Mango Communications Ltd. is a new company that is willing to take over Telecommunications licenses to operate in 20 telecom circles and get itself listed on stock exchange but present Government Policy does not permit i

The strategy adopted in this case is reverse merger in order to achieve the objectives of lower taxes, economies of scale, broadening market network, protecting trademarks, license agreements and avoiding hassles of complying with listing requirements of a stock exchange. Reverse Merger is a simplified process as it minimizes the risk due to less dependence on Market. Similar Strategies were adopted in the mergers of Vodafone India and Idea Cellular, Kingfisher and Air Deccan, ICICI and ICICI Bank, Godrej Soaps and Gujarat Godrej Innovative Chemicals. In the given case, if Mango Communications Ltd. adopts normal merger to absorb Tango Ltd., it may lose telecom licenses. Hence, reverse merger is suggested because Mango Communications Ltd. becomes a listed company and there is no need to acquire fresh licenses.