Mergers.

MERGER: A+B=C ACQUISITION: A+B=A spinal fusions - defined as an fusion of two or more firms to form one(a) new confederation RECENT MERGERS: Norwich Union+ CGU Walmart+Asda Natwest+Bank of Scotland AOL+Time Warner Wellcome+ BeechamKline TRENDS: Controlled in the UK since 1965 Monopolies and jointure Act, subsequently repaled by the Fair Traiding Act Occurs in waves: 1.wave 1920 2.wave 1960 3.wave 1970 4.wave 1980 REASONS FOR MERGERS: 1.growth 2.economies of scurf 3.power 4.better management 5.accumulated knowledge 6.stability 7.diversification 8.incerease market appoint and eliminate rival TYPES OF MERGERS: CONCETRIC MERGERS: the organisations acquired is in an unfamiliar but related palm into which the getting company wished to expand HORIZONTAL MERGERS: firms producing the same product unite VERTICAL MERGERS: firms at variant stages in the production bring merge CONGLOME score MERGERS: firms poducing intirely different products merge ASSESSING MERGER GAI NS: * want for M&A is to make 2+2=5, synergy effect (Cartwright and Cooper, 1992) * Expectation: combination will result in increase ifficiency, economies of scale, widen of markets, greater purchasing power, and in consiquence, increased profitability *Managerial assessment *Earning performance * variation in trade prices (Newbould, 1970; Hovers, 1973; Meek, 1977) EFFECT ON EFFICIENCY: *A qualify in profitability could arise from a change in qualification *Impact on efficiency is drawn from impact on profitability e.g.

, if profit declines, ifficiency has declined too *efficiency gains from mergers in general argon mot found *(Cowling et al:! 1980) * Similar results also found by Newbould (1970) HIGH RATE OF MERGER FAILURE: *Mergers have an uncomplimentary impact on profitability *Associated with : 1.lowered productivity 2.worse strike records 3.absenteeism 4.poorer calamity rates *rather than greater profitability (Meek, 1977) In long-term, 50-80% of solely mergers and takeovers is financially unsuccessful (Ellis and Perker, 1987) ADVANTAGES: 1.Economy in cap tal expenditure 2.Economy in the use of current assets 3.Ease of access to... If you want to get a full essay, order it on our website: BestEssayCheap.com

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