Presentation on Merger and Acquisition

Presented By:
Group 5
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Forms of Merger
 Absorption

A B A

 Consolidation

A B C

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Takeover
Vs.
Acquisition

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Reasons/Economics/Motives

 Enhanced Profitability
Economies of Scale
Operating Economies
Synergy

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Rationale for Acquisitions
Acquiring Company Acquirer Company
 Diversification to achieve  Major stockholders
economic protection wishing to retire
 Need for further financing
 Adding new products
faster
 Means of survival
 Prospect of technological
 Acquiring management
or marketing change
or technical personnel
 Attractive purchase or
 Acquiring profitable exchange offer
operations

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Types of Acquisitions
 Horizontal Acquisition
Book Book
Publisher Publisher
A B

 Vertical Acquisition
TV TV
Manufacturing Marketing
company company

(Forward and Backward Acquisition)

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 Concentric or Congeneric Acquisition
Machine Industrial
Tool Conveyor
Mfr. System

 Conglomerate Acquisition
Cement Electronics
Company Company

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Corporate Strategy and
Acquisitions

Planning
- Acquisition Strategy
- Assessment approaches and criteria

Search and Screening

Financial Evaluation

Integration

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About VSNL
 Videsh Sanchar Nigam Limited (VSNL), a part of the Tata Group, is
a leading international telecommunications company.
 VSNL has a global presence including operations in USA, Canada,
UK, South Africa, Singapore, Sri Lanka and India making it the first
Indian truly global telecommunications company.
 Its range of service offerings include wholesale voice, private
leased circuits, IP MPLS VPN, Internet access, hosting, mobile
signaling and several other IP services.
 The company is now poised to offer managed data services and
deliver end-to-end telecommunications solutions to carriers and
enterprises globally.
 VSNL, a pioneer in offering Internet services to individual
customers now offers a full slew of retail products in India like high-
speed broadband, dial-up Internet, Wi-FI, net telephony and calling
cards under the Tata Indicom brand name, and continues to be one
of the leading retail Internet players in India.

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About VSNL International
 VSNL International, the international arm of Videsh Sanchar Nigam
Limited ("VSNL") (NYSE: VSL), is a leading global communications
service provider offering a comprehensive portfolio of next-
generation Carrier and Enterprise solutions, including Voice,
Mobile, Data and Ethernet.
VSNL International owns and operates one of the world's largest
international mobile, voice and data networks providing global
reach to over 240 countries and territories. In addition, VSNL
International owns the world's largest designed global backbone
capacity network, spanning across 4 continents and comprises of
major ownership in 206,356km of terrestrial network fibre-optic
networks and sub-sea cables. It is also one of the largest carriers of
wholesale voice globally.
VSNL and VSNL International are a part of the Tata Group, a $22
billion global conglomerate comprising 93 operating companies.
VSNL International is headquartered in Singapore with regional
offices in the North America, Europe and Asia Pacific.

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About Teleglobe
 Teleglobe is a leading provider of international
voice, data, Internet and mobile services with over
50 years of industry expertise in international
telecommunications
 Teleglobe owns and operates one of the world's
most extensive telecommunications networks,
reaching over 240 countries and territories with
voice and advanced data services
 Teleglobe is the carrier of choice to more than
1200 wholesale customers, representing the
world's leading telecommunications, mobile
operators and Internet service providers
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 Historical Telecommunications
Provider to R&E Community
 1995: Teleglobe provides first NGI connection for the Brussels G7 Summit: 155mb
 Teleglobe provides the capacity to Canarie and co-represents Canada in the GIBN
(Global Inter-operability of Broadband Networks)
 As a member of Canarie Technical Advisory council, Teleglobe encourages creation of
Starlight in Chicago.
 2001: Teleglobe sets up the first trans-oceanic lambda linking SURFnet to Starlight (2.5
gbps) 1st lambdagrid workshop in Amsterdam
 2002: iGrid2002 Amsterdam, Tyco provides 10gig connection between Netherlight and
Abilene in NY through the IEEAF Foundation.
 2003: creation of GLIF at the 3rd lambdagrid workshop in Reykjavik. Tyco provides the
Pacific and Atlantic connectivity for Gloriad. Teleglobe had provided the predecessor
project Naukanet. 
 2005: VSNL acquires Tyco Global Network
 2005: Gloriad expands with a Tyco/VSNL 10 Gbps link between Korea and US
 2006: VSNL acquires Teleglobe
 2006: VSNL provides short term STM4 to support CHEP06 event in India
 2007: VSNL provides multiple 10G to CERN
 2008: Tata Communications providing > 10 x 10G in Atlantic and Pacific routes and
access to the commercial internet for various R&E initiatives and groups.

