Business Merger and Acquisition, IDFC - Current Affairs Questions and Answers

ANSWER: Rackspace

Explanation:
Cloud services provider Rackspace Hosting Inc said it would be acquired by Apollo Global Management LLC in a deal valued at USD 4.3 billion. The PE firm will boost investments in the technology sector.

• Rackspace’s shares went up 4.3 percent at USD 31.50 in early trading on 25th August.
• Offer represents a premium of 38.2 percent to Backspace’s closing price on August 3, the day prior to reports that the company was in advanced talks with PE firms for a go private deal.
• Rackspace had been reported to earlier be in talks with Apollo
• As part of the deal closing in the 4th quarter, PE firm Searchlight Capital Partners will also make an investment in Backspace
• Apollo with USD 186 billion in assets have been stepping up investments in technology
• Affiliates of the firm in July agreed to acquire Outerwall Inc, the owner of Redox video rental kiosks private in a deal valued at USD 1.6 billion
• Rackspace leases server space and helps corporations store and access data in cloud.
• It has focused on growing its cloud business in the face of rising competition from established players such as IBM Corp, Microsoft and startups in the field
• Citigroup, Deutsche Bank, RBC Capital Markets LLC and Barclays were financial advisors while Goldman Sachs and Co advised Backspace.
• Financing for the deal is being provided by CItigroup, Deutsch Bank, Barclays, Royal Bank of Canada are providing financing for the deal
• Paul, Weiss Rifkind and Wharton & Garrison LLP are legal advisers to Apollo while Wilson Sonsini Goodrich & Rosati is Rackspace’s Legal Adviser.

ANSWER: Thomas Cook India Group

Explanation:
Thomas Cook India Group, the holding company of Fairfax in India, has acquired five destination management companies of Kuoni Group for ₹125 crore.

The acquisition will deliver greater synergies and growth opportunities across inbound, outbound, MICE and corporate travel businesses.

In April, the company had entered into an agreement with Kuoni to acquire these businesses located in Asia, Australia, Middle East, Africa and Americas and the deal closed on June 29, 2017.

The acquisition will enable Thomas Cook India Group to expand its global footprint to 21 countries in 4 continents.

These companies include Asian Trails in Asia Pacific, Allied T Pro in North America, Desert Adventures in Middle East, ATM in Australia and Private Safaris across Southern and Eastern Africa.

With the addition of 17 new countries through the acquisition, Thomas Cook India Group’s travel business network had expanded significantly adding 1,000 crore to the company’s top line and ₹25 crore to profit before tax (PBT).

Prior to this acquisition, the Group’s Thomas Cook (India), SOTC Travel, TCI-SITA and Kuoni Hong Kong had a network spanning 4 countries which include India, Sri Lanka, Mauritius and Hong Kong.

Post acquisition, The Thomas Cook India Group’s employee strength has gone up to 6,500 people in 21 countries. It has a combined revenue of ₹8,700 crore.

The acquisition of a significant part of Kuoni’s Global Destination Management network represents an important milestone for a rapidly growing Thomas Cook India Group.

ANSWER: Sunil Kakar

Explanation:
IDFC Ltd on 27th June announced the elevation of its CFO Sunil Kakar as the Managing Director and Chief Executive Officer of the company with effect from July 16 for three years.

Kakar has also been appointed as additional director.

Both the appointments are subject to shareholders’ approval at the annual general meeting (AGM).

Besides, the company announced that the Board has approved the resignation of veteran banker Vikram Limaye from the post of MD and CEO who is set to join leading stock exchange NSE as its new Managing Director and CEO.

Kakar joined IDFC as the Group Chief Financial Officer and was responsible for finance and accounts, business planning and budgeting and investor relations, among others.

Prior to joining IDFC, he had worked with Max New York Life Insurance Company since 2001 as CFO.

He has also worked with Bank of America for 18 years in various roles.

