Corporate restructuring through mergers and acquisitions is pivotal in shifting company trajectories, and these shifts in the corporate space have a direct impact on the flow of the economy in India. Here is a look at some notable mergers and acquisitions that are anticipated to make significant changes in the country and among private players.
Mergers and acquisitions (M&A) are a form of business transaction that results in corporate restructuring by means of the acquisition of an organisation’s business divisions by another company. Essentially, it means that one corporation assumes control of operations from the other corporation. A merger consolidates two companies under one banner and creates a new enterprise, whereas an acquisition entails one company’s explicit purchase of the other.
Mergers and acquisitions have significant effects on employees, investors, and the industry as a whole. Mergers and acquisitions occur for various purposes. M&A is one method for the parties involved in this business transaction to generate long-term profits. Here is a glimpse at a few notable mergers and acquisitions within India, whose consolidation is highly anticipated to contribute to economic growth and development.
TATA and Air India:
In November 2022, Air India, which is wholly owned by Talace Private Limited, a subsidiary of Tata Sons, announced a merger with Vistara, which is a 51:49 joint venture between Tata Sons and Singapore Airlines Limited. According to a press release by Tata Sons, this merger is expected to be finalised in March 2024.
On January 27, 2022, Tata Sons, through its wholly-owned subsidiary Talace Private Limited (“Talace”), acquired a 100% stake in Air India. Vistara was founded in 2013 and currently operates in the Middle East, Asia, and Europe. Air India is expected to become India’s dominant domestic and international airline with a combined fleet of 218 aircraft following a merger.
HDFC and HDFC Bank
The merger between HDFC Ltd. and HDFC Bank Ltd. in April 2022. Currently, as reported by ET, this merger is estimated to reach a conclusion by June 2023. In essence, this merger has received all approvals from regulators such as RBI, Insurance regulatory and development authority of India (IRDAI), and the private shareholders as well. Touted as the biggest amalgamation in the history of corporate India, this merged entity will be branded as the HDFC Bank. Upon consolidation, this entity has a combined asset base of 18 lakh crore rupees as reported by ET in May 2023.
PVR and INOX Leisure
Initially announced in the year 2022, the erstwhile rivals in the industry have pledged to consolidate their business in a bid to create one of the largest multiplex chains in India. As reported by CNBC, with the merger of the two top multiplex chains in India, the new entity aims to expand its network up to 1500 and tap into markets in tier 3, 4, and 5 cities. The combined entity will be named PVR Inox Ltd. Cinemas launched after the merger will carry the new brand name of PVR INOX ltd.
Corporate restructuring has gained significance around the world as the intense globalization, competition, and digital acceleration. RN Kar and A. Soni in their study Mergers and Acquisitions in India: A Strategic impact analysis for the corporate enterprises in the post-liberalisation period state that Indian companies have adopted M&As as a strategic choice for growth and expansion. Currently we are witnessing that the consolidation of companies like PVR and INOX leisure are aimed at creating the largest multiplex chain in India and tap into potential markets at lower tier cities. Similarly, the merger between HDFC Bank and HDFC Ltd is treated as a behemoth in the financial sector of India. Mergers & Acquisitions help with corporate restructuring, this would enable reorganisation of company’s management, finances, and operations to improve the economic landscape of India.
