2022 has witnessed one of the biggest as well the most iconic merger and acquisition deals in history. Starting from the Twitter deal, the biggest in records; to the Air India acquisition by Tata, which has won the hearts of many.Â
2022 has proved to be a fruitful year for the business. The economy has recovered, resources have been restored and the markets are back working at full strength. This has enabled businesses to work on their slack during the pandemic as well as open up to new opportunities for expansion. While most companies are still recovering, others have started their journeys for expansion. Mergers and acquisitions are the most common and famous ways to do so. In 2021, 2,064 mergers and acquisitions were recorded and in 2022 the number is expected to cross five thousand. The biggest, as well as the most iconic merger and acquisition deals, have been discussed in 2022. Some were unexpected and some were heartwarming for everyone.
While mergers and acquisition are often used together, there is a slight difference between both the terms:
Merger:
When two existing companies come together and form one single company it is called a merger. There are different types of mergers; for the business, the companies decide for themselves, how they want to proceed. They either come up with a new name or use the name of one of the existing companies. Mergers mostly take place with companies that are at an equal level. It is a great way to expand the business and pursue bigger opportunities.
Acquisition:
When one company decides to buy more than 50 percent share in another company. Here the share is considered from 50 percent to 100 percent in the other company. These deals are generally done by big companies, who invest large amounts in smaller companies. The business will be run by the name of the bigger company that invests.
These two terms are used synonymously but have different meanings. This year, these have been discussed widely and are trending in the business world. Let’s see the most discussed mergers and acquisitions of the year.
Twitter deal with Elon Musk
When we talk about mergers and acquisitions, this is the first one that comes to our mind. It is an acquisition deal, one of the biggest in history. In April 2022, Elon Musk offered to buy a large stake in the social media platform, Twitter. He proposed to buy the entire stakes of the company for $43 billion. The board had accepted his proposal and the deal was closed at $44 billion.
Though this is the biggest and most discussed business deal, there have been many issues regarding the same. Elon Musk has not yet taken over the company fully. There have been disputes and according to the latest news, there is a discussion of this deal being dropped. If Musk decides to walk away from this deal, legal actions are expected to be taken against him.
HDFC-HDFC merger
HDFC Bank will soon merge with HDFC Ltd. which is a housing finance company. This merger deal, though unexpected, has left many investors excited. The bank stated that this merger would benefit them in terms of gaining a customer base. Both the companies have a distinct consumer base and this deal would benefit both of them for growth and expansion. The post-merger mortgage book is estimated at around 30 percent. By the year-end, if the companies are merged, their capital base would account for ₹360,344 crores.
Recently, BSE and NSE have given a thumbs up to this merger and RBI has also approved this deal. The companies are in the process and will be functioning together once the formalities are completed.
Zomato-Blinkit
Zomato, the famous food delivery business has proposed the quick commerce company Blinkit, to acquire all stakes. Initially, the deal was expected to be a share swap between the companies but later, Zomato proposed to acquire the company. Both the companies deal with providing quick service to costumes and their consumer base is more or less similar. By acquiring the company, Zomato plans to expand its service provision quicker and better. Zomato has proposed to buy the company for ₹4,447 crores.
Even though this deal is big and can be beneficial for both companies, it is not very well approved by the investors. Since the announcement of this acquisition, Zomato’s share price has seen a constant decline in the market.
Air India acquired by Tatas
The business deal won the hearts of many Indians. Air India, the airline company founded by J R D Tata in 1932 is returned to Tata now. In January 2022, this business deal marked the return of Air India. The company established by Tata was working with the government of India. Later it was privatized and taken over by a private player. In 2020, the company declared bankruptcy and was shut down completely. In January, it was bought by the Tatas again and is now fully in its ownership.
The company is now in discussion to acquire another airline company, AirAsia and there have been no discussions about merging it with Vistara Airlines, which is an airline company by Tata.
These were the trending business deals in 2022 so far. In the last six months, these businesses have made their mark and are expected to expand further. Apart from these mergers and acquisitions, other companies have expansion plans. The technology sector has the most number of mergers and is expected to increase.
