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THE GROWING IMPACT OF MERGER AND ACQUISITION IN INDIA

Currently were are living in such advanced technology and global competition which lead to growth of the business. Merger and Acquisition have been a great impact on today’s economic

THE GROWING IMPACT OF MERGER AND ACQUISITION IN INDIA
Blogs August 2, 2026

INTRODUCTION

Currently were are living in such advanced technology and global competition which lead to growth of the business. Merger and Acquisition have been a great impact on today’s economic growth as now there are increasing and accepting the Indian Business and their strategies. Merger and Acquisition is not a doctrine of constitution; it is just a common doctrine was founded in principle of property in hierarchy of judicial delivery system.

As the growth of merger & acquisition in India plays beyond corporate restructuring. It provides various facilities like innovation, foreign investment, which can lead to strong market player of global scale. But it can also increase legal, regulatory, competition with different brands because of such globalization also ensure to provide clear understanding of M&A with legal professionals.[1]

In Vodafone International Holdings B.V. v. Union of India, the Supreme Court demonstrated that transaction which were took place between two foreign companies outside India and transfer of shares of Cayman Islands Company were not to taxed under Income Tax Act, as they existed from the time. Therefore Income Tax cannot enforced the liability on Vodafone and hence the decision was came in the favour of Vodafone.[2]

MEANING – MERGER, ACQUISITION AND TAKEOVERS

Merger, Acquisition and Takeovers are commonly the same but these are being used at different situation. Provide the separate meaning to understand more clearly:

Merger & Acquisition are the business transactions in which ownership of a company or one of their operating units is transferred to another entity. Merger, means when two or more companies combine to form a single entity or company. It is done to increase market share, reduce competition, cut posts or expand business. Whereas Acquisition means where entity takes ownership of other company’s share capital, equity interests or assets.[3]

TYPES OF MERGER

  1. Horizontal Merger – It is a type of merger where the companies are being operating in same industry to combine with other competitors. It can also lead to result with large market size or dominant players in the market.
  2. Vertical Merger – It is type of merger where companies operating in the same industry but at different levels of supply chain to combine with other company. It has 2 types:
  3. a) Upstream Merger – It means where the company involves with supplier or producer used in the supply chain.
  4. b) Downstream Merger – It is a type of merger where it involves a company which acquire Distributor or retailer to be used in the supply chain.

III. Conglomerate Merger – It is type of merger where the companies come together but neither work in the same industry or in the production cycle.

  1. Market Extension Merger – These are those type of merger where companies are selling same or similar kinds of product but in the different market. Main objective is to expand their product in the market, targeting a global audience which leads to growth of brand value.
  2. Cash Merger – It means when the shareholders of the company provide cash instead of shares which is company is newly formed.
  3. Product Extension Merger – It is known as Congeneric Merger, when two companies with similar products are in the same market and are not necessary required to combine with other competitors.[4]

TYPES OF ACQUISITION

  1. Friendly Acquisition – It means when target company agrees to be acquirer it lead to manage Board of Directors of both companies negotiate, approval of transaction.
  2. Hostile Acquisition – It means when acquiring company take control of the targeted company without the consent of management.
  3. Horizontal Acquisition – It means when the company acquires another company which are in same industry and also at same stage of production.
  4. Vertical Acquisition – It means when company acquires another company are at the same stage of supply chain.[5]
  5. Takeovers – It means when one company gains control over another company and becomes able to manage the business decisions. According to Accounting Standard 14, which states about amalgamation and mergers with classification of their terms:
  6. Transferring all the assets and liabilities from transferor to transferee.
  7. Transferor must agree to share 90% of the shareholders to transferee it is exchange of existing shares.
  8. The transferee must continue the business of the transferor even after the amalgamation.

TYPES OF TAKEOVER

  1. Friendly Takeover – It is done when both the acquiring and target company agrees to takeover, Board of directors can even negotiate and shareholders approves the deal.
  2. Hostile Takeover – It happens when targeted company does not want to acquire but such acquiring company tries to gain control for company.
  3. Reverse Takeover – When the private company asks the public company to become publicly listed without going to long procedure of IPO.
  4. Backflip Takeover – When such company becomes an ordinary of targeted company after the acquisition it is done for the beneficial of target company to have strong brand value in the market, market position or reputation.[6]

REGULATORY PROVISIONS

In 1880, after the period of Liberalization, Privatization and Globalization i.e. LPG where Indian markets are being increasing day by day. Many businesses have merged to stay in the dynamic market. There are some regulatory provision which lead to have understand the procedure, execution and approval for the same.

