...course timetable. Course Subject and Goal The focus of this course is the law of mergers and acquisitions and alternatives to mergers. We will analyze how mergers and acquisitions are structured and why particular deals create value for firms. The course will examine the various techniques and deal terms that have profound effects on both parties and the outcome of the transaction. The course will include actual transactions as well as drafting exercises. We will focus on the barriers to optimal structuring and techniques for eliminating drafting problems. Emphasis will be given to understanding the legal responsibilities of the buyer and seller, as well as the financial, tax and regulatory treatment of the deal, the techniques for putting the deal together, corporate acquisition agreements and the securities and governance issues that arise in deals involving publicly listed and private companies. The course will encourage students to become familiar with the techniques used in corporate acquisitions and related transactions. Materials The readings will be posted on Blackboard. Case studies can be purchased directly from the publisher. Course Book Sherman, Andrew and Hart, Milledge A. Mergers and Acquisitions: From A to Z (Second/Third Edition) AMACOM (available in University Library and Business Law Department) Recommended Sudarsanam, Sudi, Creating Value From Mergers and Acquisitions, (Second Edition) Prentice Hall (available in University Library and...
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...www.ccsenet.org/ijef International Journal of Economics and Finance Vol. 2, No. 4; November 2010 Measuring Post Merger and Acquisition Performance: An Investigation of Select Financial Sector Organizations in India Dr. Neena Sinha Associate Professor, University School of Management Studies Guru Gobind Singh Indraprastha University, Kashmere Gate, Delhi, India Tel: 91-98-1805-6810 E-mail: dr_neenasinha@yahoo.com Dr. K.P.Kaushik Professor, National Institute of Financial Management Sector-48, Pali Road, Faridabad-121001, India Tel: 91-93-1236-0874 E-mail: kp_kaushik@hotmail.com Ms. Timcy Chaudhary (Corresponding Author) Research Associate, University School of Management Studies Guru Gobind Singh Indraprastha University, Kashmere Gate, Delhi, India Tel: 91-98-1856-8903 Abstract E-mail: timcy9@gmail.com The present paper examines the impact of mergers and acquisitions on the financial efficiency of the selected financial institutions in India. The analysis consists of two stages. Firstly, by using the ratio analysis approach, we calculate the change in the position of the companies during the period 2000-2008. Secondly, we examine changes in the efficiency of the companies during the pre and post merger periods by using nonparametric Wilcoxon signed rank test. While we found a significant change in the earnings of the shareholders, there is no significant change in liquidity position of the firms. The result of the study indicate that M&A cases in India show...
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...Journal of Banking & Finance 27 (2003) 103–131 www.elsevier.com/locate/econbase The impact of the manager–shareholder conflict on acquiring bank returns Marcia Millon Cornett a,*, Gayane Hovakimian b, Darius Palia c, Hassan Tehranian d,* a Department of Finance, College of Business, Southern Illinois University, Carbondale, IL 62901, USA b Graduate School of Business, Fordham University, New York, NY 10023, USA c Columbia Business School, Columbia University, New York, NY 10027, USA d Carroll School of Management, Boston College, Chestnut Hill, MA 02167, USA Received 22 May 2000; accepted 16 May 2001 Abstract This paper examines whether shareholder value-maximizing corporate governance mechanisms assist in reducing the managerial incentive to enter value-destroying bank acquisitions. We find that diversifying bank acquisitions earn significantly negative announcement period abnormal returns (AR) for bidder banks whereas focusing acquisitions earn zero AR. We then find that corporate governance variables (such as CEO share and option ownership and a smaller board size) in the bidding bank are less effective in diversifying acquisitions than in focusing acquisitions. These results are robust to the inclusion of the usual control variables. Ó 2002 Elsevier Science B.V. All rights reserved. JEL classification: G21; G34 Keywords: Banks; Bank acquisitions; Corporate governance 1. Introduction Several empirical studies have documented a negative relation between firm performance...
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...HR Managers’ Roles & Contributions in Merger Processes Khalil Al Jerjawi Faculty of Business School of Management University of Western Sydney, Australia E.mail: mr.jerjawi@gmail.com Accepted: August 12, 2011 DOI :10.5296/ijhrs.v1i1.896 As companies have engaged in domestic and international mergers over the last few years in order to match the macroeconomic trends operating on a worldwide and more recently to cope with the current global financial crisis, human resource managers have been encouraged to play a more strategic role in their organizations, especially in the case of extensive and radical organizational change such as merging process. This study addresses and works on the existing research gap by investigating the roles of HR managers among the different roles which were defined at the fist by Dave Ulrich. This paper demonstrates that HR managers are an essential part of merger and that HR practices should be given an extensive emphasizing throughout such organizational change “the merger process”. Keywords: HR practices; HR manager roles; Merger process. 64 www.macrothink.org/ijhrs 1. Introduction In recent years human resource managers have been triggered to play a more strategic role in their organizations, especially in making strategic decisions and going through radical organizational changes such as merging process (Bjorkman & Soderberg, 2003). Nowadays this requirement is even more urgent and acute due to the fact that past decade has been characterized...
