1. Mergers, Acquisitions and Joint Ventures Mohit Saraf Partner, Luthra and Luthra

2. Why M&A Underlying principles for M&A transactions 2+2 > 4 Additional Value of “Synergy”- Merger of Bharti’s subsidiaries- Cellular and Infotel with itself

3. Why M&A?  HORIZONTAL INTEGRATION : Buying a competitor- UB Acquisition of SWCL  MARKET EXTENSION - New Markets Existing Service – Bharti’s foray into Rajasthan and Chennai New Services Existing Markets- Bharti purchase of Comsat (VSAT and Broadband services)

4. Why M&A?  Vertical Integration- Internalizing crucial forward or backward activities Forward Integration:Buying a customer Backward Integration:Buying a Supplier- Reliance buying out FLAG  Diversification- Agriculture with Rothschild ( Field Fresh), Airports with DLF and CHAMPS  Restructuring

5. Transaction Issues  Legal Due Diligence  Acquirer/ Private Equity  Seller  Two types of transactions documents  Subscription Agreement  Shareholders Agreement

6. Transaction Issues (…contd.) Subscription Agreements  Right to subscribe based on reliance upon various reps and warranties  Prominent elements  Title w.r.t. transferred shares  Standing of Company  Adverse judicial orders  Related party transactions  Due authorization and valid execution of agreement

7. Transaction Issues (…contd.) Subscription Agreements  Full Disclosure of liabilities  Status of proprietary assets like IP, real estate  Material contracts and obligations  Financial statements must reveal true and fair picture  Labour dues  Environmental compliances  Disclosures in listed companies- Insider Trading Regulations

8. Transaction Issues (…contd.) Subscription Agreements  Closing Related Issues  Conditions precedent to closing- govt. approvals, shareholders approvals  Indemnity Aggregate Liability De minimus Threshold  Post Closing Adjustments  Reps and Warranties survival vs. Claims survival  Termination

9. Transaction Issues (…contd.) Shareholders Agreement  Effectiveness of SHA  Management Control  Board Control  Shareholders Meeting control  quorum requirements  affirmative list

10. Transaction Issues (…contd.) Shareholders Agreement  Transferability Restrictions  Public companies vs. Private  Right of first Refusal  Tag Along rights  Drag along rights  Put and call options  Transfer restrictions fall at IPO  Liquidation Preference

11. Transaction Issues (…contd.) Shareholders Agreement  Non- Compete provisions on promoter  Termination- if minority holding falls below threshold

12. Transaction Issues (…contd.) Due Diligence Report  Approvals and Permissions  Material Agreements  Indebtedness and Lender restrictions  Insurance  Litigation  Human resources and IP

13. Case Studies Reliance Infocom- FLAG  FLAG – bankrupt but sound asset base  FLAG merged with private limited subsidiary of Reliance Infocom  Pivotal’s competing bid- Reliance’s strategy- Voting agreement with Harbert and Triage.

14. Case Studies Bharti- Rothschild  50-50 JV to exploit inadequate exploitation of agricultural sector  Diversification exercise prompted by  favorable tax and duty regimes  by availability of surplus funds  HR to spare from wide scale outsourcing of own activities.  Confined to back-end of food retailing because of FDI limitations.