A short tale of two companies

'J' : Acquirer
'S': Acquiree

Last week i heard the news that 'J' has finally decided to acquire 'S'. It sounded slightly strange to me from lot of angles...But all these facets finally converged to one concensus..Does this happens only in India? Here i go...

• 'J' has already got a lot of flak for tearing apart CSR practices by making a previous attempt to acquire 'S' and hence been able to see S's balance sheet and eventually backing out.
• Whats interesting to me is ..how much in deep mess 'S' would have been for agreeing to be bought by 'J' even at a much lesser valuation than the previous one.
• It also shows legal loopholes in M&A practices in India. I think corporate laws should contain statues mandating prospective acquirers to take a decision on acquisition within a stipulated time frame once they do the valuation of the acquiree.

Apart from the above

• The new Joint entity would be having a much lesser market share as what it would have 6 months back,which puts a question on the returns of this acquisition.

From a consumer point of view, this marks the first move towards consolidation in the domestic aviation space in india which shall surely lead to price rise esp in high traffic routes like Delhi-Bbay,Bbay-Blore and Delhi-Blore..and i for sure is going to be one of the victim.