You may have heard of Activision Blizzard, Inc. It is an American video game holding company based in Santa Monica, California, and is known worldwide primarily for the game Call of Duty. Since 2015, it has been a member of the S&P 500 Index and the Fortune 500 list of companies.
The company made headlines in January 2022 when Microsoft acquired Activision Blizzard for USD 68.7 billion, touted as the world’s largest merger and acquisition (M&A) deal of the year.
But in April 2023, the UK’s competition regulator Competition and Market Authority (CMA) and later EU regulators shot down the acquisition deal, citing concerns that it would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for gamers in years to come.
How did such a huge deal collapse? What was the deal breaker? Could the roadblocks have been anticipated and prevented? Those interested in the full story can read it here.
Many such massive M&A deals will feature in our upcoming free bootcamp on ‘How to make a career in mergers, acquisition, and investment law’, and as we all know, no merger or acquisition is possible without M&A lawyers.
A truly big deal
Can you think of some other recent big deals, in India and abroad? In terms of value, global deals will obviously rank higher, but I have also included a couple of Indian examples in the following paragraphs, because the Indian M&A sector is actually outpacing its global counterpart this year when it comes to year-on-year growth.
Broadcom-VMWare
On May 26, 2022 diversified semiconductor manufacturing giant Broadcom acquired VMWare in a cash-and-stock deal worth USD 61 billion, the second largest of the year in terms of deal value..
However, a few concerns have been raised about the work cultures of the two companies, which could be a potential conflict area.
Broadcom’s hire-and-fire reputation in the software industry is based on its practice of acquiring firms and then going for large staff layoffs and divestment of unwanted divisions. On the other hand, VMWare adopts a more laid back approach, allowing sufficient room for failure to its employees.
The reason I bring this up is because one of the key roles of an M&A lawyer is to negotiate such areas, where the buyer and target companies may not see eye to eye on many matters.
HDFC Ltd-HDFC Bank
Corporate India witnessed its largest M&A deal in history when in April 2022, HDFC Bank agreed to take over India’s largest mortgage lender HDFC Ltd in a USD 40 billion deal, creating a financial behemoth.
The deal enables HDFC Bank to be completely owned by public shareholders, and existing shareholders of HDFC to own 41 percent of the bank. And every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares held.
While the merger was announced in 2022, it is expected to be completed by the second half of 2024, giving the corporate entity a combined asset base of around INR 18 lakh crore.
PVR-Inox
In March 2022, India’s two largest multiplex chains, PVR and INOX Leisure, announced an all-stock merger, creating the prospect of an Indian film exhibition behemoth with a network of more than 1,500 screens.
The merger was made effective on February 6 this year, and the merged entity is looking to add 200 screens every year to strengthen its presence in newer territories, though it already operates 1,658 screens across 356 properties in 113 cities in India and Sri Lanka.
Adobe-Figma
In September 2022, Adobe announced a USD 20 billion cash and stock acquisition of Figma, a collaborative web application for interface design.
On the surface, this brought two complementary digital firms together to create a broader range of services for Adobe. But was Figma really worth USD 20 billion? The market didn’t think so – Adobe’s stock price fell 33 percent in less than a month since the deal was announced.
Zomato-Blinkit
Indian food aggregator platform Zomato acquired the quick-commerce company Blinkit for INR 4,447 crore (USD 544 million) in August 2022.
Blinkit’s annual turnover in the last three fiscals were INR 263 crore in FY22, INR 200 crore in FY21, and INR 165 crore in FY20.
According to the deal, Blinkit’s largest shareholder SoftBank was to receive 28.71 crore shares of Zomato, Tiger Global would get 12.34 crore shares, BCCL would get 1.5 crore shares, and South Korean investor DAOL would receive 3.66 crore shares.
Adani-NDTV
In December 2022, the Adani Group announced that it had acquired a 27.26 percent equity stake in NDTV from founders Prannoy Roy and his wife Radhika Roy, for around INR 602.30 crore. Adani already held 37 percent of NDTV after an open offer and the acquisition of a company owned by the Roys, despite several attempts by NDTV to block the takeover citing regulatory restrictions on moving shares.
The controversial deal sparked debates about corporate control vs press freedom, and led to the resignation of NDTV executive editor and prominent journalist Ravish Kumar.
Every M&A deal needs a lawyer
I have gone into quite a bit of detail with the above examples, for a reason.
If you have read carefully, you will have spotted the problem areas in many of these deals. Example, the apparent over-valuation in the Adobe-Figma acquisition, or the concern about contrasting company cultures in the Broadcom-VMWare deal, or the allegations of corporate interference in the Adani-NDTV deal.
As an M&A and investment lawyer, you will be expected to provide solutions to these perceived problems and numerous other problems related to such issues as corporate compliance, due diligence, deal structuring, and various agreements.
With the Indian M&A sector showing every sign of continued growth, you need to be at the top of your game to achieve success and be part of huge deals like these, which make M&A one of the most sought after sectors in the legal profession.
Don’t be intimidated by the scale and impact of these transactions.
By investing a little time, effort, and smart planning, you too can be part of such transactions one day, at home and abroad. And the returns on your investment will be higher than you can imagine.
If you dream of becoming an M&A and investment lawyer, LawSikho is here to help you on this journey – right from entry-level associate to becoming a partner some day – and show you the steps you can take to join the elite club of hotshot M&A and investment lawyers.
All you have to do is come to our FREE, LIVE, and online bootcamp on ‘How to make a career in mergers and acquisitions and investment law’, from May 13-15, 6.00-9.00 pm IST daily.
Set a reminder on your phone so that you do not miss even a second, because no recordings will be available.
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