About the Book

Mergers and Acquisitions: Valuation, Leveraged Buyouts, and Financing is an approach towards understanding the musings of the world of mergers and acquisitions. It provides the anatomy of the skills and tool sets required for understanding the M&A due diligence process. The book provides a comprehensive understanding of the building blocks of M&A deal making with the help of real M&A deals and cases.

• Strategic Aspects of M&A
• Legal Issues and Framework
• Valuation and M&A
• Financing Aspects of M&A

About the Author

Dr. Sheeba Kapil is currently working as Associate Professor, Finance, at Indian Institute of Foreign Trade (IIFT), New Delhi and is also Program Director of Executive Post Graduate Diploma Programs at IIFT and has authored several books on Corporate Finance. She has published research papers dealing with Corporate Finance, Investment Analysis, Financial Instrument and Structured Investment Vehicles and M&A Determinants and Firm Performance in various international and national journals of repute. She has developed several case studies, models, and simulation exercises that are actively used in classroom teaching. Dr. Kanwal N. Kapil is having a blend of experience in industry and academics. He is currently working as Associate Professor, Marketing, and is also Chairperson for Placements and Corporate Relations at Management Development Institute (MDI), Gurgaon. He has an experience spanning over 23 years.

Table of Contents:
Unit I: Strategic Aspects of M&A 1 Understanding M&A 1.1 Introduction 1.2 Types of Mergers 1.3 Merger Waves 1.4 Merger Motives Cases P&G Grows Through M&A Grasim Does Creeping Acquisition of L&T for Cement PayPal Acquires Xoom: Online Mobile Payment Space Gets Consolidated and Competitive Savlon vs Lifebuoy Roche’s Acquisition of Genentech Pfizer and Its R&D Synergies 2 Corporate Restructuring and M&A 2.1 Introduction 2.2 Organizational Restructuring 2.3 Financial Restructuring 2.4 Portfolio Restructuring 2.5 Mergers and Acquisitions as an Inorganic Growth Tool Cases When Coca-Cola and P&G Allied Organizational Restructuring at Xerox Kraft Foods, Mergers and Splits Restructuring at Max India Corporate Restructuring at Aditya Birla Group Corporate Restructuring at AT&T Spin-off at Jubilant Organosys Ltd. Restructuring at Reliance Industry and ADAG Demerger at Wipro Limited Reliance Industries Ltd.: Growth Through M&A Tool 3 M&A: Takeover Defenses 3.1 Introduction 3.2 Probability of Takeover Cases Oracle Takeover of PeopleSoft Golden Parachute at Motorola and eBay Golden Handshake by Citigroup Kraft Foods’ Hostile Takeover of Cadbury Public Announcement of Cairn India Limited for Buyback CRISIL, JustDial, and Clariant Chemicals Buyback Shares Bristol-Myers Squibb Buyback Program 4 Identifying Opportunities in M&A: Buy Side and Sell Side 4.1 Introduction 4.2 Buy-Side M&A 4.3 Financing Options for Buyer 4.4 Investment Bank and Buy-Side M&A 4.5 Buy-Side Valuation and Deal Analysis 4.6 Sell-Side M&A 4.7 Factors Affecting Sell-Side M&A 4.8 Sell-Side Process 4.9 M&A Strategic Buyer 4.10 Investment Banking and Sell-Side M&A Cases Kraft Foods and Heinz Create a Global Food and Beverage Giant to be Accretive Only by 2017 Bridge Loan to Debt Market Gaining Momentum in 2015 5 M&A: Trends and Empirical Studies 5.1 Introduction 5.2 Global Trends in M&A 5.3 Regional Trends and Insights 5.4 Cross-Border M&As 5.5 M&A Activities in Emerging Markets: Comparative Study of India and China 5.6 Sectoral Analysis of M&A Trends 5.7 Analysis of Empirical Studies on M&A Motives and Performance Case Daiichi’s Acquisition of Ranbaxy Unit II: Legal Issues and Framework 6 M&A: Legal and Regulatory Framework 6.1 Introduction 6.2 M&A: Regulatory Framework 6.3 Merger/Amalgamation 6.4 Acquisition/Takeover 6.5 Cross-Border M&A 6.6 Foreign Direct Investment 6.7 Foreign Portfolio Investment 6.8 Foreign Venture Capital Investments 6.9 Pre-Agreement and Share Purchase Agreement Cases Vodafone and Hutch Deal Amalgamation/Merger Scheme at Akzo Nobel India Limited Vedanta Resources and Cairn India: The No Break-Up Clause in The Pre-Agreement Completion of the Transaction Between Vedanta Resources and Cairn India 7 Foreign Direct Investment and M&A 7.1 Introduction 7.2 Defining FDI 7.3 Rationale for FDI 7.4 Costs of FDI 7.5 Forex Rate Volatility, BOP, and FDI 7.6 Determinants of FDI 7.7 FDI in India 7.8 Advantages of FDI 7.9 FDI and Asian Countries Cases Temasek Provides FDI to Singapore Shale Gas Driving FDI in US 8 M&A Accounting and IFRS-3 8.1 Introduction 8.2 Purchase Method 8.3 Pooling Method 8.4 New Accounting Norms (Post 2001) 8.5 Consolidation Process Case New Companies Act 2013 Paves Way for International Accounting Standard Compliance 9 Corporate Governance Issues in M&A 9.1 Introduction 9.2 Corporate Governance Mechanisms 9.3 Corporate Governance Models 9.4 Corporate Governance and M&A 9.5 Mergers and Acquisitions: