Merger Performance

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Comparison of Post Merger performance of Acquiring Firms (India) involved in Domestic and Cross border acquisitions

Comparison of Post Merger performance of Acquiring Firms (India) involved in Domestic and Cross border acquisitions

According to India has been a breeding ground for some groundbreaking and fantastical M&A deals over the past few years especially since the liberalisation of trade in 1991. However the research on the mergers and acquisition has been equally limited. Kaur compared the pre merger and post merger performance of acquiring companies using a set of financial ratio. The study concluded that profitability and efficiency declined post acquisition but there was no statistically different performance. However Pawaskar who undertook the same study using firms during 1992-95 and ratios of profitability, growth, leverage and liquidity concluded that acquiring firms performed better then industry average in terms of profitability. When he performed a regression analysis, he found that to the contrary of earlier finding, there was no increase in post merger profits compared to the industry average.

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The Impact of Industry Commonality on Post merger Performance

The Impact of Industry Commonality on Post merger Performance

Many previous studies examine different measures of M&A performance. Kusewitt (1985) uses the regression analysis which dependent variables are two measures of the financial performance, accounting return on assets (ROA) and market return. Relative size, acquisition rate, asset acquisition rate, industry commonality, acquisition timing, type consideration, targets profitability, and price paid are independent variables. Fowler and Schmidt (1989) explore the relationships between commonly discussed strategic acquisition factors and long-term financial performance measures of acquiring firms. The financial performance measures include both accounting and capital market data. The factors of interest include relative size, previous acquisition experience, organizational age, industry commonality, contested versus uncontested acquisitions, and percentage of stock acquired. Agrawal and Mandelker (1992) use the cumulative average abnormal return to examine the post-merger performance of acquiring firms. Healy, Palepu and Ruback (1992) examine post-acquisition performance for the 50 largest U.S. mergers between 1979 and mid-1984. Merged firms show significant improvements in asset productivity relative to their industries, leading to higher operating cash flow returns. Bruton, Oviatt and White (1994) use one dichotomous explanatory variable (business commonality), three continuous explanatory variables (acquisition experience, relative firm sizes, and relative firm sizes squared), and one continuous control variable (change in the net income of the target) to predict acquisition performance.

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Merger Performance and Efficiencies in Horizontal Merger Policy in the US and the EU

Merger Performance and Efficiencies in Horizontal Merger Policy in the US and the EU

A merger between two or more firms, depending on the size of the firms in the merger, may unilaterally create or increase substantial market power of the merged firm. Market power is defined in this thesis as “the ability of a firm or a group of firms to profitably charge prices above the competitive level for a sustained period of time”. 5 Before the merger, effective competition restrains the market power of each firm in the market. A horizontal merger between former competitors reduces the number of competing firms after the merger. The most direct loss of the merger is the loss of competition between the merged entities. If one of the firms before the merger would raise its price, some demand would switch to the rival firms. The merger reduces this competitive constraint. Furthermore, after the price increase some demand will switch to the remaining competitors, which, in turn, will also find it profitable to increase their prices. 6 Oligopoly theory confirms this argument. Prior to the merger, firms make their price and output decisions independently of their competitors. But “after the merger, the merged firms maximize their joint profits, and thereby take into account the detrimental effect of quantity increases or price cuts on the market share of each others’ products”. 7 Due to the creation or increase of market power of the merged firm, the merged firm is able to raise prices above the competitive level and restrict output. This yields an allocative inefficiency, since a market outcome is allocatively efficient when the price is set equal to the marginal cost of production. 8

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Implications of Merger Performance in Developing Countries: Drawing from the Experience of two Cement Companies in Nigeria

Implications of Merger Performance in Developing Countries: Drawing from the Experience of two Cement Companies in Nigeria

Acquiring all the assets of the selling firm will avoid the potential problems of having minority shareholders as opposed to acquisition of stock. However, the cost involved in transferring the assets are generally very high (Ross, 2004). Another term, “take over” which is often used to describe different activities, sometimes refers to as hostile transactions and sometimes to both friendly and unfriendly merger (Gaughan, 2007). When acquisition is forced in nature and without the will of the target company’s management it is known as a takeover. Takeover normally undergoes the process whereby the acquiring company directly approaches the minority shareholders through an open tender offer to purchase their shares without the consent of the target company’s management. In merger and acquisition scenario, takeover consolidation and amalgamation are used interchangeably (Charles, 2002).

