SEDLÁČEK, J., KŘÍŽOVÁ, Z., HÝBLOVÁ, E.: Development of mergers and acquisitions in the conditions of the Czech economy 2001–2010. Acta univ. agric. et silvic. Mendel. Brun., 2011, LIX, No. 7, pp. 337–346 This paper presents the ﬁ rst results of a research project which has the aims to identify the problems appearing during the preparation of mergers in compliance with valid Czech regulations and to analyze economic causes and consequences of mergers. At the ﬁ rst stage it was necessary to compile a basic dataset in a structure needed for a statistical analysis. The aim of the analysis presented in this paper is to ascertain, both theoretically and empirically, how the external environment aﬀ ected the development of mergers of trading companies in the conditions of the Czech economy. The covered period is the past ten years, i.e. 2001–2010, when the development of the global economy was aﬀ ected by the bank crisis in the USA and the economic recession.
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entrepreneurial behavior performance relationship finds negative as well as positive effects. While e.g. Miller and Friesen (1983: 223) state that “hostility makes for scarcer resources, slimmer profit margins, and, in general, less maneuverability” and “requires that during the most threatening periods more attention be paid to the conservation of resources and the selective pursuit of economical competitive strategies”, others argue that in environments characterized through hostility, companies need to take risks and to proactively strive solutions to maintain or achieve sustainable competitive advantages (e.g. Covin & Slevin, 1989). “Such an advantage will more likely result from the proactive, innovative, and risk- taking efforts of entrepreneurial firms than the passive and reactive efforts of conservative firms” (Covin & Slevin, 1989: 77). This is in line with results from Calantone and colleagues (1997: 186) investigating new product development activities of Fortune 500 manufacturers. The authors show that “in more hostile conditions the likelihood of success was increased by 13.5 to 27 percentage points by improving the quality of execution of new product activities.” Summing up, while environmental hostility might be negatively related directly to
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Prior research also provide clear indication that the differences between bidders’ and targets’ corporate governance aspects, legal and institutional environments, and the level of financial market development where the two firms are located are important features that could affect post- merger performance (see, e.g., Rossi and Volpin, 2004, Martynova and Renneboog, 2008a,b, Burns et al., 2007, Bris and Cabolis, 2008 and Francis et al., 2008 ). The results based on the extant literature generally support the view that national corporate governance regulation has a significant impact on cross-border takeovers. In particular, firms from countries with weak corporate governance regulation are more likely to carry out take-over abroad rather than domestically. Firms located in the countries with strong corporate governance regime, especially in the form of high minority shareholder protection, are more likely to acquire firms abroad. Similarly, strong creditor protection in the home country has shown to have a positive effect on international takeover activities. In the context of post-merger default risk, we expect differences in institutional quality to have a bearing with a transfer of risk from low institutional quality countries to the acquirers.
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In a stock acquisition, all of the assets and liabilities of the target company might be purchased through purchase of target company’s stocks on shareholders. Additionally, a partial purchase grants the right to the acquirer to enter into the board of the target company in order to actively to part in the decision making process. With regard to both the asset and stock acquisition, there are some advantages and disadvantages. An asset acquisition provides possibility for the acquirer to choose which assets to purchase. Such possibility presents the ability of choosing which liability to buy that is in relation to the asset. In a stock acquisition, on the other hand, assets and liabilities are purchased together which disables the possibility to choose which assets or liabilities to purchase. In terms of complexity, purchasing assets is more complicated than buying stocks of a company, since an asset acquisition comprises acquisition of many assets one of which may occasionally be goodwill. As an intangible asset in which valuation is not simple, goodwill requires a holistic approach. In accordance with IAS 38 and IFRS 3, an acquirer should recognize at the acquisition date, separately from goodwill, an intangible asset of the acquiree, irrespective of whether the asset had been recognized by the acquiree before the business combination. As a result, an acquirer will recognize as an asset separately from goodwill an in-process research and development project of the acquiree as long as the specification of project meets the definition of an intangible asset (ifrs.org, 2016).
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The issue of crises appears in other studies related to M&A in the banking sector, too. For example, the ﬁ nancial crisis at the beginning of the Millennium caused a concentration of the Turkish banking sector (due to liquidations and M&As) and the development towards a monopolistic market , . On the contrary, the consolidation of the Spanish banking sector after the 2008 ﬁ nancial crisis had little impact upon costs for the clients .  explain that the resemblance between the Euro Area and the Latin America crises and the difference from the Asian one is due to the fact that one of the most important aspects was attaching much more weight to bank mergers than to labor force mobility as adjustment mechanism. A novelty in this ﬁ eld is the study of  that develops and early-warning model for the prediction of problems in the European banking sector using both micro and macro-level data. The analysis is run on the data of the present ﬁ nancial crisis.
