Over the last few days we have seen many deals-talks failing. Where in some cases there were issues on operational management, there are number of cases in which there were valuation concerns. Team M&A gives you an exclusive summary of the same.
Spice-Spanco BPO merger falls through
Natue: Spice Group’s plan to set up India’s largest domestic BPO unit by merging its BPO unit with that of Spanco Telesystems and Solutions. The three-way merger would have brought together Omnia BPO of Spice, Spanco’s BPO arm and Bharat BPO, the existing joint venture of Omnia and Spanco, which has got the call centre business of Indian Railways. It would have created India’s largest domestic BPO firm in terms of numbers, employing over 10,000 people
Reasons: Issues over operational management.
Sanofi, Piramal proposed merger deal falls through
Nature: France's Sanofi-Aventis to buy a majority stake in Indian drug maker Piramal Healthcare Ltd. Also, GlaxoSmithKline Plc was eyeing the company. News paper reports suggested that deal could be valued as high as US$1.5 bn
Reasons: Though the promoters of the company repeatedly denied any sale talk, newspaper reports suggested that the deal failed due to concerns on valuations.
Subhash Chandra Withdraws From Race For United News Of India
Nature: Two years back, media mogul Subhash Chandra (Zee group) made a bid to acquire the floundering news agency United News of India.
Reason: Subhash Chandra lost interest in the venture due to dispute with ABP Group and The Hindu publisher Kasturi & Sons Ltd, who contested Chandra’s acquisition of a controlling stake in the news.
IBM and Sun broke off acquisition talks
Nature: In recent years, the market for servers has shifted from the huge, custom-built "mainframes" that IBM dominates to vast numbers of standardized computers. Sun had approached a number of large tech companies in the hopes of being acquired. However after HP declined the offer, IBM showed its interest to expand its positioning in the industry
Reasons: Valuations is the key concern.
IBM pulls out of Satyam race
Nature: IBM entered the bidding process last month through a law firm, which is a common practice in the West. IBM is understood to have conducted due diligence on some of Satyam’s major customers and was considered a good fit for the Indian company, principally because of its brand-name and overlap in service offerings. Satyam’s low-cost structure, it was said, could have given IBM the leverage to take on Indian IT service providers. In its annual report filed with the New York Stock Exchange in February 2009, IBM had named Satyam, along with Infosys and Wipro, as its main competitors.
Reasons: Lawsuit fears. Satyam currently faces 13 class action suits by holders of the company’s American Depository Receipts in the US, after Satyam founder Ramalinga Raju confessed to a large-scale accounting fraud on January 7.
Mediator fails to resolve issue between Sun Pharma and Taro
Nature: Sun Pharma has invested about $100 million in Taro and holds 36 per cent in the Israeli generic-drugs company. The impasse between the two companies was triggered by Taro’s unilateral termination of Sun Pharma’s $454- million proposal to acquire it.
Reason: Valuations is the key concern. However the matter is now with Israel’s Supreme Court.
Spice-Satyam saga
Nature: Uncle Modi was all over the business news channel expressing his interest and was looking forward to acquire 51% state in the troubled company. The group was planning to acquire the stake through Spice Innovation, its New Delhi-based holding company, and was ready to shell around Rs 2,000 crore (around $400 million).
Reason: Lack of transparency in bidding process
2 comments:
I have been following all the deals that have been mentioned in the article. All deals mentioned are purported or proposed deals except the one between Sun Pharma & Taro. Have kept a close watch on the developments there. Taro & Sun Pharma had a set of binding agreements. Taro enjoyed the benefit in terms of injection of funds, but when it came to selling the company to Sun Pharma as was agreed earlier, its "dil maange more". The entire drag is purely because the buyer is wanting the contracts to be enforced and the crooked ones on the other side are using their god-given intelligence to get away. Had they used even a fraction of this in managing the affairs of the company, their shareholders would have been a much happier lot. So to talk of all deals and the Taro deal in the same breath is a being very unfair. Issue is not about valuation; that was settled when the agreements were signed. The issue is : are the signatories supposed to honour the agreements or not?
Its true that the real issue is if "signatories are supposed to honour the agreements or not?" but if you go through the comments made by the management of the Taro the issue clearly is of the valuations. Interestingly, in one of the press release issued by the company to its shareholders, Taro management states that the offer given by Sun Pharma is "sham" and "inadequate" (see link http://phx.corporate-ir.net/phoenix.zhtml?c=114698&p=irol-newsArticle&ID=1173465&highlight=). It also states that Sun should minimum offer $10.25 per share (currently US$7.75 is offered) at which it acquired from some of the opposing shareholders.
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