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The Survival and Termination of Party Mergers in Europe

The Survival and Termination of Party Mergers in Europe

Legislative cost-benefit assessments associated with the notion of merger termination as new party formation played an important part in the termination of the PSU. While neither of its constituent parties were a major force in Italian politics (the seat share of the PSI and PSDI in the 1963 general election was 13.8 and 5.2 percent, respectively), they were electorally viable and had secure parliamentary representation (H1). The main motivation for the formation of the merger was to become one of the major players in the party system (Rizzi 1974: 147). Ambitions were disappointed through the electoral defeat of the merger in the 1968 election (H2). The merger obtained only 14.4 percent of seats, compared to 19.0 percent that the two parties gained when running separately in 1963. The defeat contributed to the termination of the merger by intensifying internal debate, mostly along constituent party lines, about the continued participation in the government led by the DC, given the resistance of the latter to the policies advocated by the Socialists, and possible cooperation with the Communists (Di Scalpa 1988: 164-165). As the merger did not deliver the expected legislative benefits, the necessary compromises to maintain the merger seemed not worthwhile. The performance of the two re-established constituent parties PSI and PSDI from the 1972 national election onwards substantiate this evaluation. Up to the re-structuring of the Italian party system in the 1990s both parties ensured regular parliamentary representation. The PSI’s performance (in national seats) was even above its best pre-merger performance. In 1983 it further could claim the post of prime minister and participated repeatedly in government up until the early 1990s.

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Merger Failures

Merger Failures

Although there is no direct evidence linking aggregate cost of capital and merger performance, one can make indirect inferences. Since high capital liquidity is linked with the occurrence of merger waves, one can use the existing empirical evidence on the performance of wave-mergers as opposed to non-wave mergers. Consistent with our prediction, Gugler et al. [24] shows that wave-mergers perform significantly worse than non-wave mergers in the long term. The median abnormal return after three years is more than 11% lower for wave-mergers. Further, Harford’s [28] wave-dummy is significantly negative for different regressions of long-run merger performance. Also Rosen [52] finds that long-run returns are significantly lower for mergers an- nounced in periods when the merger market is booming. These papers explain this observation due to merger waves coinciding not only with high cash liquidity, but also overvalued stockmar- kets. The reason offered by these so-called “misvaluation” theories goes as follows: during times

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Financial performance of banks in Pakistan after Merger and Acquisition

Financial performance of banks in Pakistan after Merger and Acquisition

Brigham and Ehrhardt (2005) examined that the financial statement analysis is better approach to evaluate the company ’ s strength. They said that this information can also be used by the management to analyze the improvement in financial performance. Pre and post M&A performance has been studied through operating performance approach using accounting data (Gjirja 2001). Kouser and Saba (2011) evaluated the impact of combin- ation of business on their financial performance in the financial sector of Pakistan through financial ratios using accounting and financial data. Ong et al. (2011) worked to analyze the financial performance of Malaysian banking sector using accounting and financial data for pre and post-merger. They employed three methods to analyze pre and post-merger performance; first they used a comparison and ratio analysis. Second, they analyzed performance using paired sample t-test for pre and post-merger and third, Data Envelopment Analysis (DEA) approach was used to measure the bank ’ s efficiency. This research is undertaken to assess the financial performance of banks in Pakistan after M&A. Therefore approach of Ong et al. (2011) is followed in this research and ratio analysis between pre and post M&A is used to measure the financial performance of banks in Pakistan.

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The Impact Of Merger In Automotive Company:A Case Study On PROTON Holding Berhad

The Impact Of Merger In Automotive Company:A Case Study On PROTON Holding Berhad

The case study conducted is at Proton Holding Berhad organization Malaysia.From researcher study, Proton associated under of khazanah Nasional government of Malaysia and excellently providing automobile design, manufacturing, distribution and sales from 1983 until now. The merger between organizations Proton also impact in economic growth on management development after doing the merger (Muzalwana, 2012). The headquarters Proton is in located in Shah Alam, Selangor, and the other operation site is at Proton City, Perak. The researcher focuses studyon impact of merger in automotive Company for building a new product and expansion the operation. Besides that, researcher wants to identify which is the most effective’s factor that will impact in merger performance by Proton. So that, Proton can improve decision making whether to focus or reduce on the prominent impact for company future as well as can to contribute business performance.

