2. The leveraged Buyout (LBO)

3. $ 300m

4. An Equity Carve-Out.

5. Sun Microsystem

6. Export Factoring

7. AXA

8. Biovel Lifesciences Pvt Ltd.


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Sincere acknowledgment of the efforts of all the contributors for

their knowledge filled articles, crossword and quiz .

ABOUT SYMBIONTSymbionts are organisms which come together for mutual benefit, just like companies go for Merg-ers & Acquisitions.SYMBIONT is a monthly newsletter dedicated exclusively to Mergers & Acquisitions. SYMBIONTalso has an online forum for related discussions. The newsletter has always aimed to enlighten thereaders about the current happenings in the M&A circuit along with interesting add ons like cross-

words, terminologies, brain teasers and many more.

Reach Symbiont at : [email protected]

Documents

Symbiont - A Newsletter on Mergers & Acquisitions - January 2010