He sold his holding in By examining the cash-flow performance in the five-year period following mergers, the study found evidence of improvements in operating performance, and also that the pre and post-merger performance was highly correlated. The test for difference of mean shows non significant difference in the debt equity ratio of two merger companies i. We believe given that RPL is yet to commence production from its new refinery the book value based swap ratio would not be an ideal indicator for fixing a swap ratio. A firm can achieve growth both internally and externally. The data of just preceding years of the year the merger took place has been considered for pre-merger study and the data for the year has been used for post merger study.

However, if the ratio is more than around 18x, it would be adverse for RPL shareholders. No fresh investment is made through this process. The principal benefits from mergers and acquisitions can be listed as increased value generation, increase in cost efficiency and increase in market share. This clearly indicates that the Company has realized some losses of the target company which might be due to the costs incurred during the merger period or so. Alternatively, if RPL would have been maintained as a separate entity and had paid dividend to RIL, it would have attracted dividend distribution tax of We believe swap ratio in the range of x will be Neutral for both companies.

RIL-RPL merger complete

RIL currently holds Nad will alert our moderators to take action. This will alert our moderators to take action Name Reason for reporting: Never miss a great news story! The present study is an attempt to find out the difference in post merger financial performance compared with pre merger in terms of profitability and generating more value than the separate firms, resulting in consolidation, refocusing and restructuring of the industry with a motive caes faster mechanism.


Synergetic advantage of strategic Mergers and Acquisitions. An acquisition, alternately, is aimed at gaining a controlling interest in the share capital of the acquired company. Choose your reason below and click on the Report button.

RIL-RPL merger complete

Secondly, the study is based purely on secondary data which are taken from the financial statements of the case through Internet only and therefore can’t be denied for any ambiguity in data used for the analysis. Though the theoretical assumption says that mergers improve the overall performance of the company due to increased market power, Tambi uses his paper to evaluate the same in the scenario of Indian economy. The declining interest coverage ratio of the acquirer company RIL from Being bought out often carries negative connotations, therefore, by describing the deal euphemistically as a merger, deal makers and top managers try to make the takeover more palatable.

Hypotheses of the Study: Companies intensely working in competitive business environment have to change fast as per the evolving dynamics in their industry of operation.

History repeats with RIL-RPL merger

The above Table shows the position of Reliance Industries Ltd. Help Center Find new research papers in: Log In Sign Up. Issn no volume 11 “Mergers and Acquisitions: Thus, a book value based swap ratio does not serve any purpose in this case.

Related It’s advantage RPL in 1: Lande, “Efficiency Considerations in Merger Enforcement. Fill in your details: The test for difference of mean shows non significant difference in the debt equity ratio of two merger companies i. To analyze the available financial information of the sample company, various techniques of applied research and stdy tools like comparative ratios have been employed.


ril and rpl merger case study

After concluding the results of this study, it is found appropriate to put the following suggestions: There is a considerable difference between pre and post merger financial performance. Merger ratio favours RPL shareholders: On the basis of analytical study of sample case completed, amd following conclusions have been drawn which are perfectly in the line of objectives predetermined: The difference was that the issue in was dtudy a premium of Rs 50 without a debenture component attached to it.

ril and rpl merger case study

He sold msrger holding in The study has been undertaken to contribute towards the following broad Objectives: A firm can achieve aand both internally and externally. The issue had a size of Rs 2, crore and like the one inthe offer price was Rs 60 per unit. Mergers and Acquisitions is considered as one of the strategies for growth which have emerged as a natural process of business restructuring throughout the world.

There is no considerable difference mergef pre and post merger financial performance. It seems that the company has resorted to realizing losses. However, the decrease became insignificant after controlling for the performance of the control sample of peer companies.