Tag: Mergers and Acquisitions
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The True Nature of a Stock Swap
A stock swap is a transaction where an acquirer acquires shares of another company and, instead of paying cash for such acquisition, discharges consideration by issuance of its own shares. Business World has surveyed experts on the question as to whether a stock swap amounts to a “sale”. The response is as follows: Yes :…
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Competition Commission & Global Mergers
There has been a coordinated and consistent move by industry to ensure that merger regulations that have been proposed by the Competition Commission do not cover global mergers whose implications in India are not substantial. We have discussed this issue in the past on this blog (here, here and here). In fact, the draft regulations…
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Vodafone Income Tax Case
The acquisition of shares in Hutch Essar by Vodafone from Hutchison in a multi-billion dollar M&A deal last year has resulted in a dispute on the taxability of capital gains on the transaction. This dispute is currently pending before the Bombay High Court, with a decision being awaited. The court’s verdict is expected to have…
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Management Buyouts (MBOs): Possibilities and Challenges
Earlier this week, The Hindu Business Line carried a detailed column on various business and financial aspects of management buyouts (MBOs), particularly as such deals are being witnessed (albeit infrequently) in India. Simply stated, management buyouts involve the acquisition of a division of a company or the shares in a company, in each case by…
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Website on Takeover Code
Acquisitions of shares or control of a publicly listed Indian company are governed by the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (a.k.a. the Takeover Code). Although this piece of regulation is only about a decade old, it has been tested several times in transactions and before SEBI, the appellate…
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CSX/TCI Judgment – Some Thoughts on the SEBI Takeover Regulations
In a closely followed case, the U.S. District Court for the Southern District of New York issued its decision regarding the reporting requirements of a hedge fund (TCI) that had entered into “total return equity swaps” with counterparties in respect of the shares of CSX. Although TCI only entered into cash-settled swaps (without any obligations…
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Bharti-MTN: Structural Problems
The proposed deal between Bharti and MTN to combine their businesses fell through over the weekend. Although the principal reason for the fallout appears to be disagreement over who would control the combined entity, that was aided by problems with structuring the deal from a regulatory perspective. As The Economic Times reports: “In addition, there…
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Taxation on Sale of Shares in a Foreign Holding Company
Often, divestments by foreign owners of Indian companies are effected through a sale of the stake outside India. More specifically, where foreign companies hold shares in Indian companies through intermediate offshore investment companies, they can effect a divestment by merely selling off shares of the offshore holding companies. This does not in any way result…
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Taxation on Slump Sales
A ‘slump sale’ is one of the methods available to give effect to a transfer of a division or undertaking of a company to another company. Under this method, all the assets and liabilities of (or relatable to) the undertaking are transferred for a ‘lump sum’ consideration without assigning values to the individual assets and…
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Indian Corporates on an African Trail
Several large as well as medium sized Indian companies have undertaken outbound investments and offshore acquisitions in the last decade. These have primarily been in developed markets such as the United States or in various European countries such as the United Kingdom, Germany and so on. The year 2008 has witnessed the emergence of a…