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Deal

 Videsh Sanchar Nigam Ltd (VSNL) to

acquire Bermuda-registered Teleglobe
International Holdings Ltd for $239 million.
 Standard Chartered Bank acted as the
financial adviser to VSNL, in connection
with the transaction, while Kelley Drye and
Warren served as the counsel to VSNL.

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Reason

 VSNL has, with the acquisition of

Teleglobe, become one of the world
largest carriers of international voice
complementing its emergence as the
largest provider of submarine cable
bandwidth.

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Continue…
 The telecom major will also have access to over
200 direct and bilateral agreements with leading
voice carriers and incumbent carriers in many
countries.
 
 Headquartered in Hamilton, Bermuda, with an
operating centre in Montreal, Canada, Teleglobe
also has more than 1,400 wholesale customers
and carries over 13 billion minutes of voice traffic
globally. VSNL, which clocks over 3 billion
minutes per year, expects to get the 13 billion
minutes garnered annually by Teleglobe.
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Share price

  VSNL is buying out Teleglobe’s largest

shareholder Crberus, a venture capital
company, at $4.50 per share, a 20 per
cent premium on its Nasdaq price. This
will amount to $178 million. Besides,
VSNL will take over $61 million worth of
debt of Teleglobe.

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Cont…

 VSNL will buy 66 per cent equity stake

from private equity investor Cerebrus. The
acquisition will be through amalgamation
of Teleglobe with VSNL International
(Bermuda), a subsidiary of VSNL.
 The other shareholders will automatically
sell to VSNL, as facilitated by Bermuda
regulations, said Mr Rajiv Dhar, Chief
Financial Officer, VSNL
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The effect

 The acquisition was made by VSNL

International, the overseas arm of the
company. Subsequent to the acquisition
by VSNL, Teleglobe has been de-listed
from the NASDAQ exchange. VSNL's
ADR's are listed on the New York stock
exchange.

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Benefits
 The acquisition of Teleglobe made VSNL the
largest voice service provider globally.
 This added further impetus to VSNL's emergence
as a global telecommunications company with
operations in India, Sri-Lanka, Singapore, South
Africa, United Kingdom, Canada and the United
States of America.
 The biggest benefits to Videsh Sanchar Nigam
Limited from this merger were in terms of higher
scalability and better network services to its
customers. Teleglobe's strong global network
provided VSNL the platform for further expansion
of its services.

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The important aspects of the emerging company by the
merger of VSNL and Teleglobe are

 Global representation in 35+ countries.

 Over 650 enterprise customers and 1400 enterprise customers
globally.
 A total of about 206,356 km of cable inclusive of both land and
under-sea cable.
 Ownership of more than 100 cable systems.
 Role of network administrator in SEA-ME-WE4 (South East Asia-
Middle East -Western Europe).
 30 earth stations ensuring access to 5 geo-stationary satellites.
 The emerging company connected the Indian telecom network with
240 international territories.
 It also provided connection to 400 cellular service operators across
the globe.
 Provided Global data service to India.
 Engaged in delivering content data.

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Conclusion
 The VSNL and Teleglobe merger took place in 2006
in a deal worth 239 million US dollars. The acquisition
of Teleglobe made VSNL the leader in voice services
in the world. Several benefits related to infrastructure,
operations and services resulted from this merger.
VSNL gained higher scalability and better network
connectivity.
 The VSNL and Teleglobe merger in 2006 was one of
the biggest deals in the international communications
industry. VSNL (Videsh Sanchar Nigam Limited)
acquired Teleglobe International Holdings Ltd. in a
deal worth 239 million US dollars. VSNL's annual
revenue was expected to shoot up by 200% as a
result of this acquisition.

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Thank you

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