Microsoft acquires LinkedIn, Reliance-Aircel Merger, SBI Amalgamation- Weekly Digest #1

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Monday- 13th June 2016

• Reliance Communication and Aircel merger expected to finalise in early July. Reliance Communications will turn its wireless business into an arm, which will be absorbed by Aircel. Merger entity to have new brand entity later, with both partners having equal ownership.
• Tata Power to buy Welspun’s renewable energy assets fo Rs. 10,000 crores ($1.4 billion). This will be the largest solar sector Mergers & Acquisitions in Asia.
• In a meeting with RBI, bankers said that there could be a delay in the delivery of dollars by banks with whom RBI has entered into forward contracts. This is due to the likely outflow of $20 billion of foreign currency deposit between Sep-Nov this year.
• Amazon CEO, Jeff Bezos, wants Modi to allow FDI in the hybrid model of e-commerce. A hybrid model is the one which comprises both marketplace and inventory-led business. Currently, FDI is allowed only in marketplace business for e-commerce companies.
• Microsoft to buy LinkedIn in a $26 million deal. Microsoft will pay $196 per share in an all cash-based transaction. LinkedIn will retain its identity and its CEO, Jeff Weiner, will now report to Satya Nadella, CEO of Microsoft.

Tuesday- 14th June 2016

• FM Arun Jaitely met state Finance Ministers and their representatives and it seems likely that GST may finally be implemented as it obtained near unanimous support, even from congress ruled states. Congress’s demand to have a cap on GST rate in constitutional amendment bill has been denied.
• Share prices of public sector banks rallied as the RBI gave flexibility to banks to bail out companies with high debt. Loans can be split into sustainable and unsustainable debt and unsustainable can be now converted to equity.
• Vijay Mallya has been declared Proclaimed Offender by a special court. Vijay Mallya to appear before the court by July 12. Failing to do so, enforcement directorate can attach all his properties.
• A small group of sellers on Flipkart.com have threatened to exit or be inactive in protest to new policies by Flipkart which increases sales commission and charging of shipping fees and reverse shipping fees.
• Tata Power to buy 25% of Resurgent Power for $300 million as a part of a consortium to buy coal-fired and hydropower assets in India.

Wednesday- 15th June 2016

• Liberal aviation policies saw a surge in share prices in the aviation sector. 5/20 rule has now been scrapped and it has been replaced with 0/20 rule for overseas flight eligibility for airline companies. Regional connectivity has been capped at Rs 2,500/hr.
• Cabinet approved SBI to proceed with the amalgamation of 5 associate banks with itself. This resulted in a sharp increase in their share prices, up to 20%. The associate banks to be amalgamated are State Bank of Jaipur, Travancore, Patiala, Mysore, and Hyderabad.
• Cabinet has also approved the selling of 10% stake in Housing and Urban Development Corporation (HUDCO) through IPO. This is a part of disinvestment scheme of state-owned enterprises to raise funds.
• India’s exports have dipped straight for the 18th month in May 2016. However, the decline has been shrinking progressively and exports are expected to recover in coming months.
• Amazon has moved Gujrat High Court against Gujrat entry tax on goods purchased through e-commerce portals, delivered from outside state. Amazon is challenging the definition and concept of the tax.

Thursday- 16th June 2016

• There have been talks between HDFC Life and Max Life to merge together and form the country’s biggest private life insurer. The new entity’s valuation is expected to be Rs 50,000 crore.
• NTPC is looking forward to take a giant leap in renewable energy sector, by adding solar and wind projects to its portfolio. However, it may take 10-15years to shift our dependence from coal to renewable sources for generating electricity.
• In a meeting with senior tax officials, Prime Minister Narendra Modi urged the officials to take steps to remove the fear of harassment from the minds of taxpayers, while increasing the number of tax payers to 10 crores.
• Just three days before Flipkart is to implement an increase in sales commission, its rival, Amazon India has cut the fees it charges to sellers in selective cases up to 7%. This move is expected to trigger a price war between e-commerce giants.

Friday- 17th June 2016

• Employee Provident Fund Organisation (EPFO) has credited interest rate at 8.8% for the fiscal year 2015-16, for its 17 crore accounts.
• Heinekin has filed an application before debt recovery tribunal for First Right of Refusal over Vijay Mallya’s UB shares.
• After government provided taxation incentives for offshore fund managers willing to relocate to India, SEBI has proposed easier rules for fund managers to move to India.