  1. THE COMPETITION ACT, 2002

It plays a major role in regulating mergers and also ensure them about do not involve in adversely affect market competition. As this act provide Merger & Amalgamation which are in certain threshold and Section 5 requires the approval for the same. CCI always examines and notifies about the M&A Transactions which is likely to access “Appreciable Adverse Effect on Competition”. Some of the important backbone functions of the CCI in Competition Act:

  1. a) Regulation of Combination – It governs mergers, acquisition and combination which can affect competition in market. CCI has a choice whether to use merger or acquisition which may impact competition in the market.
  2. b) Prevention of Abuse of Dominant Position – It lead to impact on company when by abusing the dominant position in the market. It happens because by putting the prices of product unrealistically high or low for eliminate of competition it is called Predatory Pricing.[7]

In Walmart Inc. v. Flipkart Pvt. Ltd., Walmart has acquired 77% stake in Flipkart, it is one of the largest e-commerce deals in India. CCI approval the deal and it was found that there was should be strong competitors like Amazon still exist but market is still competitive.[8]

  1. THE COMPANIES ACT, 2013

It is the primary legislation in India where it regulates with management and operation of companies, as this provide procedure for consolidation of companies which need approval of shareholders and authorities. It deals with Section 230 to 240 provide the procedure for M&A, the act also need approval from shareholders, NCLT (National Company Law Tribunal) and creditors before the scheme gets implemented.[9]

  1. SEBI GUIDELINES

The Securities and Exchange Board of India (SEBI) Act, 1992 it provides rules and regulations which plays a crucial role in regulating the securities markets in India. Main aim of the act is to protect investors and have fair, transparent trading practises.[10]

FUNCTIONS

  1. If a company or person acquires 5% or more voting shares in company will immediately inform targeted company and concerned about stock exchange.
  2. If a company acquires share 10% of voting capital without making any special offer.
  3. Public offer must clearly discloses that:
  4. Identity of the acquirer;
  5. Terms and conditions;

iii.  Acquirer existing shareholding in the targeted company;

  1. Any other acquirer.
  2. Offer must be fair and should not be lower than average of weekly high and low which lead closing market prices in 6 months before any public announcement.[11]
  3. INSOLVENCY AND BANKRUPTCY CODE (IBC), 2016

IBC plays a huge role in Merger and Acquisition especially when company goes in Corporate Insolvency Resolution Process which is done under IBC due to loan defaults, other acquirers helps the applicants to take over the company.

Section 31 states that NCLT gives a resolution plan which often lead to acquirer its capital and restructuring such amount of debt which will effect in making binding contract. The IBC process is being different from Companies Act:[12]

  • Not require 75% of the shareholder approval from the company.
  • Instead of it requires 66% approval of the creditors.
  • Such scheme is not subjected to SEBI Takeover’s code or any of the other requirements which can be happen under special law which is defined under Section 238 of IBC.[13]

REASONS FOR GROWTH

  1. Business Expansion – It is one of the primary and important to expand such business with their operations. Instead of building business from ground but can quickly enter into the market by acquiring the existing company.
  2. Technology & Innovation – By the time there are new and fast technology which are invented to do the fast and help to improve our product and services while reducing the time and cost required for such development.
  3. Foreign Direct Investment (FDI) – It helps in various investment policies where foreign companies have to invest in such acquisition. There are multinational companies which have entered in Indian market.
  4. Diversification – Many companies use Merger & Acquisition where it lead to diversify business operations which lead to reduce dependence on a single market. It helps spreading business risks and improve long-term stability.[14]

PRACTICAL CASE STUDIES

Case Study – Great Offshore Takeover Battle: Bharati Shipyard v. ABG Shipyard

In this, 2009 both Bharati and ABG Shipyard were engaged in bidding war to have Great Offshore where this Offshore company provides oil and gas industry. But Bharati succeed in acquiring the company, and however takeover comes which lead to pay heavy cost as the company was forced to take large amount of debt, it lead difficult to pay such amount as both of them were suffering from financial crisis. This case study tells about the takeover how companies expand their business and over paying of debt can lead to financial problems.[15]

Case Study – HDFC & HDFC Bank Merger

The merger of HDFC & HDFC Bank it is one of the largest corporate mergers in the history. They announced in 2022 and completed in 2023 as merger which is one of the financial company. In this, HDFC Ltd. Merged with HDFC Bank through the scheme of amalgamation where the shareholders of HDFC Ltd received 42 shares of HDFC Bank of every shares 25 of shares ltd. Also these are being regulated by mergers when they receive approvals from various regulator, which includes RBI, CCI, and stock exchanges. Merger came effect on July, 2023.