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A Study on Mergers and Acquisition in India and Its Impact on Operating Efficiency of Indian Acquiring Company

A Study on Mergers and Acquisition in India and Its Impact on Operating Efficiency of Indian Acquiring Company

Merger and Acquisition had been the most popular means of inorganic ex- pansion of companies over the years. It is extensively used for restructuring the business organizations. Companies undertake mergers and acquisitions based on strategic business motivations that are, in principal, economic in nature. This research study attempts to evaluate the impact of pre and post financial performance of the acquirer companies. This will be done by com- paring the pre-merger and post-merger performance of the acquirer company in selected M & A deals in India in two periods—2007-2008 (selected due to 2008 global financial crisis) and 2012-2013 (Many deals rose after 2010 and then again in 2012-2013) using select financial ratios and paired t test at 5% significance.

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IMPACT OF MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR ON SCRIP PRICE RETURNS

IMPACT OF MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR ON SCRIP PRICE RETURNS

In this paper, we examined the impact of mergers and acquisitions in indian banking sector during the period 2005-2010 on scrip price returns. The mergers chosen in this study were the top mergers during that period .these include merger of ICICI bank with bank of Rajasthan, merger of HDFC bank with Central bank of Patiala,merger of indian overseas bank with bharat overseas bank and ICICI bank with sangali bank. The main objective of this study is to understand movement in scrip prices before and after merger and to know the significant impact on scrip returns of these selected banks due to mergers and acquisitions. It was observed that impact of merger on scrip return is miniscule i.e., all the selected banks have not shown any substantial difference in return during post merger periods. It indicates that, mergers seems to have a slightly positive impact on Profitability of the selected banks and a minute reduction is observed in some cases, but that has not hampered the post merger performance of the various banks.

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Frigo, Matteo
  

(2019):


	The impact of black holes on the stellar-dynamical properties of early-type galaxies.


Dissertation, LMU München: Fakultät für Physik

Frigo, Matteo (2019): The impact of black holes on the stellar-dynamical properties of early-type galaxies. Dissertation, LMU München: Fakultät für Physik

In the series of simulations with different merger mass ratios we find a different orbital structure. From the perspective of the larger galaxy, a merger affect its orbital structure mainly in two ways: the infalling satellite’s black hole affecting its stars and the satellite’s stars being added to it. While in a major merger these happen together, in a minor merger most of the satellite’s stars do not reach the inner parts of the main galaxy. Figures 6.10 show the fraction of different orbit families at different radii, for each of the minor merger simulations: M5 (top left), M4 (top right), M3 (bottom left), M2 (bottom right). In all the remnants, the fraction of orbits which were failed to be classified is around 30% in the center of the galaxy and drops to less than 10% in the outer parts, similarly to the equal-mass mergers. This is once again likely an effect of our static analytical potential not being an accurate representation of the real one. The orbit structure of M5, M4 and M3 is very similar. They are dominated by x-tube orbits in the outer parts (∼ 60%), while the inner parts are more isotropic. Z-tubes are the second most common orbit type, accounting for 15% of all orbits in the outskirts but rising to ∼ 30% in the center. Box orbits are roughly constant at about 10%. The central region with more z-tubes and less x-tubes is likely produced by the black holes. In fact in M2 we see similar trends, but the central region is larger (1 kpc). There is also more matter coming from the satellites in the central region, slightly increasing the fraction of box orbits. All the remnants have a negligible amount of orbits classified as irregular.

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Corporate mergers and financial performance: A new assessment of Indian cases

