This article is written by Saloni Mathur, Corporate Finance Consultant at S. R. Ashok and Associates Private Limited, pursuing Diploma in M&A, Institutional Finance and Investment laws (PE and VC transactions) offered by Lawsikho.


What reasons can you attribute to 2017-2018 being the blockbuster year for mergers and amalgamation activities in India?

The uptick in the M&A activity could largely be attributed to factors that include consolidation across various sectors, India’s growing international appeal, India’s jump of 23 positions in Ease of doing business against its rank of 100 in 2017 to 77th in 2018 amongst 190 countries assessed by the world bank, Insolvency and the Bankruptcy Code, extremely competitive atmosphere in the mobile and e-commerce space, and the feeding frenzy in the consumer goods and e-commerce area as foreign companies look to have a major slice of India’s massive customer base. 2018 broke all previous records by crossing the USD 100 billion mark in terms of deal value across the Private Equity and the M&A transactions. Deal value as on December 2018 reached a record high of around USD 105 billion across 1640 transactions.

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M&A transactions that involved Indian Companies reached 90 billion US Dollar in 2018 making it a landmark year in the history of M&A Transactions in India. This surge in the activities emanated from diversifying the market presence.

This write up sheds light on the factors that contributed to a higher number of Mergers and Amalgamations in India in the year 2017 and 2018 and also throws light on the rationale behind the top M&A deals that happened in India.

M&A history in India at a Glance

Emerging as the key driver for deals, domestic consolidation took a large share with around 60 percent of the overall M&A transaction values in 2018. Inbound deals accounted for around 30% of the total M&A deal values this year. Also, a number of overseas investors had shown interest in the activities of the Indian Startups and pooled in huge resources in their ecosystem to give a boost to their business objectives.

Figure 1.1

Source: VCCE Edge, Venture Intelligence, and PWC Analysis

The M&A activity in India gained momentum in recent years due to growth in India’s International appeal and large customer base. Current trends witness domestic and foreign participation in the Indian Distressed asset sale where they are investing in the asset reconstruction companies. Consolidation in various FMCG companies is being witnessed due to the huge potential in India’s customer base with varying choices and preferences. There has been a surge in the consumer spending over the last five years which is prompting overseas investors or companies to merge or amalgamate with the Indian Companies to reap huge benefits and arrive at economies of scale.

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Various reasons that have made Indian markets more attractive include major reforms in the legal and the regulatory realm of the country like the Goods and the Service Tax (GST), Real Estate Regulatory Authority (RERA), and Insolvency and the Bankruptcy Code (IBC). These are the signs of the increasing depth and maturity of the Indian markets.

A snapshot of the M&A Activity in the last three years

1. Deal Summary by Volume over 3 years









Cross Border




Internal mergers and restructurings








Table 1.1

Source-Grant Thornton-Annual Deal tracker

2. Deal Summary by Value over 3 years ($mn)









Cross Border




Internal mergers and restructurings








Table 1.2

Source: Grant Thornton- Annual Deal tracker

Factors that make India an attractive hub for mergers and amalgamations

There have been various factors that contributed to the Mergers and Amalgamation Activity in 2018. In today’s market, the M&A activities are driven by the motive of consolidation and reduction of debts. Some of the identified reasons that make India an attractive hub include:


The synergy between the merging or the amalgamating firms or companies determines the increase in the value of the combined entity. This can be achieved through cost savings that come through economies of scale or increased sale in the profits of the business. Anaphor feature is the tax benefit which is the product of such merger or amalgamation. For example, there were tax benefits in the case of Ashok Leyland Information Technology(ALIT) which was acquired by Hinduja Finance, a group in 2013 so that it could set off the accumulated losses in  ALIT’s books against its profits or with an objective of entering into an entirely new sector.


Consolidation is basically the combination of two or more companies into a new company where all the companies are legally dissolved to create a new entity in order to strengthen the position in the market. For example, in the Media and Entertainment sector, the consolidation theme was the key with the MAA Television Network Limited which was acquired by Star India Private Limited for an estimated Rs. 2000-2500 crore. This helped the network to expand its presence in other Indian languages.

