A hostile takeover takes place when a company acquires another company by direct interaction with the shareholders or by making an attempt to replace the management of the company in order to take over it. The takeover bidding takes place when the acquirer makes efforts to take control of the target company without any prior approval or discussion with the Board of Directors of the target company. A hostile takeover is used as an ‘ultimate weapon’ by companies globally to expand their companies overnight but the question before us is “whether India ready for hostile takeovers and whether it can breed in India’s regulatory, cultural, institutional, and political environment?” In my opinion, hostile takeovers are a result of liberalization, where a large corporation uses its resources to acquire a majority stake in a smaller company and displace the existing board to derive economic interests. However, the results do not factor the interests of the minority shareholders.

Intricacies of an Acquisition-

A company may want to acquire another company because of its markets or technological advances, etc. However, the rate of successful mergers to unsuccessful mergers in India always results in an unsuccessful merger because of the overall harmful effect on the economy. The acquirer company generally falls into a debt that would result in slow growth. The management may not be comfortable with the new working atmospheres and would invest a lot of time and money to understand new atmospheres. The constant fear of acquisition in the merging company hinders its growth, functioning, and profitability. The company that is being taken over is generally in a profitable situation as the acquirer company usually pays a premium on all the shares. An example being GVK Power and Infrastructure Ltd. raising a debt of Rs 4500 crores to acquire Australia’s Hancock coal mines. It raised the company’s debt to equity ratio above the ideal ratio of 0.4 to 2.2, which affected the profitability of the company.

Acquisitions: Pre Corona Era

Hostile takeovers have not really been a fashion in India. India is one of the fastest-growing economies in the world and is attracting capital across sectors via the Foreign direct investment (FDI) route. The pertinent problem in India is that the Indian promoters won’t let a hostile takeover go through. Indians take great pride in the companies started by themselves. A hostile takeover won’t work since often the companies’ key shareholders are the family members themselves and they don’t want the controlling interest of the company to go outside the family. The government actively engaged in a policy overhaul by implementing the Goods and Service Tax and sectors had been opened to attract 100% FDI. Since 2015, more than 100 companies went public and they were directly able to raise more than 1.5 lakh crore, which is double the amount raised in the earlier 10 years.

a. Role of SEBI

The securities and exchange board of India (SEBI) had been on their toes to model the regulations towards a progressive takeover. These steps towards an open market spurred confidence among investors and increased foreign investment in the budding Indian economy. The underlying aim was to transform the traditional business models by introducing it to an efficient & competitive culture. The long term objective was to deliver value to the shareholders and the economy as a whole. The Indian takeover code, i.e., the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 along with the amendments of 2013 promoted hostile takeovers, following the Doctrine of ‘no frustration’. A “Frustration of contracts” occurs when it is impossible to fulfil contractual obligations and is beyond the control of either party. The doctrine ensures that even if the circumstances are beyond the control of either party, the contract is performed in its entirety.

Acquisitions: Corona Era

The Corona Virus outbreak has created havoc and disruption of businesses across the globe. The virus will create challenges for some market players while at the same time create opportunities for companies with deep pockets. The virus is going to make “big” companies bigger while simultaneously the smaller players in the market might have to file for bankruptcy. The middle-sized companies are going to struggle like the daily wage labourers in India; they are going to struggle, merely to survive and keep the business afloat.

a. Indian Government: The Knight in Shining Armour 

The nationwide lockdown imposed in India has taken a huge toll on the Indian businesses. Foreign investors such as China would exploit this economic downturn by acquiring businesses in India. The investors from China in the past 2 years have funded around $6 billion into the budding start-ups in India. In order to mitigate these potential concerns of hostile takeovers in India, the government has modified its FDI policies. According to the new policy, all countries having a territorial nexus with India have to take prior approval from New Delhi before making any FDI or transferring ownership in existing companies. In my opinion, this policy change has caused a major paradigm shift in terms of foreign M&A transactions in India. The government of India transitioned from a facilitator of FDI to a “Knight in shining armour” to save the businesses in India from hostile takeovers.

In furtherance, the Ministry of Finance declared the Corona Virus outbreak as a valid natural calamity that can be used as a force majeure circumstance for the appropriation of goods. On similar lines, the Ministry of New and Renewable energy declared the coronavirus to be a force majeure circumstance in relation to the supply of renewable energy.

b. Share market Fluctuations

Apart from the policy implications in FDI, foreign investors also need to account for the unpredictable stock market in India. The acquirer companies should strategize their investments and deal valuations keeping in mind such fluctuations. “Investors should generally re-look at financial models to take into account the economic disruption to the target’s business, sector-wise exposure to coronavirus-induced disruptions, the impact of macroeconomic volatility on the target, etc. and should consider post-closing adjustments, lock-boxes, etc.”

c. Slowdown of Scrutiny

An acquisition is not merely important in terms of revenue synergies or deal valuations; the overriding factor is the timing of the acquisition. This variable of time can be a decisive factor for an acquisition to be successful. In the present-day circumstances of India, almost all the courts and tribunals are functioning on very limited staff. The hearings are only limited to emergency cases which if not ruled upon would cause substantial harm to justice. Henceforth, this slows down the entire process of scrutiny and approvals from the responsible authorities (RBI, NCLT, CCI, SEBI). This slowdown can impact the viability of a hostile takeover for an acquirer.


 The Corona virus has severely impacted the atmosphere and opportunities of hostile takeover in India. Before undertaking any M&A activity in India, foreign companies have to cross all these hurdles created by the Covid-19 situation in India. Successful takeovers will only be implemented if companies strategize their investments keeping in mind the volatility of the situation and attach probabilities to each contingency plan.


Roy, Prabal Basu. “Is India Ready For Hostile Takeovers?” BloombergQuint, Bloomberg Quint, 30 Mar. 2017

Bhasin, Hitesh. “Hostile Takeover: Meaning, Tactics, Disadvantages & Examples.” Marketing91, 18 Oct. 2019,

Singh, Manish. “To Avoid Hostile Takeovers amid COVID-19, India Mandates Approvals on Chinese Investments.” TechCrunch, TechCrunch, 18 Apr. 2020,

“GVK Power to Acquire Coal Assets in Australia for $1.26 Bn.” Business Today, 17 Sept. 2011,

“Opportunities Emerging From The Coronavirus Pandemic: Forbes India Blog.” Forbes India, ForbesIndia, 7 May 2020,

“Income Tax Department.” Tax Laws & Rules > Acts > Companies Act, 2013, 


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