Corporate mergers and financial performance: A new assessment of Indian cases

In this paper, the method that is being developed and used plays a key role in both producing and understanding the test results. In view of financial performance, Cochran and Wood (1984) argue that there is no real consensus on the identity of proper measure, or a better approach. Hence, it falls into two broad dimensions: stock returns and accounting profits. Mostly, academic researchers and corporates use accounting and stock information to assess pre- and post-merger performance. In financial economics literature, it is found that most authors have applied event study method to assess both stock signalling and financial performance of firms around various corporate and financial restructuring announcements, for example, dividend distribution, stock splits, takeovers, joint ventures, share repurchases, and so forth (e.g. Reddy et al., 2013b). In general, researcher community computes abnormal returns of both merging and merged firm in the short-run around the public announcement of share acquisition or stock sale agreement. Alternatively, they also compute accounting ratios and apply various statistical tools to measure operating performance in the long-run period. More specifically, King et al. (2004) states that accounting measures offer an assessment of the effectiveness and efficiency of top management, and reflect the reality of corporate concert. Thus, this paper uses accounting ratios in general perspective, which is similar to previous contributions (Beena, 2004; Healy et al., 1992; Pawaskar, 2001; Sharma & Ho, 2002; Sinha et al., 2010). Then, to meet the premise of article, it constructs sector-wise cylinder models by using various categories of financial ratios (see Table 3), and tests the hypotheses accordingly.

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LITERATURE ON MERGER MOTIVES AND ADDITIONAL CONSIDERATIONS IN CROSS-BORDER MERGERS

LITERATURE ON MERGER MOTIVES AND ADDITIONAL CONSIDERATIONS IN CROSS-BORDER MERGERS

Goel and Thakor (2010) develop a formal model where envy among CEOs of bidder firms can generate merger waves even when the first firm in the wave only has idiosyncratic shock. They also empirically test some of the predictions of their model based on a sample of acquisitions realized by US-listed firms where the acquirer obtains at least 50% of target shares during a merger wave for 1979 to 2006 period. In particular they verify that earlier mergers in a merger wave involve smaller targets, create higher abnormal returns for bidders and result in larger compensation for top management compared to later mergers in the wave.

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Merger between airlines in financial distress: does the merger save them?

Merger between airlines in financial distress: does the merger save them?

The fixed and random effects models are commonly used when dealing with panel data. The choice between the two models is often guided by a Hausman test. Failure to reject the Hausman test implies favouring the random effects on efficiency grounds. However, Clark and Linzer (2012) have demonstrated that the Hausman test is neither a necessary nor a sufficient metric for deciding between the two models. They argue that the decision should be determined by the size of the dataset, the underlying level of correlation between the unit effects and regressor. Although the Hausman test conducted in this study prefers a fixed effects model, we present the results of both models. An alternative estimation procedure to accommodate the heteroskedasticity and serial correlation problems is to use the feasible generalised least squares (FGLS) approach (Greene 2000). The FGLS estimation is consistent and more efficient than OLS in the presence of the two problems. In addition, Zellner’s (1962) seemingly unrelated regression (SUR) model is used to examine the impact of the 2009 merger on the fares on each of the seven routes. The fixed effects model is usually estimated with large cross-section units and a small number of time periods, while the SUR estimator is based on the large-sample properties of small cross-section units and large a number of time periods.

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Merger Control in Ireland: Too Many Unnecessary Merger Notifications?

Merger Control in Ireland: Too Many Unnecessary Merger Notifications?

This paper has concentrated on setting lower bound thresholds and defining the correct geographic entity in order to ensure that the merger has sufficient nexus to the State that the merger could have an appreciable competitive effect within Ireland. In terms of the other thresholds in the Competition Act 2002, particularly the turnover threshold of €40 million within the State, it appears that this is not considered too high. The Competition Authority in its proposals for changes in the Competition Act 2002 with respect to mergers did not identify situations where such a threshold caused otherwise anti-competitive mergers to be notified. 40 Furthermore the Competition Authority can in such instances request the merging parties to voluntarily notify, or it can investigate the merger as an agreement between undertakings that may restrict competition. Nevertheless there may a case for indexing these thresholds to inflation on annual basis as in the US.

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Operating Performance of Banks after Acquisition: Evidence from India

Operating Performance of Banks after Acquisition: Evidence from India

banking channel. The other consolidation model which is simultaneously in progress is operational consolidation among banks. Above all we firmly believe that certain corporate governance issues are to be solved on a priority basis before implementation of merger agenda. Bank mergers in India have often been viewed as shotgun marriages. A strong bank takes over a weaker institution usually one that is about to go belly-up at the behest of the country's central banker, the Reserve Bank of India (RBI). Sometimes the deal doesn't make sense, but regulators force it through . An emerging consensus suggests that more bank mergers may be inevitable. Generally speaking, consolidation leading to cost efficiency may not be a bad idea. The cost of doing business in the banking sector is high. The cost of intermediation is 5% in India and, compared to international levels, it is at the high end. So, if one can bring down administrative costs through mergers that do help.

