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Drawbacks of Mergers

Of the 15 M&A deals struck since 2005, the largest was Vodafone's 67% acquisition of Hutchison Essar for $ 13.66 billion which placed the enterprise value of Hutchison's mobile footprint in India at $ 18.8 billion in 2007. The second largest deal in terms of valuation was more recently, in December 2008, when NTT Do-CoMo bought 26% of Tata Tele for $ 2.7 billion, representing an enterprise value of $ 10.38 billion for Tata Tele.

If it goes through, this will be India's biggest-cross border deal, eclipsing Tata Steel's acquisition of European steel major Corus for $ 12.2 billion in 2006.

The tortuous formula, if it works out, will result in Bharti Airtel getting a 49% stake in MTN and the South African telco a 36% "economic interest" in Bharti Airtel.

Potential transaction between Bharti and MTN will create a leading telecom service provider group, aligning Bharti's market-leading Indian business with MTN's market-leading African and Middle Eastern operations.

Concluded.

* Contributed by: -
Prof. M. Guruprasad is Senior Faculty for Economics, Finance and Research, with AICAR Business School Raigad / Mumbai. He has more than 15 years of experience in research and educating / training management students. He was research scholar with the University of Mumbai. Worked as Executive in the Marketing research industry. Also Conducted Workshops and Training programmes. He has published articles in various industry magazines, newspapers and has initiated many discussions on academics.