Reduction of Debts

Consolidation with the purpose of reduction of debts has been the key theme in the cement, steel and the power sectors. The recent acquisition of Debt-laden Bhushan Steel Limited by Tata Steel Limited under the IBC regime in an insolvency auction was a successful venture towards the reduction of debt in the company. Bhushan Steel Limited was amongst the 12 stressed assets referred to the National Company Law Tribunal (NCLT) proceedings by the RBI last year.

Reforms in the Government regulations

Almost all relevant corporate laws/regulations in India have been revamped in the last few years, be it the takeover code, delisting regulations, Companies Act, and the Competition law. Tax Laws are continuously evolving and so are the Foreign Exchange Management Act (FEMA) regulations, impacting both the inbound and the outbound investments.

Tools and Technology are making an impact

Corporations and firms are making greater use of new M&A technology tools to assist with reporting and integration. These tools are an effective strategy against conflicts, cost and time, likely key factors in making more deals work. For example, there has been substantial growth in the virtual data room providers that facilitate large M&A transactions annually. Intralinks is the industry’s one of the leading virtual data rooms that facilitate more than 6500 high-stakes transactions annually. 99% of the Global fortune 1000 have trusted Intralinks with their sensitive data and artificial intelligence makes their services more secure, easier and faster.

Top M&A Deals in 2017-2018 in India and why they happened?





Deal Value($mn)


HCL Technologies Limited

International Business Machines Corp.(IBM)-8 Software products

IT and ITeS

Software Development



IDFC Bank Limited

Capital First Limited

Banking and Financial Services




Tata Steel Limited

Bhushan Steel Limited


Industrial Materials



Hindustan Unilever Limited

GlaxoSmithKline Healthcare Limited





Walmart Inc

Flipkart Online Services Private Limited





Table 1.3

Source: Grant Thornton Annual Deal tracker

HCL Technologies Limited- IBM 8 Software products

This was the single largest acquisition by an Indian Information technology services company and a buyout that was unlike any made by risk-averse home-grown IT firms. Under the all-cash deal, HCL proposed 1.475 billion dollars of its own cash and borrowed 300 million dollars to finance the transaction. HCL expected that the eight software products such as IBM Notes, Domino and Appscan, shall help it garner 625 million dollars in increasing its revenue in the 12 months after completion of the deal, which is expected to happen by mid of 2019.

The software products in scope represent a total addressable market of more than 50 billion dollars and include:

  1. Appscan for secure application development
  2. Bigfix for secure device management
  3. Unica for market automation
  4. Commerce (On-premise) for Omni-channel e-commerce
  5. Portal( on-premise) for digital experience
  6. Notes & Domino for email and low-code rapid application development,
  7. Connections for workstream collaboration

As per the presentation made to the analysts, the 8 software products of IBM have a market size of 110 Billion dollars and that five of them are grabbing a double-digit growth. The products that are being acquired are in large growing market areas like security, Marketing, and commerce which are a strategic segment for HCL.

Key Highlights of HCL’s acquisition strategy

  1. HCL’s investments are generally in the software products that give them synergic benefits.
  2. The 1.8 Billion dollar deal provides HCL with great opportunity to reach and serve thousands of global enterprises across wide range of industries and markets.

IDFC Bank Limited-Capital First Limited

The IDFC Bank Capital First Limited merged effective 18th December 2018. IDFC Bank and Non-Banking financial company (NBFC) capital first had announced the completion of their merger, creating a combined loan asset book of 1.03 lakh crore for the merged entity IDFC first Bank.

Why did the deal happen?

  1. The merged bank i.e IDFC First Bank shall offer a wider range of retail and wholesale banking products, services and digital innovations to a wide number of customer segments. The merged entity shall serve 7.2 million customers through its 203 bank branches, 129 ATMs, and 45 rural businesses across the country’s rural and urban areas.
  2. As part of the agreement, shareholders shall receive 139 shares of IDFC bank for every ten shares held of Warbug Pincus based capital first.
  3. The board of the IDFC Bank approved the appointment of Rajiv Lall, Founder MD& CEO of IDFC bank, as part-time non-executive chairman of IDFC First Bank, subject to the approval of the RBI.

