Motives for Mergers in Food Manufacturing

This paper reviews theories that identify motives for mergers, reviews recent empirical research, specifies a model that incorporates alternative motives, and tests the model with data from food manufacturing mergers between 1979 and 1986. Results suggest that capital markets are not efficient, and that mergers are not to redress agency problems. Acquirers paid higher premiums for target firms that have recently had low profitability, and paid higher premiums when the stock market was low. The model explains at best 30 percent of the variation in premiums, suggesting that major explanations for mergers remain as yet unidentified.Agribusiness, Industrial Organization,

A RE-EXAMINATION OF EVENT STUDIES APPLIED TO CHALLENGED HORIZONTAL MERGERS

A growing body of empirical studies have been interpreted as support for a laissez-faire policy towards mergers. These "event studies" examine the reaction of stock market prices of firms that announce an agreement to merge. The type ~f reaction reveals whether a merger is motivated by a desire for market power or purely to improve market efficiency. In this paper, a version of the capital asset pricing model (CAPM) is applied to determine if abnormal returns are earned by rivals of 22 pairs of firms whose attempted horizontal mergers were challenged by the federal antitrust agencies. At most eight, and possibly only five, of the cases were found to be motivated by efficiency in seeking merger, and at most six, and possibly only one, were motivated by market power; the rest were inconclusive. The event-study technique is highly flawed for the study of business-regulation effects. Numerous unrealistic assumptions, inappropriate data constraints, and questionable interpretations hamper .the application of this technique to policy analysis.Industrial Organization,

Evolution of banking mergers and acquisitions market in Russia

Purpose: The article characterizes efferent and afferent trends as a strategic factor in the evolution and development of the banking system of the Russian Federation. Design/Methodology/Approach: The article reveals the peculiarities of the processes of mergers, takeovers, and acquisitions taking place in the Russian market, emphasizes their evolutionary and cyclical nature, making a conclusion about the optimization of existing business processes, the transition to a market-oriented way of managing capital. Results: The phenomenon of bank mergers and acquisitions is another step in the evolution of financial capital. This process should be considered against the background of the development of the entire industry of financial markets associated with the organization of new institutions and extinction of outdated forms of organization of redistributive processes. Practical implications: Solving number of tasks related to the optimization of existing business processes, the transition to a market-oriented way to manage capital are critically important for the successful restructuring of the financial architecture under the pressure of new technological challenges for domestic banks. Slowdowns in these processes will lead to the need to tackle cross-cutting tasks, which will create risks for providing financial resources for the entire economy. Originality/Value: Prospective systemic changes in the banking sector of Russia will also affect the sphere of mergers, while the processes will simultaneously move in several directions. The institutions who failed to restructure business processes in a new technological environment will have to leave the market due to the outflow of customers.peer-reviewe

Growth strategies and value creation: what works best for stock exchanges?

In recent years, demutualized stock exchanges have increasingly engaged in M&A and alliance activities. To shed light on this topic, we investigate short-run share price responses to the formation of 110 stock exchange M&As and alliances in the period 2000â2008. Our findings show that the average stock-price responses to a stock-exchange M&A or alliance is positive. Stock exchange M&As create more value than alliances. For alliances, joint ventures generate more value than non-equity alliances. More value is created when the integration is horizontal and cross-border than when it is vertical and domestic. Evidence is also found for learning-by-doing effects in stock exchange integration activities. Finally, we find that the better the shareholder protection, accounting standards and degree of capital market development in the partnering exchangeâs country, the higher the merger and alliance premium. These patterns also obtain when we examine long-run performance measures such as the three-year buy-and-hold abnormal return, change in ROA (ROE), change in liquidity, and change in market capitalization of IPO between years t-2 and t+2.exchanges; mergers and acquisitions; strategic alliances; joint ventures; network organization

Growth strategies and value creation: what works best for stock exchanges?

In recent years, demutualized stock exchanges have been increasingly engaging in M&A and alliance activities. To examine the effect of these growth strategies on exchange shareholders’ value creation, we focus on 14 public stock exchanges and investigate their short-run share price responses to the formation of 110 M&As and alliances all over the world spanning the period 2000-2008. Our findings show that the average stock price responses for M&As and alliances are positive. M&As create more value than alliances. For alliances, joint ventures generate more value than non-equity alliances. More value accrues when the integration is horizontal (cross-border) than when it is vertical (domestic). Additionally, there is evidence of learning-by-doing effects in stock exchange integration activities. Finally, we find that the better the shareholder protection, accounting standards and capital market development in the partner exchange’s country, the higher the merger and alliance premium for our sample exchange. These patterns are consistent when we examine the exchanges’ long-run performance. JEL Classification: L22, G32, D23exchanges, joint ventures, mergers and acquisitions, network organization, strategic alliances