Vikram Limaye will quit the Committee of Administrators (COA) for BCCI on July 14 when the Supreme Court reopens, to take over as the Managing Director and CEO of National Stock Exchange (NSE).

Limaye is a member of a panel appointed by the Supreme Court to administer the Board of Control for Cricket in India (BCCI). The Securities and Exchange Board of India (Sebi) has cleared Limaye’s appointment as head of NSE provided he gives up his role in COA.

Limaye was with IDFC since 2005 and has over 25 years of experience of working with financial institutions, global investment banks, international commercial banks, and global accounting firms

ANSWER: The Eye Tribe

Explanation:
Facebook’s virtual reality-focused Oculus division has acquired eye-tracking technology startup The Eye Tribe based in Denmark for an undisclosed amount.

The Eye Tribe startup was founded in 2011 by four students from the IT University of Copenhagen. It develops software that enables eye control on mobile devices and computers, allowing hands-free navigation.

The acquisition will benefit Facebook’s Oculus to integrate eye-tracking software to its Rift VR (virtual reality) headset, allowing users to control actions by moving their eyes.

Oculus, a virtual reality company, was acquired by Facebook in 2014 for 2 billion dollars. It had rolled out two new features - Parties and Rooms - for Samsung Gear VR.

Oculus

CEO: Brendan Iribe

Founded: 2012, Irvine, California, United States

Headquarters: Menlo Park

Acquisition date: March 25, 2014

Founders: Jack McCauley, Brendan Iribe, Palmer Luckey

Head organization: Facebook, Inc.

ANSWER: Essar

Explanation:
Russia’s Rosneft Oil Company along with its partners on 15th Oct 2016 acquired India’s second biggest private oil firm Essar Oil in an all cash deal valued at USD 13 billion

• Rosneft’s partners include Rosneft Oil Company, United Capital Partners and Trafigura
• The acquisition was announced during the 8th BRICS Summit in Goa
• Rosneft will have a 49 percent stake in the refinery, port and petrol pumps of Essar Oil
• The remaining partners will split the 49 percent equity equally
• Remaining 2 percent will be held by minority shareholders after the delisting of Essar Oil
• Deal includes USD 10.9 billion for Essar’s Vadinar refinery and USD 2 billion for the port terminal that feeds the refinery
• It also includes Essar Oil’s debt of USD 4.5 billion and USD 2 billion debt with the port company and power plant
• Rosneft now becomes the third international player after after Royal Dutch and Shell and British Petroleum to enter the Indian fuel retailing market
• Essar Oil a subsidiary of Essar Group is a fully integrated oil & gas company and is among the largest single site refineries in Vainer, Gujarat with the capacity of 20 MT
• Essar Oil has a portfolio of offshore and onshore oil and gas blocks with around 1.7 billion barrels of oil equivalent in reserves and resources
• The company was established in 1969
• Essar Group is led by Shashi Ruia and Ravi Ruia

ANSWER: Reliance

Explanation:
Reliance Communications (RCom) and Reliance Jio (RJio) are working together through a “virtual merger” of their infrastructure such as spectrum and towers and the two companies are reaping the synergies, according to RCom president Anil Ambani.

• “What we have accomplished is a virtual merger between Rcom and RJio. Our spectrum is shared, our network is shared, our towers are shared, our fibre shared, our voice is shared and every effort to reap synergies, every effort to lower our costs, to be capital light has been achieved,”- he said in an official statement.
• RCom has a full 4G LTE long term evolution network on a pan Indian basis without capital expenditure on the balance sheet
• Assets shared and traded with Rjio have ensured RCom does not shell out entire capital expenditure
• RCom is also unlikely to bid at the upcoming spectrum auction given that RJio has deposited Rs.6,500 crore as earnest money deposit,
• The proposed merger with Aircel will create wealth for shareholders
• RCom expects a deal soon for its tower business, he said.

