Submitted to : Ms.

Amanjot Kaur
(University Business School)

Submitted by : Aastha Hasija

M. Com Honours
(01)
 Corporate restructuring is the change in
the business capability or portfolio that is
carried out by a non-living route or a
change in the capital structure of a
company that is not a part of its ordinary
course of business or any change the
ownership of or control over the
management of the company or
combination thereof.
 Forms of
corporate
restructuring

Organic
Inorganic
corporate
restructuring
restructuring
 Growth is through internal sources without
any change in the corporate entity
 Focus of management is on internal
corporate governance structures
 Increasing customer base, reinvesting in
new assets, improving productivity, adding a
new product line, improving corporate
culture.
 Generally done through business
restructuring like regrouping of business,
downsizing, outsourcing etc.
 Expansion of product portfolio and
business portfolio as well
 Passenger cars and commercial vehicles
are different businesses
 Launched from Tata motors own capacity
 Not through any merger or acquisition of
another company
 Any change in business due to following
four reasons
 Dabur was not satisfied with PE ratio of
20 and operating profit margin 20%
 Took assistance from Mckinsey it initiated
its steps to lower inventory costs, shorten
delivery schedules, and sharpen
response time to market needs.
 AT& T had its share price shoot up with
an announcement of 40000 cut in its
workforce when faced with pressure on
profits
 Initial
public issue or buy back of equity
shares that would permanently alter the
capital structure of the company
 Merger, demerger, sell
offs, delisting of
company and acquisitions
 Merger: combination of two or more
companies into a single company

Mergers

Merger by Merger by
amalgamation absorption
 Fusion of two or more companies
 Both lose their identities and new
company comes into existence
 New firm comes into being
 Generally applied to combinations of
firms of equal size.
 Merger of Maruti Motors and Suzuki
formed a new company called Maruti
Suzuki India Ltd.
 Fusion of smaller company with larger
company
 Smaller ceases to exist
 Merger of oriental bank of commerce
and global trust bank
A company or an individual or a group of
individual acquires control over another
company
 Right to control its management and
policy decisions
 Target company’s identity remain intact
 It continuous to exist as earlier
 Change in the composition of board of
directors
 By purchasing a substantial percentage
of voting capital of target company
 By acquiring control over the holding
company
 By acquiring management control
 Corus and Tata steel
 Sahara airlines by jet airways
 Two companies enter into agreement to
provide certain resources towards the
achievement of a particular common
business goal.
 Intersection of a small section of activities
 Venture partners share returns obtained
from the venture
 DHFL Pramerica Life Insurance is a joint
venture between DHFL AND Prudential
financial
 Reduction in size of firm

Contraction

Spin-offs Split-offs Split-ups divestiture Carve out

 Company splits off a section as a
separate business unit
 Distributes shares of the subsidiary to its
own shareholders on a pro rata basis
 New management and works
independently
 Air India formed a separate company
names Air-India Engineering Services
Ltd. By spinning off its engineering
division
 New company formed to takeover
operations of existing division
 Shareholders receives shares of new
company in exchange of parent company
 Reducing share base of parent company
and downsizing of firm
 Entire firm is broken into series of spin
offs
 Parent company dissolves
 Creation of new class of stock for each
division
 Paying current shareholders with
dividend for new class of stock
 Andhra Pradesh state electricity board
split up in 199 divisions
 Sale of portion of firm to an outside party
 Sells an undervalued portion of business
or unrelated to business
 Use funds of sale in higher investments
 Government sold 10% of share in ONGC
through public issue
 Sale of a portion of firm through an equity
offering to outsiders
 New entity is created
 Outsiders are sold the shares of the
subsidiary
 Buy back of shares
 Proxy contests
 Company buying its own shares from the
markets
 Strengthens the promoters controlling
position by increasing his stake in equity
 Gujarat Ambuja approved buy back of
shares 10% of paid up capital at 170 per
share
 Unfriendly fight over control
 Attempt to use their proxy votes to install
new management
 Leveraged buy out
 Going private
 ESOPs
 Debt is used in acquisition of the
company
 Firm borrowing fund to buy back its
stock to convert from a publicly owned to
privately owned company
 Transformation of public corporation into
a privately held firm
 Employee stock options , make tax
deductible contributions of cash or stock
into trust
 Assets are allocated to employees and
are not taxed until withdrawn by them
 Merger of ICICI Bank with Sangli Bank
 Reebock nd adidas
 Daimler, Chrysler- A failed Merger
 Merger of five associates of SBI and
Bhariya Mahilla Bank with SBI
 Facebook acquired Instagram and
Whatsapp
 Walmart acquired Flipkart
 Which company was acquired by Tata Steel
in 2007?
 Recently IBM has acquired which company
to increase its cloud computing base?
 Which form of corporate restructuring deals
with increasing the product portfolio?
 What does Daimler and Chrysler
manufacture?
 TATA Motors manufacture which model in
2011?
 Mergers and Acquisitions, Jay M Desai;
Nisarg A Joshi
 Mergers Acquisitions and Corporate
Restructuring, Prasad G. Godbole
 Mergers, acquisitions and corporate
restructuring in India, Rachna Jawa
 https://www.thehindubusinessline.com