Pragyan Dash, N.M.Leepsa
Economic Times (ET) Cases, Times of India Group, Case Clearing House
Publication year: 2017

Abstract

Inorganic growth in terms of Mergers & Acquisitions (M&A) has been achieving remarkable popularity among the business organizations across the world. The pros of M&A transactions have been a boon for corporate bodies, however, the cons of these transactions are unavoidable. Various research papers and economic surveys represent the evidence regarding the failure of M&A transactions. After M&A transactions, many companies face managerial issues, cultural issues, and financial issues in the post-M&A period. This case study is based on a prominent Indian merger in the aviation industry which provides an idea on various aspects of M&A and reflects a number of merger-related issues in the real corporate environment. In the Indian Aviation industry, Air India and Indian Airlines were two famous aviation companies, which went for a merger deal in 2007. The merger has been a topic of discussion among financial analysts and business experts from the date of its completion. According to several corporate professionals, it is a failed merger and a few are of the opinion that, it is a corporate affair between two unsuited parties. Was the merger actually a failure? What were the reasons/motives behind the merger and the reasons for failure? What were the anticipated synergies and the actual synergies achieved by both the organizations in this merger?

Pedagogical Objectives

  • To understand the motives and reasons of the merger deal between Air India and Indian Airlines
  • To compare the anticipated and achieved synergies of the merger between Air India and Indian Airlines
  • To determine the reasons behind the problems faced by both the airlines after the merger

Case Positioning and Setting
This case study can be used in the BBA, MBA and Executive MBA programs in “Corporate Restructuring Course” or “Merger and Acquisition Course” – To get a basic idea regarding the concept and motives of M&A, factors affecting M&A and problems usually faced by companies at the time of M&A. This case study will be also helpful in improving the analytical skills of the participants.