M&A Critique – June 2017 Issue

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26th of May marked the completion of 3 years of the new government and with that we saw a lot of articles, news on analysis of achievements and fulfilment of the promises made. All my colleagues and nearby friends are convinced that the current government is at least seriously trying to take steps in the direction of the mantra “Sab ka Saath, Sab ka Vikas” but there is no assurance of an accurate picture. Figures are important in quantifying the progress of the country. There substantial and impactful changes in FDI regulations for defence industry and divestment of public sector undertakings and implementation of GST. Even stock exchange reflects optimism of business community though still it is yet to reflect in profits and growth in top line. The government could electrify 73% of the 18,452 villages but only 8 % of these villages have 100% household electrified. Although the rate of construction of highways have been reducing , the rate of the rural road construction is the highest.

Our Cover Article is on the merger of Dish TV and Videocon D2H making it India’s largest and second largest in the world D2H broadcasting company. The merger though announced mid-last year had to get thumbs up from CCI which shall now see consolidation in the coming month. The merger will help the company to strengthen its pan-India presence since Dish TV has more reach in the rural areas and Videocon has more reach in the urban areas of the country to gain almost 45% market share.

DCM group has gone through a lot of restructuring exercises with almost no gain to its public shareholders in the past. In the latest restructuring exercise by the company it shall segregate its textile business and real estate business into 2 separate companies. The demerged real estate business shall have its joint venture /group company Purearth and Tiara merging into DCM Realty & Infrastructure Ltd. This should potentially unlock some value for the public shareholders soon.

Our next article is on Quickr quick growth by means of acquisitions of multiple companies in the past 2 years, the latest being HDFC Realty and HDFC Red, the real estate arms of the HDFC Ltd group. The latest acquisition shall help Quickr to boost its realty service business with addition of the HDFC brand name alongwith 4500 developers and 9000 projects. The online portal of giving out various services to all type of customers is now positioning itself for further expansion to add in more services and reach throughout the country.

Our next article is on Navkar Corporation consolidating its wholly owned subsidiary (WoS) Navkar Terminal Limited. The merger should enable the Navkar Corporation to focus on growth strategies especially strategic tie-ups and expand customer base and in the process probably create substantial value in the future.

Our final article in related to the pharma industry. Pharma industries are not doing really well in the last few quarters revenue-wise although Torrent Pharma has gone ahead with decision of acquiring 2 women healthcare brands from Novartis AG called Regestrone & Pregachieve. The bolt -in acquisition is going to purely based on asset sale and will add to the therapeutic portfolio of Torrent Pharma and in the process extract more value out of its earlier acquisition.

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