Mergers & Acquisitions

Mergers and acquisitions, commonly called M&A, are business transactions through which companies combine or transfer ownership.

• In a merger, two companies combine their businesses or operations.
• In an acquisition, one company purchases another company, a stake in it, or some of its assets.
• M&A may help companies reduce costs, increase market share, or enter new markets.
• Horizontal, vertical, and conglomerate mergers are common types of mergers.
• Investors may track M&A activity to understand changes within companies and industries.

• However, an announced deal may be delayed, changed, or cancelled.

  
  
  

Mergers and acquisitions refer to transactions in which companies combine or one company purchases another.
Although the terms are often used together, they have different meanings.
A merger generally happens when two companies combine their businesses. An acquisition happens when one company purchases another company, a controlling stake in it, or some of its assets.
For example, if two similar-sized companies combine their operations, it may be called a merger. If a large company purchases a smaller company, it is usually called an acquisition.
 

A merger is a transaction in which two companies combine their businesses into one entity or corporate structure.

The companies may combine their:

• Operations
• Resources
• Employees
• Assets

• Products and services

  
  

For example, if two banks merge, they may combine their branches, employees, customer accounts, and technology systems.

Companies may merge in different ways. The three common types are:

A horizontal merger may help a company increase its market share. A vertical merger may give it greater control over its supply chain. A conglomerate merger may allow it to enter a different industry.

India has witnessed several proposed and completed mergers.

1. Zee Entertainment and Sony India

Zee Entertainment Enterprises Limited and Sony Pictures Networks India announced a proposed merger in 2021.

The companies planned to combine their television channels, digital services, content libraries, and production operations.

However, the merger was not completed. Sony terminated the proposed transaction in January 2024 after certain closing conditions were not met.

2. ITC and Sunrise Foods Private Limited

In 2020, ITC acquired 100% of the equity shares of Sunrise Foods Private Limited.

This was an acquisition rather than a merger. The deal helped ITC expand its presence in the packaged spices market.

3. Hindustan Unilever and GlaxoSmithKline Consumer Healthcare

GlaxoSmithKline Consumer Healthcare Limited merged with Hindustan Unilever Limited in April 2020.

The all-equity merger was valued at approximately ₹31,700 crore. HUL also acquired the Horlicks brand for India from GSK for ₹3,045 crore.

An acquisition happens when one company purchases another company, a controlling stake in it, or some of its assets.

The company making the purchase is called the acquirer. The company being purchased is called the target company.

After an acquisition, the target company may:

• Become part of the acquiring company
• Continue operating as a subsidiary
• Transfer selected assets to the acquirer
• Stop existing as a separate legal entity

For example, a large technology company may purchase a smaller software company. The smaller company may continue operating under its original name as a subsidiary.

Some well-known examples include:

• Facebook acquired WhatsApp in 2014 for approximately ₹1.82 lakh crore ($19 billion).

• Microsoft acquired LinkedIn in 2016 for approximately ₹2.51 lakh crore ($26.2 billion).

  
  
  

Several major acquisitions and investments have taken place in the Indian market.

Facebook and Jio Platforms

In 2020, Facebook invested ₹43,574 crore in Jio Platforms for a 9.99% stake.

This was a minority investment rather than an acquisition of Jio. Reliance Industries continued to control Jio Platforms.

Reliance Industries and Vitalic Health

Reliance Retail Ventures acquired a 60% equity stake in Vitalic Health Private Limited for approximately ₹620 crore.

It also acquired direct ownership of Vitalic Health’s subsidiaries, including:

• Tresara Health Private Limited
• Netmeds Market Place Limited
• Dadha Pharma Distribution Private Limited

The transaction helped Reliance enter the online pharmacy market.

Vodafone and Hutch Essar

In 2007, Vodafone acquired a controlling stake in Hutch Essar for approximately ₹1.06 lakh crore ($11.1 billion).

Later, Vodafone India and Idea Cellular completed their merger in August 2018 and formed Vodafone Idea Limited.

Mergers and acquisitions differ in their structure, ownership, and management.

For example, two merging banks may have to combine their branches, employees, technology systems, and customer service processes. This can take time because both banks may follow different working methods.

Companies undertake mergers and acquisitions for several strategic reasons.

1. Economies of scale

Economies of scale refer to cost savings that may arise when a company operates on a larger scale.

By combining operations, companies may:

• Remove duplicate departments
• Share offices, warehouses, or technology
• Buy materials in larger quantities
• Reduce administrative costs

For example, two companies may not need separate accounting departments after combining.

2. Increased market share

M&A may help companies reach more customers and strengthen their market position.

Companies may combine their:

• Customer bases
• Product portfolios
• Distribution networks
• Geographic presence

For example, a company operating mainly in northern India may acquire a company with a strong distribution network in southern India.

3. Access to new technology

A company may acquire another business to gain access to its technology, products, skilled employees, or technical capabilities.

For example, a traditional financial company may acquire a financial technology company to gain access to its payment systems or software.

Also read: Technical analysis

Tracking M&A events can help investors understand changes taking place within companies and industries.

It may help you:

• Understand a company’s expansion plans
• Identify industries undergoing consolidation
• Study changes in ownership and management
• Understand how companies are entering new markets
• Assess the risks linked to a transaction

An acquisition offer does not necessarily mean that the target company is undervalued. M&A deals may face regulatory issues, integration costs, delays, or cancellation.

Share prices may rise or fall after an announcement. Investors should study the deal terms, financial position of both companies, regulatory requirements, and integration risks before making a decision.

Mergers and acquisitions are transactions through which companies combine or transfer ownership. In a merger, companies combine their businesses. In an acquisition, one company purchases another company, a stake, or selected assets.

Companies may use M&A to reduce costs, increase market share, enter new markets, or gain technology. Tracking these transactions can help investors understand changes within companies and industries. However, every announced deal may not be completed or create value.

US dollar amounts have been converted into Indian rupees using an exchange rate of approximately ₹95.62 per $1 as of 30 July 2026. The rupee equivalents are indicative and may vary due to exchange rate fluctuations.