It is also considered as landmark transaction were because how mergers have demonstrates how mergers can create larger and more institutions, improve the customer services and contribute to economic growth. The merger on this have been approved by all the authorities and shareholders as it lead to impact on competition, banking transaction and public interest.[16]

CHALLENGES

That despite while building a company faces lot of challenges for growth earning profit but sometime it lead to risk where company takes risk but also get out of the situation. As when company decides to Merger & Acquisition faces such challenges like:

  • taxation issues;
  • valuation disputes;
  • cultures differences; and
  • regulatory approvals.[17]

SUGGESTION

To maxims such benefits for Mergers & Acquisition in India throughout which companies should conduct Due Diligence before making any such transaction. There should be proper financial checking of all transaction, losses (if any), legal, regulatory risks which lead to have disputes in the company. The regulatory authority ensures that there should be fair and transparent competition so that there are able to survive in the market and genuinely focus on the business combinations.

CONCLUSION

India has developed into corporate and economic landscape which lead to dramatically increase in Merger and Acquisition as these are those transaction which lead to increase economic growth with corporate competitiveness by facilitating all the business transactions. Significant transaction like in case of Vodafone and Hutchison, HDFC and HDFC Bank also the acquisition of Walmart & Flipkart which shows how important strategic business combinations are in India.

As mergers & acquisition will continue as these are essential part of the business which lead to promoting innovation and provide such direction which will benefit for the growth of company and move closer to the worldwide.

Author(s) Name: Riya Pawar (Bharti Vidyapeeth Institute of Management and Research)

References:

[1] Mergers & Acquisitions An Indian Legal, Regulatory and Tax Perspective (Nishith Desai Associates 2025)

[2] Vodafone International Holdings BV v Union of India and Ors (2012) 6 SCC 613

[3] Rabi Narayan Kar and Amit Soni, MERGERS AND ACQUISITIONS IN INDIA: A STRATEGIC IMPACT ANALYSIS FOR THE CORPORATE ENTERPRISES IN THE POST LIBERALISATION PERIOD (Indira Gandhi Institute of Development Research)

[4] Priyanshu Verma, ‘An Overview of Mergers in India and Its Types’ (iPleaders Blog, 23 October 2024) <https://blog.ipleaders.in/an-overview-of-mergers-in-india-and-its-types/> accessed 15 July 2026

[5] ‘What Is an Acquisition? Definition, Types, and Examples’ (Forage, 17 March 2023) <https://www.theforage.com/blog/skills/acquisition> accessed 15 July 2026

[6] Aditya Kasiraman, Types of takeover strategies’ (iPleaders Blog, 06 January 2021) <https://blog.ipleaders.in/types-takeover-strategies/> accessed 15 July 2026

[7] Competition Act 2002

[8] ‘Walmart’s Majority-Owned Flipkart Launches Wholesale Business to Help Small Businesses in India Source Directly From Manufacturers and Producers’ (Walmart, 23 July 2020) <https://corporate.walmart.com/news/2020/07/23/walmarts-majority-owned-flipkart-launches-wholesale-business-to-help-small-businesses-in-india-source-directly-from-manufacturers-and-producers> accessed 15 July 2026

[9] Companies Act 2013

[10] Securities and Exchange Board of India Act 1992

[11] Atal Kumar, ‘Corporate Mergers and Acquisitions (M&A): Judicial Response’ (2022) 7(6) International Journal for Research Trends and Innovation <https://www.ijrti.org/papers/IJRTI2206161.pdf>

[12] Insolvency and Bankruptcy Code 2016, s 31

[13] Ibid s 238

[14] ‘Motives for Mergers’ (Corporate Finance Institute, 05 March 2026) <https://corporatefinanceinstitute.com/resources/valuation/motives-for-mergers/> accessed 15 July 2026

[15] Sidharth Tehran, ‘Takeover Battle: Bharati Shipyard Limited & ABG Shipyard Limited’ (iPleaders Blog, 15 May 2021) <https://blog.ipleaders.in/takeover-battle-bharati-shipyard-limited-abg-shipyard-limited-ended/> accessed 15 July 2026

[16] Tanmoy Bhattacharya, ‘CASE STUDY ON MERGER BETWEEN HDFC LTD. AND HDFC BANK’ (2022) 5(1/2) JKIJMSS @JK Business School <https://jkbschool.org/wp-content/uploads/2021/04/JKIJMSS-V.5-N.-12-6.pdf> accessed 15 July 2026

[17] Kunal Singh, ‘ISSUES AND CHALLENGES FACED BY BUSINESSES IN MERGERS AND ACQUISITIONS IN INDIA’ (2023) 2(2) Journal of Legal Research and Juridical Sciences <https://jlrjs.com/wp-content/uploads/2023/03/80.-Kunal-Singh.pdf> accessed 15 July 2026