Mergers and Acquisitions (M&A): Meaning, Types and Examples

Mergers and acquisitions (M&A) are key strategies for companies in India to grow, offer more products, and stay competitive. A merger combines two companies into one, while an acquisition means one company buys another. 

M&A activity in india is driven by factors like globalization, new technology, and cost-saving goals. Big examples include Tata Steel buying Corus and the Vodafone-Idea merger. 

These deals follow rules set by the Companies Act, SEBI and the Competition Act to keep things fair and clear. Knowing how M&A works is important for businesses in today’s changing market.

What Are Mergers and Acquisitions (M&A)?

Mergers and acquisitions (M&A) are key strategies for companies in India to grow, offer more products, and stay competitive. A merger combines two companies into one, while an acquisition means one company buys another.

M&A activity in india is driven by factors like globalization, new technology, and cost-saving goals. Big examples include Tata Steel buying Corus and the Vodafone-Idea merger.

These deals follow rules set by the Companies Act, SEBI and the Competition Act to keep things fair and clear. Knowing how M&A works is important for businesses in today’s changing market.

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Mergers and acquisitions (M&A) involve bringing together companies or their major assets through financial deals. A company might:

• Buy and fully absorb another company
• Merge to form a new company
• Take over some or all of another company’s key assets
• Make a tender offer to buy its shares
• Carry out a hostile takeover

All these methods of combining or consolidating businesses fall under M&A. The term also refers to the departments in financial institutions that handle or advise on these activities.

Understanding Mergers vs. Acquisitions

Mergers and acquisitions are often talked about as if they mean the same thing, but there are key differences.

An acquisition happens when one company takes over another and becomes the new owner. This can be hostile (without the target company’s agreement) or friendly (with mutual consent).

A merger, on the other hand, is when two companies of similar size agree to combine and form a new company. This is often called a "merger of quals." Both original companies give up their individual identities.

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Example: When Daimler-Benz and Chrysler merged, they created a new company called DaimlerChrysler. Both companies’ stocks were replaced with the new company’s stock. Later, DaimlerChrysler became Mercedes-Benz Group AG in 2022.

Whether a deal is called a merger or an acquisition depends on how it's presented to the board, employees and shareholders of the company being bought.

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The Types of Mergers and Acquisitions

1.Horizontal Acquisition

Horizontal acquisitions, also known as horizontal mergers, happen when two companies in the same industry to offer similar products or services, combine to gain a larger market share. 

This merger creates a stronger company with better bargaining power and a more competitive edge than the two companies had separately. In many industries, the top companies achieve or maintain their leading position through such acquisitions.

Example- The 1999 merger of Exxon and Mobil, which formed ExxonMobil, is a textbook example of a horizontal merger.

2.Market Extension Acquisition

A market extension acquisition is a type of horizontal acquisition in which companies operate in different geographic regions. While the core objective remains consolidation, focus is on expanding geographic reach. 

Cross-border acquisitions are the most common form of market extension and are especially prevalent in industries like food retail and retail banking, where high levels of consolidation make acquisitions more attractive than launching greenfield operations in new markets.

Example- In early 2022, UK-based Wight Shipyard and French shipbuilder OCEA merged in an all-share deal. 

This market extension merger gave both companies better access to each other’s markets and more resources to compete with bigger players. As a result, they were able to double their size.

3.Vertical Acquisition

While a horizontal acquisition involves buying a competitor at the same stage of production, a vertical acquisition happens when a company buys another that operates at a different stage in the production or value chain. 

For example, a manufacturer might acquire a supplier or distributor to gain more control over its operations.

4.Conglomerate Acquisition

Today, many of the products we use come from big conglomerates that have grown by acquiring other companies. 

A conglomerate acquisition happens when a large company buys several smaller businesses, often across different industries and regions. Well-known examples include Procter & Gamble, Nestlé, and GlaxoSmithKline.

5.Congeneric Acquisition

A congeneric acquisition, also called a concentric or product extension merger, happens when two companies with different products or services but serving the same market come together. The idea is to create synergies—where the combined business is stronger than the individual parts. For example, an ice cream maker buying a wafer company is a classic case.

6.Reverse Takeover (SPAC)

Reverse takeovers, often involving SPACs (Special Purpose Acquisition Companies), have become more common in recent years. In this type of deal, a private company acquires a public company to go public without going through the expensive IPO process. Sometimes, the public company technically acquires the private one, but the goal remains the same—the private company takes control and becomes publicly listed.

Example: America West’s 2015 acquisition of US Airways.

7.Acqui-hire

In today’s economy, top companies are defined as much by talent and intellectual property as by physical assets. 'Acqui-hiring'—acquiring a company primarily for its talent—is a proven strategy, especially in the tech sector where top programmers are in short supply.

Example: Facebook’s 2010 acquisition of Drop.io was driven by a desire to hire CEO Sam Lessin.

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How Acquisitions Are Financed

Acquisitions can be financed through cash, stock, assumption of debt or a combination of all three. In some cases, the investment bank managing the sale may offer financing to the buyer—this is known as staple financing, and it helps encourage larger and faster bids.

In smaller deals, it’s common for one company to purchase all the assets of another. For example, Company X might buy all of Company Y’s assets for cash. This would leave Company Y holding only cash (and any remaining debt), after which it might liquidate or pivot to a different business.

Another financing method is the reverse merger, often used by private companies seeking to go public quickly. In this arrangement, a private company with strong prospects and financing needs acquires a publicly listed shell company—one with no real operations or significant assets. The private company then merges into the public entity, creating a new publicly listed company with tradable shares.

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Reasons for Mergers and Acquisitions

Here are the some comman reasons for mergers and acquisitions that drive companies to pursue such deals: 

• Expanding Market Reach
• Diversifying Product Portfolio
• Reducing Operational Costs

Examples of Successful M&A Deals in India

Mergers and acquisitions in india have greatly influenced the business world. Successful M&A deals have increased market share, sparked innovation, boosted competitiveness, and driven strategic growth. 

Here are some key examples of mergers and acquisitions in india that have transformed industries.

1. Tata Steel & Corus

In 2007, Tata Steel, a major Indian steel company, bought Corus, a UK-based steel giant, for about $12 billion. This was one of the biggest overseas acquisitions by an Indian company at the time.

2. Vodafone & Idea (Vi)

In 2018, Vodafone India and Idea Cellular joined to form Vi (Vodafone Idea), one of India’s biggest telecom companies, with over 40% market share. The deal was worth about $23 billion.

3. Zomato & Blinkit

In 2022, Zomato, a major food delivery company, bought Blinkit (previously Grofers), an online grocery delivery platform, for $568 million. This acquisition was aimed at strengthening Zomato’s position in the fast-growing quick commerce (Q-commerce) market.

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Conclusion

Mergers and Acquisitions are powerful strategic tools that enable companies to grow, innovate and stay competitive in dynamic markets. From horizontal and vertical mergers to congeneric acquisitions, reverse takeovers, and acqui-hires, each type serves a unique strategic purpose—whether expanding market presence, gaining talent or diversifying offerings.

As seen in landmark deals like Tata Steel–Corus, Vodafone–Idea and Zomato–Blinkit, M&A can reshape industries and create lasting value.

However, success depends on more than just financials; cultural integration, regulatory alignment and post-merger execution play equally vital roles. When done right, M&A is not just a transaction—it’s a transformational journey.