Tata Steel Limited-Bhushan Steel Limited

Tata Steel had announced the acquisition of Bhushan Steel through its acquisition of Bhushan Steel (BSL) through its wholly-owned subsidiary Bamnipal Steel Limited, completing the resolution of the first case under the Insolvency and the Bankruptcy Code, 2016.

Tata Steel had acquired a controlling stake of 72.65% in Bhushan Steel Limited and paid the admitted corporate insolvency costs and employee dues, as required under the Insolvency and the Bankruptcy Code(‘IBC’). Further settlement of the amounts equivalent to Rs.35,200 crore towards the financial creditors of BSL was undertaken, and Rs.1200 crore to the operational creditors.

The investment in Bhushan Steel Limited through Bamnipal Steel Limited has been done through a combination of equity of Rs.158.89 crore and an inter-corporate loan of Rs.34,973.69 crore. The acquisition is being financed through a combination of an external bridge loan of Rs. 16,500 crore availed by Bamnipal Steel Limited with the remaining Rs.18, 700 crores coming in the form of equity infusion by Tata Steel in Bamnipal Steel Limited.

Bhushal Steel was one of the prominent players in the Indian Steel Industry. Tata Steel would leverage this acquisition by reaping huge synergy benefits, develop a strong portfolio of products, and thereby target a large customer base.

Hindustan Unilever Limited-GlaxoSmithKline Healthcare Limited

On January 2019, CCI approved the amalgamation of GlaxoSmithKline Healthcare Limited( GSK)and Hindustan Unilever Limited(HUL). Pursuant to the proposed combination HUL would enter into a non-exclusive consignment selling agency arrangement with various GSK entities in relation to the marketing and selling of certain over the counter medicinal products and oral healthcare products in India, Bhutan, Nepal, for a period of five years.

HUL belongs to a Unilever Group which is globally present in-home care, beauty, and personal care, foods and refreshment products segment. GSK belongs to the GSK group which is globally present in prescription medicines, vaccines, consumer healthcare products, etc.

With this strategic merger, HUL planned to expand its portfolio with great brands into a new category catering to the nutritional needs of its consumers.  GSK CH India is the market leader in the HFD category, with brands such as Horlicks and Boost. Such a merger shall give HUL a stand in this segment and increase its revenue.

The transaction was expected to be completed in one year was an all-equity merger with 4.39 shares of HUL being allotted for every share in GSK CH India.

Walmart Inc-Flipkart Online Services Private Limited

US Retail giant Walmart Inc decided to pick up 77% stake in India’s largest online retailer Flipkart for 16 Billion dollars, in what made the country’s largest acquisition and world’s biggest purchase of an e-commerce company.

The transaction proposed to result in the largest exit of private equity and Venture Capital investors in India. They were expected to collectively make about 14 billion dollars by selling shares to Walmart. By this acquisition, Walmart planned to use Flipkart’s expertise to expand globally and innovate in sourcing and supply chain activities. By this giant M&A deal, Walmart and Flipkart shall achieve more together than both of them could achieve separately to contribute to the Economic growth of India creating a strong local business powered by Walmart. The investment also proposed to benefit India by providing quality, affordable goods for customers, while creating new skilled jobs and opportunities for suppliers.

As Walmart scales in India, it shall continue to partner to create sustained economic growth across agriculture, food, and retail.

The remaining share shall be held by Flipkart co-founder Binny Bansal, Tencent, Tiger Global, and Microsoft Corp.


2017-2018 has witnessed a plethora of M&A deals in India valuing Rs.90,211 million dollar in 2018. The driving forces have generally been India’s rising International appeal, Easing of FDI norms in India, reforms in the existing regulatory framework and the burgeoning consumer spending. 2018 being the blockbuster year for the M&A deals have given high hopes and expectations for 2019. If India Inc continues to grow at this rate which makes mergers and investments favorable, sooner India will turn out be one of the biggest business destinations.


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.  


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