The rapidly evolving market conditions are putting immense pressure on companies to maintain structural profits and revenues. In order to survive and have an upper hand in the market compared to competitive firms, businesses are reimagining their future by opting for M&A strategies. It refers to Mergers and Acquisitions (M&A) plans in which either one company buys another or two companies come together to become one entity. The motive behind Merger & Acquisition strategies is to recover, learn and come out in a better position.
M&A strategies are considered an amalgamation of both Defensive and offensive moves played by the company with the aim to build accelerating business models.
One lesson that is a must for all companies is to build a business model with a firm establishment of resilience at its core. The defensive move through M&A strategy helps businesses ensure their agility & adaptability and ward off threats from competitors in the marketplace.
In the words of George Washington, the first US President, “The best defence is a good offence.” This stands true in the business world also. As important as it is to defend businesses from possible threats in the marketplace, it is equally important to play bold moves. The acquisition allows the company to play the smart and bold move to capture the market and enjoy the competitive advantage from the leadership position.
Businesses are now understanding the value of offensive and defensive moves and the remarkable shift has been noted in the M&A in the post-pandemic era. According to the reports by Deloitte, Global M&A deal values are up 62% in the last two decades. Industrial Products & Construction dominates the M&A deals on a YOY basis.
INDIA’S BIGGEST ACQUISITIONS
India is acing the game by hitting record highs in the last few years. India has witnessed some major acquisitions driving billions out of a deal. Some of the biggest M&A Megadeals in the corporate arsenal include:
Adani Group – Holcim
After signing a megadeal with Holcim, Adani Group acquires the cement business of Holcim with a 63.1% share in Ambuja Cements which holds a 50.1% share in ACC. This is India’s biggest M&A deal in the history of infrastructure and materials space which was closed in only 4 months. The richest Billionaire in India, Gautam Adani called this deal historic assuming the significant benefits of Holcim’s market leadership position.
The CEO of Holcim, Jan Jenisch said, “With the Adani Group, we have found a perfect owner to unleash our Indian business’ next era of growth for our people and all stakeholders in a swift and efficient transaction.” This acquisition is a significant move by the Adani Group in becoming India’s second-largest cement company. Many financial and business experts see this acquisition as a rational move by Gautam Adani.
Tata Steel – Corus Steel
In 2007, Tata Steel acquired one of the greatest players in the European steel industry, Corus for the whopping price of $12.02 billion. Tata Steel has a reputation as one of the world’s most profitable steel companies. And the acquisition of Corus Group added one more feather to the cap of Tata Steel making it 5th largest steel producer in the world.
After the acquisition, Mr Ratan Tata said, “The completion of this acquisition of Corus by Tata Steel is a major step forward in the Company’s global strategy and represents an exciting future for both businesses.” Initially, Tata Steel offered $5.2 per share but after a bidding war with CSN, Tata ultimately bought Corus Steel at $7.00 per share.
Walmart – Flipkart
While talking about the biggest acquisition deals, how can one forget to mention the biggest e-commerce deal? In 2021, Walmart completed the acquisition of Flipkart for $16 billion in return for a 77% stake in the company. To strengthen its position in the market, Walmart acquired Flipkart to leverage the latter’s expertise and reach out to the wider customer.
Expanding its growth horizons, Walmart laid out plans to amplify its business on Indian land. Walmart’s acquisition made it one of the key players in the Indian e-Commerce industry besides Amazon and Paytm Mall. The interesting thing about this acquisition is that even after the deal, both companies have separate brand names and operating structures.
Tata Motors – Jaguar
With a net consideration of $2.3 billion, Tata Motors acquired the business of Jaguar Land Rover (JLR) from Ford Motor in 2008. Tata Motors signed this deal at the time of recession in the US when demand for automotive brands was crawling down and JLR was in deep losses. It is then that Tata Motors took this opportunity and bought Jaguar Land Rover and transformed the company’s losses into profits in a few years.
Tata Motors gave reinvigorated JLR from its dwindling sales and deep losses to one of the most successful and iconic automotive brands in the UK. In 2015, just after a few years of acquisition, Tata Motors not only helped JLR with recovering the losses but the company also made profits of 2.6 billion.
To navigate businesses through significant changes, businesses across the world opt for Merger & Acquisition technique to ensure an easy ride in the market. It takes a far-sighted vision and decisiveness of the corporate leader to create a profitable acquisition strategy. The record-breaking acquisition deals in history exhibit how strategic and well-planned M&A activity can prove to be a game changer for the brands.