Merger And Acquisition Essay

Acquisitions and mergers

Acquisition is the process of acquiring a company at a price called the acquisition price. The price can be paid in terms of cash, acquiring company’s shares or both. Business acquisitions can be classified as friendly acquisition and hostile acquisition. In a hostile acquisition, the company that need to acquire the business buy the equity shares of the target company from its existing shareholders while in a friendly acquisition, a company invites other companies to acquire its business.

A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another company in which no new company is formed. Mergers and acquisitions are both aspects of strategic management

Hutchison Essar (HEL) is a mobile telecommunication industry, started its operations in 1994 in India. India is a large market with significant market potential and rural areas were untouched and India has emerged as fastest growing telecom market in the world.

Reasons why HTIL decided to exit Indian telecom market were to focus on its existing market in Europe, HTIL’s plans to invest in Indian ports was blocked by government of India, the urban markets in India was saturated and future expansion was possible only with rural market but its average revenue per user will be falling. And the reasons why Vodafone acquired Hutch were its strategy of expanding to high growth and emerging market of India, the Indian government had raised the foreign investment in telecom sector from 49% to 74%, high brand recall for Hutch among customers, company use of latest

On March 2007 Vodafone signed agreement with HTIL’s Indian partner Essar that Vodafone will hold 52% and Essar will continue holding 33% of stake, also other minorities will hold remaining 15% of stake in the company.it was the biggest deal in Indian telecom market. Vodafone has plans to bring world class branding to India after the acquisition or replacing of hutch brand by Vodafone brand name. Vodafone also want to increase its customers by diversifying its business to rural areas. Vodafone also want to launch 3G services in India as soon as Indian government declared the 3G policies. Also the hutch has created a good existing platform in India and also they were able to use existing management.

Vodafone had faced many problems in India such as to compete with home grown majors who know the Indian environment better and also they were new to the place and had to establish their brand name. But the strategies like advertisement, brand positioning, diversification to rural areas, and new services had helped them to establish their market in