ANSWER: TEN Sports

Explanation:
Sony Pictures Networks India has entered into an agreement to acquire TEN Sports Network from Zee Entertainment Enterprises Ltd and subsidiaries for USD 385 million subject to regulatory approval.

• Acquisition will add South Asia’s leading sports network to SPN’s portfolio of channels
• TEN Sports holds cricket rights in South Africa, Pakistan, Sri Lanka, West Indies and Zimbabwe
• Holding rights for major wrestling, football, tennis, gold, athletics and motor and cycling including Tour De France, it will diversify SPN’s interests
• Sony Entertainment Television and SAB TV are the main brands of SPNI although it owns many other brands and companies under the umbrella Sony brand.
• On 3 November 2015, MSM was renamed Sony Pictures Networks India Private Limited after 21 years.

ANSWER: Grasim

Explanation:
Aditya Birla Nuvo Ltd will merge with Grasim Industries Ltd to unlock shareholder value and create a USD 9 billion or INR 59,766 crore enterprise.

• With this merger, Aditya Birla Group will hive off financial services business into a separate entity to be listed later.
• BoD of Grasim Industries Ltd, ABNL and Aditya Birla Financial Services Ltd at their respective meetings approved the merger of ABNL into Grasim and subsequent demerger and listing of financial services business through a composite arrangement scheme.
• Transaction which is subject to regulatory approvals will be implemented in 2 phases.
• ABNL will first merge into Grasim and financial services business would then be demerged resulting in listed financial services company with 57 percent owned by post merger Grasim and the balance being held by post merger Grasim shareholders on a proportionate basis.
• Following the merger, Grasim with an aggregate turnover of INR 59,766 crore and EBITDA of INR 11,961 crore for March 31, 2016 will become India’s top cement company and will be among the top diversified private NBFCs in India.
• It will be the third ranked telecom operator besides being among the top four private sector insurance and asset management companies.
• The proposed transaction will create a combined entity with USD 9 billion revenue, EBITDA of INR 12,000 crore and EBIDTA margins of 19 percent.
• This is a win-win situation for shareholders of both companies - Grasim shareholders will gain access to high growth businesses of financial services and telecommunications while Nuvo shareholders will get strong cash flow business of cement and VSF
• ABFSL will be listed by May-June 2017.
• For each merger of ABNL with Grasim, each ABNL shareholder will get three new equity shares of Grasim for every 10 equity shares held in ABNL which means shareholder holding 100 shares in ABNL will receive 30 shares in Grasim.

ANSWER: HDFC Life, Max Life Insurance

Explanation:
Boards of HDFC Life and Analjit Singh’s Max Group companies on 8th August 2016 approved the merger of two life insurance entities

• Merger will create the largest private sector life insurance company with assets under management of INR 1.1 lakh crore with 7 million customers
• Exact value of the deal were not revealed

ANSWER: Caesars Interactive Entertainment Inc

Explanation:
Chinese consortium including game developer Shanghai Giant Network Technology Co Ltd and e-commerce film Alibaba Group Holding Ltd founder Jack Ma has agreed to acquire Caesars Interactive Entertainment Inc’s online games unit for USD 4.4 billion in cash.

• Caesars Interactive Entertainment is currently owned by Caesars Acquisition Co and Caesars Entertainment Corp.
• Sales will help two companies looking for cash as they embark on a complex merger.
• Caesars Entertainment’s main operating unit, Caesar Entertainment Operating Co Inc is currently involved in a USD 18 billion bankruptcy and is seeking creditor approval for restructuring the plan.
• Chinese companies are eager to expand beyond their home country which has the world’s largest online gaming market.
• Chinese’s biggest gaming group agreed to purchase a majority stake in Clash of Clans mobile game maker Supercell from SoftBank Group Corp in an USD 8.6 billion deal.
• Caesars online games business called Playtime makes games such as Bingo Blitz and Slotomania available on Apple Inc’s App Store.