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Mergers and Acquisitions have emerged as a major force for developing financial and economic environment due to increased market competition both in national and international market, excessive interdependence of companies for different products and services etc. The entire business world is looking forward towards sustainable growth and development. Sustainability issues are gaining ground in terms of business transactions due to the combined efforts of the merged business undertakings. The primary objective for this research paper is to evaluate the impact of mergers and acquisition of the companies sector wise and to identify the factors affecting mergers and acquisition of companies in current scenario. For this purpose, researcher has analyzed the mergers and acquisitions in five different sectors by allowing for both pre and post business position of the amalgamated companies. Records are basically collected from secondary sources and compiled for an effective presentation.
Nestlé global corporation has over the past decades been not only one of the leading corporations in the field of nutrition and healthy lifestyle, but also a kind of model in the field of international mergers and acquisitions. As it is known, the company was founded in 1866 by Henri Nestlé in Vevey, Switzerland, where it is headq- ?artered. A chemist by education, Henri Nestlé focused on the development and improvement of milk-based baby food and break- ?ast cereals, which was how Nestlé business started. The company employs about 280 000 people in its offices and factories covering almost all countries of the world; Nestlé sales in 2011 amounted to 83.6 billion Swiss francs. Nestlé mission expressed in the slogan «Good Food, Good Life» is formulated as follows: «to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night». In order to fulfill this mission, the company is engaged in further developing its most famous brands listed in table 5.
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The top leader is the ultimate role model of the integration process. Clear messages from the top about why the merger is reduce resistance. Employees need to know how the change will be of benefit not only to the organization, but also themselves. For example, if combining research and development efforts and reducing production costs results in providing a better product to help save people lives, the leader must encourage employees that they are a part of this important life- saving work. In other words, leaders must communicate in a way that illustrates how the integrating companies have one shared value and that by working together a better culture can be created that will benefit not only the employee and organization, but ultimately the customer.
The authors would like to express their gratitude to the Brazilian agencies CNPq (National Counsel of Techno- logical and Scientific Development), CAPES (Post-Gradu- ate Federal Agency), and FAPEMIG (Foundation for the Promotion of Science of the State of Minas Gerais), which have been supporting the efforts for the develop- ment of this work in different ways and periods.
There has been a recent upsurge in M&A activity within the Kenyan banking industry which is attracting attention, specifically in trying to understand the various motivations for mergers and how M&As affect financial performance and operational efficiency. This study looked at the effects of mergers and acquisitions on financial performance of commercial banks in Kenya. This study set to establish whether the many mergers and acquisitions that have happened in Kenya’s banking sector have influenced financial performance. The main objective of the study was to establish the influence of mergers and acquisitions on financial performance of commercial banks in Kenya. The specific objectives of the study was to find out the influence of operating synergy, differential efficiency, risk diversification and market share development on financial performance of commercial banks in Kenya. Descriptive research was employed to investigate the effect of M&A on a specific financial performance of the commercial banks in Kenya. The study was anchored on three theories which include differential efficiency theory, financial synergy theory and hubris theory. The population of a study consisted of 9 banks that have merged or acquired in the period 2010 to May 2017 in Kenya. This included 3 mergers and 6 acquisitions. The study was collected using questionnaires to collect primary data. The study also used secondary data from audited annual financial statements of respective banks over the period. Financial data from statements of financial positions, statement of comprehensive income statements and statements of cash flows of respective
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At the time of independence in 1947 approximately 99 percent of all pharmaceutical products under patent in India were held by foreign companies and domestic Indian drug prices were among the highest in the world. To encourage domestic production of pharmaceutical products, the government of India established 5 state-owned pharmaceutical companies. At the same time several policy initiatives supported the development of indigenous pharmaceutical industry. The policy and regulatory measures includes- abolition of product patents on food, chemicals, and drugs in 1970.The new patent act allowed only patents for production processes fostering the development of a competitive pharmaceutical industry, making inexpensive drugs accessible to Indian masses. The imposition of price controls on certain formulations and bulk drugs discouraged the foreign participants who later abandoned Indian market making way for the domestic industry. Forty years of protection has enabled this industry to grow significantly and to develop efficiently its research and manufacturing capabilities. The leading companies avail the opportunity to move up in the value added chain. India is leading other developing countries in process R&D capabilities and the range of technologically complex medicines manufactured domestically (Kale and Little, 2007).
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Among the total of 118 acquisitions incidents of listed companies during 2004 to 2014, 30 are of companies with interlocking directorates relations. Seen from Table 2, in the year 2014, mergers and acquisitions is the most frequent, in 2006 and 2007 the numbers of mergers and acquisitions are also high. Horizontal M & A mode had the largest number, followed by mixed, the number of vertical mergers is the least. Since the three kinds of M & A mode has no rules of distribution, the decision of mergers and acquisitions of listed companies is still based on strategic starting point. In 2006 acquisitions of listed companies had a small outbreak, quiet for a few years, in 2014 listed companies experienced a concentrated outbreak in China. The number of mergers and the number of vertical mergers and the number of mixed mergers has seen a big increase, which indicates that Chi- na’s stock market system has gradually improved, enterprise management is becoming more mature, diversified business is gradually forming, corporate heterogeneous inter-industry mergers and acquisitions are becoming more common, cross-border M & A project reflects the increasingly diversified development of China’s listed companies.
