Corporate Merger Practices in India : An Empirical Study

Mergers and acquisitions (M&As) have long been a popular element of corporate strategy and represent an important alternative for strategic expansion through inorganic growth. This paper investigates motives and trend of merger activities of Indian companies during the period 2003-08. The survey findings show that the primary motivation for mergers is to achieve operating synergies. The findings reveal that domestic merger landscape during the period is dominated by mergers of subsidiaries with the parent companies. The study provides insights about the motives for such mergers. The results of empirical survey show that the trend of mergers of subsidiaries with the parent companies during the period is an attempt for consolidation and a response to the changing regulatory framework. Parent-subsidiary mergers have implications for corporate governance. Management of companies can adopt the strategy of merging large number of unlisted subsidiaries to improve the corporate governance structure of the companies