Understanding Mergers:
“A merger is a corporate strategy to combine with another company and operate as a single legal entity. The companies agreeing to mergers are typically equal in terms of size and scale of operations”.

A merger generally comprises of combining two companies into a single larger company. The combination of the two companies requires a transfer of ownership. These can be done through a stock swap or a cash payment between the two companies. Involved companies surrender their stock and issue new stock as a new company, to form.

There are different types of merger:

• Horizontal Merger:
  This sort of merger happens between two companies who compete in the same industry segment.
   
• Vertical Merger:
  This type is one which two or more companies in different fields link together in business being in the same industry.
   
• Co-Generic Merger:
  Co-generic merger are some way or the other are linked to the production processes, business markets, or basic required technologies forming the extension of the product channel or acquiring components that are required in the daily operations in which two or more companies are in association with.
   
• Conglomerate Merger:
  Conglomerate merger is a kind of venture in which two or more companies belonging to diverse industrial sectors combine their operations.

Why Companies Merge and Acquire?
Company chooses to merge with or acquire for multiple reasons. For merging, a decision to merge under certain conditions could be made through rationale which consists of the higher level reasoning. The contribution towards the justification for a merger depends on mid-level specific (often operational) which are the drivers that controls.

Taking an example, company X might decide to acquire company Y and the root cause can be strategy implementation. The underlying driver for acquiring company Y is the desire to control capacity in that sector so that company X achieves one or more strategic objectives as company Y has exceeded with the capacity in that sector.

Analysis Of Companies Which Have Merged Together:
The automobile industry which is growing in the fast pace in the global and having the tendency to form potential customer base but flexible within an industry and the competition in this field relates to a more volatile environment and the need for merger and acquisition. Automotive Industry is one of the top five sectors that has seen mergers and acquisition trends rise. With expected growth in the future, the factors that are important for the success of mergers and acquisitions need to be studied.

Few such company which merged together are “Tata Motors ltd. and Ford Motors”, “JK tyre and Cavendish Industries” etc.

Tata Motors ltd. and Ford Motors:
Merger Deal Information:

• Tata Motors acquired Ford Motors' Jaguar Land Rover on a cash-free, debt-free basis, at a cost of US$ 2.3 billion. The deal went through in 2008
• The purchasing requirement involves possession of all required Intellectual Property Rights, manufacturing plants, two advanced design centres in the UK and a worldwide network of National Sales Companies by Jaguar and Land Rover or permanent royalty-free licenses.
• The companies entered into long-term contracts to supply Jaguar Land Rover with engines, stampings and other parts. Other areas of Ford's transition support include IT, accounting and test facility access.
• According to the merger agreement the two companies will continue to collaborate in areas such as technology sharing and joint development of hybrid vehicles and powertrain engineering.
• The Ford Motor Credit Company will keep on giving temporary financing to Jaguar Land Rover vendors and clients.

Pre-Merger Information of the companies:
Losses at Jaguar amounted to USD 715 million in 2006. Jaguar did not perform well as due to the high manufacturing costs in the United Kingdom, it was unable to provide any income for Ford:

• It was a very difficult challenge for Ford Motors to bring down production costs and successfully turn around the company. This is the reason Ford was willing to sell the JLR brand at half the price.
• Tata saw this as an opportunity to take advantage of India's demographic dividend in the premium class segment due to double-digit GDP growth during that period.
• Tata Motors believed that the situation could last for a few years and that people's disposable income will grow which would help the company diversify its market in India into a premium class segment. But not only the world market but also the Indian market get affected because of economic slowdown and Tata Motors was in trouble.

Problem faced by the companies Post-Merger:
Tata Motors faced several problems following the purchase of the ford-owned JLR Company. Those were as follows

• Problem 1: Tata Motors faced cash liquidity problems and have negative working capital after JLR was acquired. In addition, the debt ratio had increased over the five years, with negative interest coverage showing that the company was having trouble paying the bridge loan. The bridge loan was due on June 2009, but the company was able to repay only US$ 1 billion at the end of the year 2008.
   
• Problem 2: The global financial crisis has seriously affected the global automotive industry, in particular the luxury car segment. The subprime mortgage crisis had caused the demise of Lehman brothers which later led to the global financial sector collapse and further deepening the global financial crisis. The result of this automobile demand was also diminished. Owing to the meltdown in major international markets, the company's export declined by 38.6 percent in 2009.
   
• Problem 3: Rising materials and fuel prices had contributed to a decline in vehicle demand. Because of the impact of tighter money supply with higher interest rates, fuel and material prices (e.g.: steel, tyres) were rising. Tata Motors had felt the heat of declining demand because of the high fuel price. Reduction in sales volume and cost increase, as well as raising short-term debt, has been very harmful to Tata Motors.
   