When looking at the origin of acquirers (Graph II.1.4) further differences between the euro-area countries are noteworthy. Firstly, most of the larger countries show a clear fall in the number of deals concluded between the pre-crisis period of 2006/2007 and the following three crisis years. Secondly, the reduction in M&A activity appears to have affected domestic and international transactions to a similar extent. One notable exception to this observation is the case of Spain and (to a lesser extent) the Netherlands, which saw a relative shift towards domestic acquisitions at the expense of deals featuring a foreign buyer from another euro-area country. Thirdly, looking at an extended sample that includes smaller euro-area countries (not depicted) further shows that M&A activity in smaller economies’ banking sectors is typically
Abstract: The research paper studies mergers and acquisitions (M&As) in India and examines the post-M&A performance using data from 2001 to 2015. The long-term performance after a year of M&A is taken for study and is measured in comparison with the combined performance of Companies before merger. We find that, certain characteristics of the companies like pre-merger operating performance and attitude of deals – friendly or not are important determinants of long-term post-M&A operating performance. However, for M&As in that period, there appears to be no major effect on performance of firms’ characteristics linked to M&A activity such as consideration structure, cash reserves of the acquirer, same industry and target’s share acquired.
It has been realized globally that Mergers and acquisitions is only way for gaining competitive advantage domestically and internationally and as such the whole range of industries are looking for strategic acquisitions within India and abroad. Today, the banking industry is counted among the rapidly growing industries in India. In the last two decades, there has been paradigm shift in banking industries. A relatively new dimension in the Indian banking industry is accelerated through M&A. SBI merger is the biggest in the Indian banking industry. The study covers the area of performance evaluation of M&A’s in Indian banking sector in the recent period. The paper explains the procedure of SBI merger, impact of SBI merger and the challenges faced by SBI after merger.
The Public Utility Holding Company Act of 1935 gave the SEC the authority to review mergers of holding companies that own shares into public utility companies. This law was effectively repealed by the Energy Policy Act of (Pub.L. 109–58); see Aaron M. Flynn et al., Federal Merger Review Authorities and Electric Utility Restructuring, C ONG . R ESEARCH S ERV ., No. Rl32133 (2003). Utility holding companies need no longer register with the SEC; Nidhi Thakar, The Urge to Merge: A Look at the Repeal of the Public Utility Holding Company Act of 1935, 12 L EWIS & C LARK L. R EV . 903 (2008) (The SEC still reviews publicly listed companies – irrelevantly of their industry – through its proxy statement review Section 14(a) of the Exchange Act and Regulation) (codified as 17 CFR 240.14a-1 - 240.14b-2)).
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Over the years, airlines operating in a deregulated market environment have also devised innovative tactical and strategic alliances and business ventures in an attempt to survive in a very competitive global market. Applying economic theory, it is this author’s view that but for historical, protectionist ownership and control rules which are in place in most jurisdictions, major airlines around the globe would consolidate even further – vis-à-vis cross-border mergers and acquisitions.
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This paper explores the issue of institutional trading in the Chinese market, where unlike in the US or other developed markets, institutional investors in China own a lower proportion of the equity market. In particular we study this issue in the context of mergers and acquisitions in Chinese market where there is a potential of severe interest conflict between institutions and controlling shareholders. This paper follows Brickley, Lease and Smith Jr. (1988) classification, and focus on mutual funds, who have less business ties with their firms underlying their investments and thus are more likely to trade based on the information collected on certain corporate event, such as Merger & Acquisitions.
institutions have a substantial presence. See, e.g., Victoria Colliver & James Temple, Wells Fargo, Citigroup Vie for Wachovia, S AN F RAN . C HRON ., Oct. 8, 2008, at C1. Bank of America currently already controls 10.9 percent of U.S. bank deposits following its acquisition of Countrywide Financial Corp. in June 2008. See Federal Reserve System, Order Approving the Acquisition of a Savings Association and Other Nonbanking Activities 5 n.13 (June 5, 2008) (order approving Bank of America’s acquisition of Countrywide), available at http://www.federalreserve.gov/newsevents/press/orders/orders20080605a1.pdf. The 10 percent limit did not apply to this acquisition because the Reigle-Neal Act exempts acquisitions of federally chartered savings associations and savings banks. See id. Presumably, if a transaction would violate the statutory limit, the Fed would be unable to approve it and, therefore, would search for another option in the first instance.
tion literature. In addition to business motives for mergers, private motives can also play an important role in a banker’s decision to sell. For example, community banks are often family-owned and may lack successors or be located in declining rural markets that can become “overbanked.” Alternatively, some owners start banks with the goal of quickly selling them to a larger institution, rather than operating them independently on a long-term basis. Although this latter example may sound like a business motive, it is primarily driven by the owner’s private motive to cash out as quickly as possible.
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