A Project on Merger and Acquisition of Vodafone and HutchWhat is Merger In business or economies a merger is a combination of two companies into one larger company. Economies of Scale-Ex-Managerial Economies such as increased opportunity of managerial specialization .This refers to the fact that the combined compnaycan often reduce its fixed costs by removing duplicate departments or operations. Types of Merger and Acquisition Horizontal Merger-Two companies that are in direct competition and share the same product lines and markets.For instance. Increased Revenue/Increased Market Share-This assumes buyer will be absorbing a major competitor and then increase its market power. is the buying of one company(the target) by another An acquisition may be friendly or hostile. Such actions are commonly voluntary and involve stock swap or cash payment to the target.a cone supplier merging with an ice-cream maker. Cross Selling-A manufacturer can acquire and sell complementary products. Vertical Merger-A customer and company or a supplier and company. What is acquisition An acquisition also known as takeover . Market-extension merger-Two companies that sell the same products in different markets. Motives behind a Merger or Acquisitions Synergies. Resource Transfer-Resources are unevenly distributed across firms and the interaction of target and acquiring firm resources can create value either through overcoming information asymmetry or by combined scared resources. • 2005: Acquired BPL. • 2003: Acquired AirCel Digilink (ADIL. Geographical or other diversification-This is designed to smooth the earnings results of the company which over the long term will smothen the stock price of the company giving conservative investors more confidence in investing in the company. • 2001: Won auction for incense to operates GSM Service In Karnataka. • 2000: Acquisition of Delhi operation entered Kolkata and Gujarat Market through ESSAR Acquisition. Uttar Pradesh and West Bengal.Taxes-A profitable company can buy a loss maker to use the target’s loss as their advantage by reducing the tax and liability. • 2004: Launched its three additional telecom circles of India namely Punjab. another mobile services provider in India • 2007: Vodafone acquired HTIL stake in Hutchison Essar. • Vodafone acquired Dishnet Wireless . Uttar Pradesh east and Haryana telecom circles and renamed it under Hutch Brand. . a service provider in Orissa and has launched its services in the following circles successfully . Growth of Hutchison Essar • 1992: Hutchison whampoa and Max group established Max Group.Essar Subsidiary) Which operates in Rajasthan. Andhra Pradesh and Chennai. and had 439 million subscribers as of December 2011. pipping Reliance Communications. 2007. Vodafone Group agreed terms for the buy-out of its partner Essar from its Indian mobile phone business. Hinduja Group. Vodafone agreed to acquire the controlling interest of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.The transaction closed on 8 May.Vodafone Background: Vodafone founded in 1983 as racal Telecom. It offers both prepaid and postpaid GSM cellular phone coverage throughout India with good presence in the metros. 2007. Vodafone India provides 2. It will leave Vodafone owning 74% of the Indian business. and later as an Independent in 1991. which is the owner of the remaining 33%. It is the world's second-largest mobile telecommunications company measured by both subscribers and 2011 revenues behind China. while the other 26% will be owned by Indian investors. The whole company was valued at USD 18.46 billion to its Indian counterpart to take Essar out of its 33% stake in the Indian subsidiary. the largest mobile telecommunications company in the United States measured by subscriber On July 2011. Vodafone also owns 45% of Verizon Wireless. Its Vodafone Global Enterprise division provides telecommunications and IT services to corporate clients in over 65 countries. in compliance with Indian law. . and Essar Group.Its headquarters are in Berkshire.75G services based on 900 MHz and 1800 MHz digital GSM technology. The UK firm paid $5. Vodafone owns and operates networks in over 30 countries and has partner networks in over 40 additional countries. On 11 February. UK.8 billion . Vodafone India launched 3G services in the country in the January-March quarter of 2011 and plans to spend up to $500 million within two years on its 3G networks.1 billion. Vodafone 710 and Amobee Media Systems. Products promoted by the Group include Vodafone live!. On sept Vodafone acquired Hutchison Essar at at $13. Vodafone Mobile Connect USB Modem. This was discontinued in December 2011 after disappointing hardware sales. it launched Vodafone 360. including global telecom majors like BT. Vodafone Freedom Packs. controlling interest of 67% of Holdings. data and fixed broadband services through multiple solutions and supporting technologies to deliver on its total communications strategy. Vodafone Eurotraveller. Freedom beckons.8 bn 2007.Products and Services offered by Vodafone The products and services offered by Vodafone are.including those of Mannesmann.Orascom from EGYPT.a new internet service for the mobile.voice. Maxis Telecommunications of Malaysia .3bn ($11."\ In February 2010.O2 OF UK. This was after The Director of Internet Services resigned in September 2010 tweeting "5 days before I leave Vodafone. PC and Mac. Hutchison Essar valued at $18. Why & How this Deal Took place: None of its recent global acquisitions . have contributed to an acceleration of data services usage growth. will sell for below $15 (£10) and is aimed at the developing world.telecom business in Japan and Belgium were performing up to the mark Markets including US .the Hinduja group. Vodafone launched world's cheapest mobile phone known as Vodafone 150. were maturing and were not growing in a big way Stiff Competition among all major players in the industry.1 bn plus $2 bn debt). Vodafone at Home. Vodafone Connect to Friends. handset capabilities and the mobilization of internet services.Reliance and Bharti AIRTEL How did Vodafone benefitted through this deal: In October 2009. messaging. . The advancements in 3G networks and download speeds. 104 29.518 15.951 Profit for the year Basic eps £mn 7.189 9.835) 7.8 .350 34.756 (5. Kenya and Ghana.01) 9.20 16.870 8.498 8. Year ended 31 March 2011 2010 2009 2008 2007 2006* 2005 Profit Turnover before tax £mn £mn 45. Turkey and eight African countries including Lesotho.478 31.080 6.073 9.017 35.It will initially be launched in India.6 154.6 260 206.56 (8.001 (2.383) (14.674 4.7 341.821) 6.94) (35.44 5.884 44.4 170.618 3.81 12.472 41.68 Proportionate customers (mn) 347.1 302.297) (21. 013 6.4 Synergies from this Deal: Vodafone.492 9.70 133.112 8.2004 36.Acquisition .
Report "A Project on Merger and Acquisition of Vodafone and Hutch"