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Impact of Merger and Acquisition Ex-Ante and Ex-Post Performance of Pakistani Firms

Impact of Merger and Acquisition Ex-Ante and Ex-Post Performance of Pakistani Firms

In addition thought about that Europeans solidification more often has the advantage of positive result s attributable to their well-settled economy. As per Altunbas and Marques, (2007), progress improved about 2.5% and 1.2 % by other countries ycombination and home mergers . Results called attention to that in the state of home mergers, distinctive capital structure, and lesser objective size improved of firm'sefficiency and the other way around in term of foreign mergers. As well Indian money related associations empowered idealistic post- merger results (Sinah and Kaushik, 2010), by dissected seventeen associations forward period of 2000 to 2008 through applying non-parametric methodology of Wilcox-on Signed-Rank Test. Four determinants as "gainfulness, liquidity,solvency, and profitability" were considered to evaluate the effectiveness and exhibited a considerable relationship of proficiency with mergers and acquisitions.As a correlation, wave of Egyptian mergers was not as beneficial in U.S", U.K and India while Egypt inferable from new in the division of banking upgrades (Badreldin and Kalhoefer, 2009).

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A Study on Merger of ICICI Bank and Bank of Rajasthan

A Study on Merger of ICICI Bank and Bank of Rajasthan

performance and efficiently after the global crises in 2008-2009. In the Indian banking industry having far better position than it was at the time of crises. Government has taken various initiatives to strengthen the financial system. The economic recovery gained strength on the bank of a variety of monetary policy initiatives taken by the RBI. In the recent times banking sector has been undergoing a lot of changes in terms of regulation and effects of globalization. These changes have affected this sector both structurally and strategically. With the changing Environment many different strategies have been adopted by this sector to remain efficient and to surge ahead in the global arena. One such strategy is through the process of consolidation of banks emerged as one of the most profitable strategy. There are several ways to consolidate the banking industry; the most commonly adopted by banks is merger.

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Contractual revisions in compensation: evidence from merger bonuses to target CEOs

Contractual revisions in compensation: evidence from merger bonuses to target CEOs

In a theoretical study about golden parachutes, Berkovitch and Khanna (1991) view parachutes as implicit deferred compensation, already earned but not yet received, that promotes managerial human capital investment in the firm. Our contracting revision hypothesis suggests that the merger bonus helps target CEOs recoup their firm specific human capital investment. Given this, one would expect that bonuses should be more prevalent when parachutes are small or not provided. This is what we find. We note that Table 3 documents an inverse and statistically significant association between bonuses and parachute provisions. The estimates in model (1) imply that a drop of one standard deviation in parachute value increases the probability of a bonus by 1.11 percentage points. The parachute estimate in model (2) indicates that a $1 decline in the parachute payment raises the bonus by $0.67. This evidence indicates that golden parachutes and merger bonuses are substitutes and reinforces the idea in the contractual revision hypothesis that bonuses are given to circumvent potential problems with ex-ante compensation contracts. 17 Moreover,

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Schulte, Christian
  

(2010):


	Essays on merger policies and on R&D in Europe.


Dissertation, LMU München: Volkswirtschaftliche Fakultät

Schulte, Christian (2010): Essays on merger policies and on R&D in Europe. Dissertation, LMU München: Volkswirtschaftliche Fakultät

This as well as the second chapter considers an open-economy setting of a concen- trated industry that is modelled by standard Cournot quantity competition. There are two countries with national governments having a sector-speci…c tax or equivalent reg- ulation policy at their disposal to in‡uence the market outcome after a national or an international merger has taken place. Governments anticipate the behaviour of pro…t maximizing …rms. Firms, in turn anticipate governments tax response when they de- cide on an (inter-)national merger. Finally, I study the implications for national welfare maximizing merger policy when countries non-cooperatively set their production-based tax rates. Moreover, a special focus lies on the consideration of di¤erent ownership structures with respect to the location of the …rms’shareholders. I …nd that when for- eign …rm ownership is low in the pre-merger situation, non-cooperative tax policies are more e¢ cient after a national than an international merger and smaller synergy e¤ects are needed for this type of merger to be proposed and cleared. In contrast, cross-border mergers dominate when the degree of foreign …rm ownership is high initially.

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