Why Are Mergers Done? Mergers are typically pursued to achieve several strategic objectives: Jet Airways and Air Sahara (2006) In 2006, Jet Airways acquired Air Sahara for ₹1,800 crore with the aim of expanding its network. Instead of integrating Air Sahara fully, Jet Airways rebranded it as JetLite. This move led to operational inefficiencies and increased costs, as maintaining two separate brands created confusion among customers and employees.
By 2015, Jet Airways had to write off its entire investment in JetLite, amounting to a significant financial loss. Lesson: Effective brand integration can streamline operations and create a cohesive market presence. Failure to do so can result in increased costs and diluted brand value.
Ola and FoodPanda (2017) In 2017, Ola acquired FoodPanda's food delivery business for $40-50 million in equity, hoping to capture a significant share of the online food delivery market. However, the acquisition was plagued by operational challenges and stiff competition from established players like Swiggy and Zomato. By 2019, FoodPanda's order volumes had dwindled to just 5,000 per day, forcing Ola to suspend its operations to stem further losses.
Lesson: Acquisitions should be aligned with market trends and consumer demands. Misreading market dynamics can lead to disastrous outcomes. Microsoft and Nokia (2014) Microsoft's acquisition of Nokia's mobile phone division in 2014 for $7.
2 billion was intended to boost its presence in the smartphon.