• Problem 4: The Company’s share price dropped dramatically and affected the global image of the company. Tata Motors switched to the equity market to raise funds, as the bond market was frozen. But Tata Motor's share prices were also significantly lowered due to the uncertainty of successful acquisitions and global crises that resulted in net profit and EPS declining.

Positive changes that took place Post-Merger:
After the acquisition, the company faced several challenges but the transaction also helped the company to acquire two synergies, i.e. cost and revenue synergies.

Cost-Synergy:
The TATA Motors enjoys the Competitive Benefit from the general International Market through the Tata Group of organisations like Corus for steel, Corus was the fundamental provider of automotive high grade steel to JLR and other auto industry in Europe and United States, TCS for giving designing plans, manufacturing arrangements and sourcing services, INCAT Provides administrations like supplier programs, counselling services and worldwide outsourcing. That would have provided an overall synergy for TATA Group. Tata took advantage of being a huge conglomerate that helped them survive in challenging times.

Revenue Synergy:
Such as well-known brands, Land Rover and Jaguar brand identity, emerging Indian car market and opportunity to sell Indian brands and a global presence. Because of these reasons Tata group takes over these goods.

JK tyre and Cavendish Industries:
Merger Deal Information:

• JK tyre acquired 2.195 crores of Cavendish industries. The deal was concluded April 13, 2016. Cavendish industries are a wholly owned subsidiary of Kesoram. The industries of Kesoram had an exceptional gain of some 409.2 crores.
• The valuation was in Rs. 700 Crores in the form of equity shares. Through their accounts the subsidiary claimed Rs.1495 crores debt. Whereas JK tyre's maximum exposure was about 450 crores that are elevated by internal accruals. JK group associates and Cavendish companies will collect the remaining Rs. 250 crores of the internal accrual & debt of 1495 crores.
• The purchase would give JK tyre access to a well-rounded product portfolio, both domestic and international.
• JK Tyre is ready to enter the fast-growing 2/3 wheel tyre market and will acquire additional capacity from Truck & Bus Radials, a major and high-growth segment where it is already the market leader.
• This acquisition gives JK Tyre access to three Cavendish factories located in Laksar and Haridwar where producers enjoy tax advantages. These units will give JK tyres an extra capacity of 10 million tyres. The JK tyre has access to 12 plants, three in Mexico including.

In Uttrakhand, too, the company will gain excise benefits.

Pre-Merger Information of the companies:

• Cavendish industries was a fully owned subsidiary of Kesoram industries. It was formed on 12th January, 2015. It was formed with the objective of further selling it and reducing the company’s debt burden which stands at Rs 4,497 crores (as per F.Y. 2015)
   
• The company limited their liability to Rs 450 crores. The chairman of JK tyres Raghupati Singhania said “we have safeguarded the balance sheet of JK tyres. Significant extent of the debt will be raised by Cavendish and the rest by group organisations.

Positive changes that took place Post-Merger:

• Increase in Production:
  By acquiring Cavendish industries, JK tyre gained access to an additional capacity of 10 million tyres annually. They gained access to 3 additional well established plants located at Haridwar. The company has a current capacity to produce 34.7 million tyres annually. Through this acquisition the company which is 3rdlargest tyre maker has come closer to being the 2nd largest tyre maker. It has almost beateb Apollo tyres. MRF, the market leader still leads the market by a huge percentage.
   
• Growth strategy:
  due to this deal the company has got immediate strategic entry in the 2/3 wheeler market which is growing rapidly. The deal has also allowed the company to gain market penetration in the 2/3 wheeler market.
   
• Tax benefits:
  JK tyre would also enjoy excise duty benefits from the plant located in Uttarakhand. The benefits were approved till 2020. This will help the company to increase their profits by reducing their costs through excise duty benefits and various tax benefits.
   

Conclusion:
Sustainability of the merger and the success or failure of the acquisition depends upon various numerous factors. The high unsuccessful rate of M&A shows that neither scholar’s not even professionals have a proper understanding of the variables involved in the mergers and acquisitions (M&A) process and their complex interrelationships.

The existing body of knowledge is characterised by several independent streams of management research that have studied discrete variables in either the pre-acquisition or post-acquisition stage. The success and failure of mergers and acquisition in today’s fast pacing economy depends on many factors.

Even after considering all the factors there is no definite rule of thumb that the merger will succeed. The only step a company can take when merging is to make sure it considers all the possible factors factors to increase the possibility of strong success of the merger for the possible long run.