Introduction
If we look at a numeral of diverse activities in comparison to other activities and trends in market, such as privatization and deregulation of financial markets, a very huge and rapid method for consolidation of publicly listed firms, which has been taken place in US, Europe and Asia-Pacific during the last decade and if we check and analyze these investment decisions they says that the largest investment decisions that most firms make is to Merge with other firms. 1
According to the literature we are assuming that markets are efficient and in-general manager focus on the question whether mergers on average add or destroy shareholders value. Known that corporate managers have two choices of growth, organic growth and growth via acquisition, there are plenty of winners and losers in organic growth investments as well as in M&A.
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1. According to (Chiplin and Wright 1987)/ (The new Palgrave dictionary of money and finance, 1992, pp.10.) Both terms ‘Merger’ and acquisition could be used synonymously.
There could be several different reasons that may be crucial to make a corporate merger decision the reasons could be to achieve economies of scales and scope in production, increase firm’s size and achieve competitive advantage, achieve risk diversification and potential tax shields, increase market power, displace inefficient managers, improve technological equipment that could also led to increase innovation. Nevertheless, the scope of this paper is to give emphasis on examining the mergers in terms of their value/profitability with the consideration to all possible facts which contribute to it.
Mergers
In order to proceed with our report, we first will look at some of the literature d...
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... (2), pp. 197-216.
Ruback, R. (1983), The Conoco Takeover and Stockholders return, Sloan Management Review, Vol. 23 (2), pp. 13-33.
Stewart C.Myers, Alan J.Marcus and Richard A.Brealey, Fundamental of Corporate Finance : 3rd Edition (2001) p.588-607
Sudarsanam, P.S. (1995). The Essence of Mergers and Acquisitions. Prentice Hall: London.
Thompson, N.D. (1978). Mergers and Acquisitions, Motives and Effect. Royal Commission on Corporate Concentration. Ottawa, Canada. Queen’s Printers.
Web Source:
www.bloomberg.com/brief/mergers:- 12/17/19
http://www.mergerinvesting.com/history
http://uk.finance.yahoo.com/
http://www.ifaonline.co.uk/ifaonline/news/1309587/trustnet-merger-financial-express-prestel..
http://www.business.com/directory/financial_services/investment_banking_and_brokerage/mergers_and_acquisitions_manda/reference/government/weblistings.asp
In the literature one finds a large number of explanations for the occurrence of mergers and acquisitions. Sometimes, these explana-tions are also applicable to related forms of interindustrial links such as joint ventures or strategic alliances. Therefore it is necessary to define the term merger and acquisition as it will be used throughout this paper.
Gaughan, P. A., 2002. Mergers, Acquisitions, and Corporate restructuring. 3rd ed.New York: John Wiley & Sons, Inc.
Brenda, I must start by saying I am not in total agreement with the notion that mergers and acquisitions are fast and efficient ways to get into new markets. Casing point the current case of wellcome, no one could prove to me in any way that this merger was anything close to efficient. I would, however, agree that it can be a faster way to get into a new market and consolidate resources. Per (Hussinger, 2010), technology acquisitions can strengthen the firms’ technological competencies, on the one hand. A bundling of competencies can be important in order to stay competitive in fast-growing markets. Effective communication in my view can be one of the key ingredients to having a successful merger. It
The purpose of this paper is to attempt to recompile information about the merger of two corporations; one of many taking places i...
Conglomerate mergers result in joining of firms which compete in different product markets, and which are situated at different production stages of the same or similar products. That is to say, neither the products nor the inputs of these merging firms are the same. Conglomerate mergers result in significant advantages gained by the merging firms since they are the fastest means of entry into different activity fields in the shortest possible time span. Moreover, they reduce the financial risks by “not putting all the eggs in one basket” (Gaughan, 2007). There are three types of conglomerate mergers:
Mergers is when two firms or entities, often of about the same size, agree to become one single new entity or organization rather than remain separately owned and/or operated. This kind of action is often referred to as a ‘merger of equals’. Financially, the stocks of both companies are migrated into a new stock with the new name of the company issued. (CIPD, 2009)
One can use SWOT analysis as a major tool to identify factors affecting the competitiveness and viability of each firm before the merger takes place. The intent is to provide the information base to support clear and focused decision making. Exhibit 1 provide...
Mergers, acquisitions, takeovers and joint ventures are members of the amalgamation family. One reason that companies often choose to expand is to merge with another company, to take over another company, or form a new company altogether (JV) .A merger is where two companies come together as one company – may be with a new name of the parent company, losing their independent identities. A takeover means that one company buys out the other company. And joint venture is when a new company is born with the parent companies in existence. Amalgamation is the merger of two or more companies with another existing company, or the merger of two or more companies to form a new company. In India, amalgamation as per the Co...
According to Investopedia.com (2014), “[…] a merger is a deal to unite two existing companies into one new company […]”. There are 5 main types of merger: conglomerate, horizontal, market extension, product extension, and vertical. In a conglomerate merger, none of the companies to be united has anything in common. In a horizontal merger, the companies to be merged are in same industry, and the deal is part of a consolidation. In a market extension merger, the companies sell same products but compete in different markets. In a product extension merger, companies add together products that go well together. In a vertical merger, the companies make parts for a finished good combine. Among the mergers that I researched, the one that caught my eye the
Mergers usually take place when companies are struggling on their own, but find hope and comfort in uniting with another company. This unite is a great way to create new companies, combine revenues, establishing new policies, procedures, and objectives. It also opens up new doors, and allows new companies to expand in so many different aspects of their business. Part of the mergering phrase should include the planning process to assist with determining the objectives of the business’ long term investments goals. This could also open up the door for new products, new machinery, new plants, replacement of machinery, new locations, new projects, as well as the tangible and intangible things both companies already have.
In order to achieve this, business must think about how many workers they should hire. By doing so, they are making sure that they are not spending all their money on their workers. Another aspect that business consider is whether or not they should take part in mergers. Mergers include, horizontal and vertical mergers. Horizontal mergers, deal with merging with another company that produces the same good and at the same process as you. This is a great for business, that are trying to save money by letting go of their worker. On the other hand, vertical mergers deal with merging with another company that produces the same product as you but at a different process. This is great for business that are trying to save money on manufacturing and paying for less labor. Not only do mergers, allow business to better achieve their goal by hiring less labor it also allows them to save money on advertising. There are many aspects business must take in consideration in order to produce the most money
Companies merge and acquire other companies for a lot of strategic reasons with different degree of success. The success of a merger is measured by whether the value of the acquiring firm is enhanced by it. The impact of mergers and acquisitions on organization can be small and big in other cases.
Week 5 Lecture. (2006). FIN 325 Mergers, Acquisitions, and International Finance. Retrieved from rEsource on July 7th, 2006 from https://ecampus.phoenix.edu/secure/resource/resource.asp
A merger or acquisition is a mix of two organizations where one partnership is totally consumed by another enterprise. The less essential organization loses its personality and turns out to be a piece of the more imperative partnership, which holds its character. A merger quenches the consolidated company, and the surviving partnership accepts all the rights, benefits, and liabilities of the combined enterprise. A merger is not the same as a solidification, in which two partnerships lose their different personalities and join to frame a totally new company. Government and state laws control mergers and acquisitions. Direction depends on the worry that mergers unavoidably dispose
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.