Valuation of Financial Synergies in Mergers and Acquisitions: A Case Study of Multiple Indian Entities
Journal Title: MUDRA: Journal of Finance and Accounting - Year 2017, Vol 4, Issue 2
Abstract
Mergers and acquisitions are broadly undertaken to have extraneous advantages for the combined entity vis-à-vis standalone entities. The objective of the study is to evaluate the actual financial synergy realisations in case of four recent and significant M&A deals in three different sectors in India: automobile, banking, and pharmaceuticals. These are: Amtek Auto and JMT Auto; Kotak Mahindra and ING Vysya Bank; Sun Pharmaceuticals Industries Ltd and Ranbaxy Laboratories; and Express Scripts and Medco Health Solutions. Synergies are calculated for few basic parameters including revenue, expenditure, and PAT in all the four deals and also for industry-specific elementary performance indicators for proper evaluation of the industry. The results suggest Kotak Mahindra -ING Vysya Bank and Sun Pharma-Ranbaxy deals were able to realise most of the synergies that were estimated and were on the right track towards synergy realisation in the post-acquisition period. However, the Amtek Auto-JMT Auto deal couldn’t realise cost synergies as their expenditures elevated to high levels after the merger but it managed to attain lower cost of capital financial synergies. On the other hand, Express Scripts-Medco deal badly failed because it couldn’t attain revenue synergies after the merger. The study concludes with the relevant policy implications.
Authors and Affiliations
Anjala Kalsie, Aishwarya Nagpal
Keywords
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- EP ID EP623782
- DOI 10.17492/mudra.v4i02.11447
- Views 242
- Downloads 0
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