Mergers and acquisitions transactions strategies in diffusion - type financial systems in highly volatile global capital markets with nonlinearities

The M and A transactions represent a wide range of unique business optimization opportunities in the corporate transformation deals, which are usually characterized by the high level of total risk. The M and A transactions can be successfully implemented by taking to an account the size of investments, purchase price, direction of transaction, type of transaction, and using the modern comparable transactions analysis and the business valuation techniques in the diffusion type financial systems in the finances. We developed the MicroMA software program with the embedded optimized near-real-time artificial intelligence algorithm to create the winning virtuous M and A strategies, using the financial performance characteristics of the involved firms, and to estimate the probability of the M and A transaction completion success. We believe that the fluctuating dependence of M and A transactions number over the certain time period is quasi periodic. We think that there are many factors, which can generate the quasi periodic oscillations of the M and A transactions number in the time domain, for example: the stock market bubble effects. We performed the research of the nonlinearities in the M and A transactions number quasi-periodic oscillations in Matlab, including the ideal, linear, quadratic, and exponential dependences. We discovered that the average of a sum of random numbers in the M and A transactions time series represents a time series with the quasi periodic systematic oscillations, which can be finely approximated by the polynomial numbers. We think that, in the course of the M and A transaction implementation, the ability by the companies to absorb the newly acquired knowledge and to create the new innovative knowledge bases, is a key predeterminant of the M and A deal completion success as in Switzerland.Comment: 160 pages, 9 figures, 37 table

Vertical integration and firm boundaries : the evidence

Since Ronald H. Coase's (1937) seminal paper, a rich set of theories has been developed that deal with firm boundaries in vertical or input–output structures. In the last twenty-five years, empirical evidence that can shed light on those theories also has been accumulating. We review the findings of empirical studies that have addressed two main interrelated questions: First, what types of transactions are best brought within the firm and, second, what are the consequences of vertical integration decisions for economic outcomes such as prices, quantities, investment, and profits. Throughout, we highlight areas of potential cross-fertilization and promising areas for future work

Impact of mergers and acquisitions on organizations and people

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2007.Includes bibliographical references (leaves 73-74).The concept of this thesis emerged from my own experience of mergers and acquisitions in which I had been involved over the past 20 years. Companies make acquisitions, mergers, or joint ventures for technology or geographical reasons, or to consolidate a market. The companies have to find a way to integrate the two organizations, and typically they face the challenges of combining different business philosophies, visions, leadership styles, and technology innovation management that have developed and manifested over an extended period of time of time. The motivation for the most companies to get involved in acquisitions is to maintain the growth rate, get access to new ideas, and processes that will provide a lasting benefit for the organization. In the thesis, I will examine the difficulties of the integration of one entity into another. Often, companies are acquired for their people's talent and expertise. The cultural and human aspects, however, are not a major consideration during the overall due-diligence process. I conclude that the extremely high failure rate of more than 50% for mergers and acquisitions is a result of the negligence of a formal cultural and human due-diligence process, and a "human capital balance sheet" needs to become a part of the process.by Ralf T. Faber.M.B.A

Beyond the hegemonic narrative – a study of managers

Purpose – The aim is to analyse managerial behaviour using narrative analysis to identify stories that are often ignored, silenced or missed by the hegemonic managerialist narrative. Design/methodology/approach – An ethnographic narrative based on an 18 month period of participant observation where the author was a manager in a business unit acquired by another company for $1 billion. Findings – Strategy can be diverted or altered by managers lower down the organization in a counter strategy process. This is consistent with Dalton where managers lower down the organization adapt and change strategy to make it work in practice. Research limitations/implications – Participant observation and ethnomethodological narrative analysis have the potential to go beyond the hegemonic managerialist literature and identify a much more complex picture. However, such research is always open to criticism as being from the author's “own perspective” and appearing to claim “omnipresence.” Other stories have been given voice but it is never possible to say that all stories have been recovered from the silencing processes of the organization. Practical implications – A clearer understanding of how management operates counter strategies within an organization in practice. This enables organizations to reconsider how they engage managers beyond the hegemonic narrative. Originality/value – This paper aims to provide an insight into management behaviour beyond the usual treatment of managers as an amorphous mass as is common in most of the hegemonic managerialist narrative. When managers are told the narratives in this paper they can recount their own similar stories yet these are rarely told