Approaches of Corporate Governance 9.6 Corporate Governance Issues: Views of Acquirers and Targets 9.7 Corporate Governance and M&A: Indian Context Cases Ola and TaxiForSure Create Value for Their Shareholders Sun Pharma–Taro Pharmaceutical Nestle–Kraft Sun Pharma–Ranbaxy Unit III: Valuation and M&A 10 Concepts in Business Valuation 10.1 Introduction 10.2 Components of DCF 10.3 Valuing Firm with DCF 10.4 Unlevering Beta and Firm Valuation Cases Changing Value of Ranbaxy: Daiichi to Sun Pharma Anthem Acquires Cigna (Health Insurance Sector of US) RBI Notifies Valuation Methods for Acquisition or Sale of Shares 11 Business Valuation and Consideration Paid in M&A 11.1 Introduction 11.2 The Historical Cost Approach 11.3 The Residual Income Approach 11.4 The Multiples Approach 11.5 The Dividend Discount Model 11.6 The Discounted Cash Flow Approach 11.7 Economic Value Added 11.8 Consideration in M&A Cases Valuing IBP for the Acquisition EVA-Oriented Mission Statements of Coca-Cola 12 Brand Valuation and M&A 12.1 Introduction 12.2 M&A and Brand Valuation 12.3 Brand Valuation Methods 12.4 IFRS and Brand Valuation 12.5 Intangible Assets 12.6 Value Drivers for Valuation Cases Rank Hovis McDougall (RHM) Drives Away Hostile Takeover Attempt Through Brand Valuation Brand Value of Sintax Industries Ltd. Tata’s Acquisition of Jaguar and Land Rover Selling Rolls Royce Infosys’s Brand Value Model 13 Private Equity and Start-Up Valuation 13.1 Introduction 13.2 Convertible Debt For Start-Ups 13.3 Equity Series Round 13.4 Pre- and Post-Money Valuations 13.5 Future Dilution 13.6 Option Pool 13.7 Preferred Stock and Liquidation Preference Cases Flipkart and Snapdeal Attract Series of Investments from PE Investors SEBI Launches Separate Trading Platform for Start-Up Ventures Indian End-to-End Logistics Start-Up Firms Get Funding From PE Firms 14 LBO Economics and Valuation 14.1 Introduction 14.2 LBO Economics 14.3 LBO Valuation Case Blackstone Buys Gates Global from PE Firms and Enhances Valuation By 20% in Just 4 Years Unit IV: Financing Aspects of M&A 15 Financing Options in M&A 15.1 Introduction 15.2 Normal Equity 15.3 Differential Voting Equity 15.4 Preference Shares 15.5 Debt Financing 15.6 Retained Earnings/Cash Surplus 15.7 Eurobonds 15.8 Foreign Bonds 15.9 Depository Receipts 15.10 External Commercial Borrowings (ECBs) 15.11 Equipment Financing 15.12 Leasing and Hire Purchase Cases REVCO Bankruptcy Post LBO Cairn Vedanta Deal SEBI and Put/Call Option Case of Vulcan Engineers Ltd. Tata Steel Refinances USD 5 Billion Corus Loan Tata Capital Floats INR 500-Crore Public Issue of Secured Non-Convertible Debentures Blackstone to Offer SeniorNotes KKR Completes Acquisition of Fotolia Cash Reserves Used for M&A Saint-Gobain Post Acquisitions Refinances its Debt with Eurobond HRT Acquires UNX with GDR 16 Leveraged Buyout 16.1 Introduction 16.2 LBO Sponsors 16.3 LBO Mode of Target Acquisition 16.4 Criteria for Selecting LBO Candidates 16.5 LBO Capital Structure 16.6 Concept of Financial Leverage and Risk 16.7 History of LBOs 16.8 Role of Private Equity Investors 16.9 Theories of LBOs 16.10 Exit Strategies for LBO 16.11 LBOs in India Cases Harley Davidson’s Successful LBO SNS Face Valuation Dilemma: Facebook and WhatsApp LBO at Dell Hilton Hotel LBO by Blackstone Pharma M&A Deals Raise Senior Notes Bankruptcy of US Allied Stores and Federated Stores Indian LBO by Hindalco Industries Aditya Birla Group and Novelis 17 Private Equity and M&A 17.1 Introduction 17.2 Functions of a PE Firm 17.3 Structure of a PE Firm 17.4 Private Equity and Hedge Funds 17.5 PE Investment Strategy 17.6 Types of Private Funds 17.7 Regulation of PE Market 17.8 Factors Responsible for Private Equity Growth 17.9 PE in India Cases Warburg Pincus: Activity in India Home-Grown e-Commerce Business Snapdeal Raises Private Funds The Google Story Gujarat Venture Finance Limited Igarashi Motors, Japan Exits Indian Business and Buyback from Blackstone Blackstone Buys-Sells-Repurchases Stake in Indian BPO Intelenet Global Services Motilal Oswal Raised INR 900 Crore PE in 2012 TPG and Carlyle PE Firms Invest in ABD Indian Alcoholic Beverage Company 18 Investment Banks and M&A 18.1 Introduction 18.2 Investment Bank Structure 18.3 Investment Bank Functions 18.4 Investment Bank Fee 18.5 Regulation of Investment Banks 18.6 Investment Banks in India Cases Collapse of Most Admired I-Bank: Bear Stearns An Investment Bank and its M&A Advisory and Valuation Service KKR and Its Asset Management SBI Capital Markets Limited 19 Hedge Funds and M&A 19.1 Introduction 19.2 Hedge Funds and M&A 19.3 Characteristic Features of Hedge Funds 19.4 Growth of Hedge Funds 19.5 Hedge Fund Indices and Databases 19.6 Types of Hedge Fund Investors 19.7 Hedge Fund Investment Strategies Cases A Hedge Fund Called LTCM Participatory Notes Brian Hunter and Amaranth Hedge Fund Summary Key Terms Quiz Review Questions Project Assignments References