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...Do Bank Mergers Create Shareholder Value? An Event Study Analysis Varini Sharma Introduction to Econometrics December 17, 2009 Professor Gary Krueger Macalester College I. Introduction Since the 1980s, the U.S. banking industry has experienced a large increase in the level of mergers and acquisitions. Between 1980 and 1998, approximately 8,000 bank mergers occurred, involving about $2.4 trillion in acquired assets that can be attributed to deregulation in the1980s and the removal of legal restrictions on intrastate and interstate banking (Rhoades, 2000). One basis for these mergers is the assumption that such consolidations lead to improvements in efficiency and profits amassed through increased market power, economies of scale, reduced earnings volatility, diversification, and other financial and operational synergies. While proponents of bank mergers argue that these gains are substantial, Coase (1937) tells us that tradeoffs exist between economies of scale (size) and ability to manage. In addition to the significant increase in mergers we have witnessed the collapse of countless financial institutions in the past 3 years due to bad lending practices. While the Coase theory applies to firms in general, how well does it apply to financial institutions? Additionally, has the increased size of financial institutions contributed to the financial crisis of 2008? This paper investigates the economic role of bank mergers in creating shareholder...
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...the obtained conclusions, we employ different tests (i.e., Augmented Dickey-Fuller test, variance-ratio test, and Ranks and Sign test) to examine the hypothesis that the returns based on the price and return indices follow a random walk process | FINDINGS & DISCUSSION:Eg: Types of relationships (support or not), Reliability & variance | Wright (2000) shows that ranks and sign tests can be exact, and have better power properties than the conventional variance-ratio tests. Moreover, they demonstrate that rank-based variance-ratio tests have, generally, more power than the sign-based variance-ratio tests. Considering Lo and MacKinlay (1988) variance-ratio tests, Wright (2000) demonstrates that the non-robust Z(q) is more powerful than the heteroscedastic robust Z^(q). The summary presented in table 5 is based on these rejection rules. This is because the data in this study are highly non-normal. Panel A indicates that the results obtained from the three...
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...Nash equilibrium = a pair of strategies (strategy is a best response against the other) When players act rationally, optimally, and in their own self-interest, it’s possible to compute the likely outcomes (equilibria) of G. By studying G, we learn: Strategies are likely to take us and how to modify the rules of the game to our own advantage. SEQUENTIAL G (players take turns moving) are influenced by who moves first (a potential first-mover advantage, or disadvantage), and who can commit to a future course of action. Credible commitments (threats) are difficult to make because they require players to commit to a course of action against their self-interest. Thus, the best threat is one you never have to use. SIMULTANEOUS-move G, players move at the same time. In the prisoners’ dilemma, convict and cooperation are in tension—self-interest leads to outcomes that reduce both players’ payoffs. Cooperation can improve both players’ payoffs. Rules of thumb: • Be nice: No rest strikes. • Be easily provoked: Respond immediately to rivals. • Be forgiving: Don’t try to punish competitors too much. • Don’t be envious: Focus on your own slice of the port pie, not on your competitor’s. • Be clear: Make sure your competitors can easily interpret your actions. Strategic: model as either a simultaneous-move or sequential-move game. Focusing on how the outcome of bargaining games depends on who moves first and who can commit to a bargaining position, as well as whether...
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...Running Head: MERGER Merger Introduction There are certain organizations around the world which get engaged in the activities regarding merger. The health care organizations also get engaged in merger with other health care organizations. In the present paper, discussion shall be made regarding merger in health care organizations. There are certain financial drivers which are required to be considered by the health care organizations to move forward with merger. The financial planning and the success of the merger are to be taken into consideration by considering the financial statements of the organization after the merger has been carried out by the organizations. Financial Drivers Causing Merger There are three financial drivers which cause mergers within the health care organizations. The first financial driver causing merger is healthy corporate balance sheets. The second financial driver is low interest rates and inexpensive refinancing opportunities. The third financial driver is marginal growth of the organization (Buckley & Ghauri, 2002). All these financial drivers work in a positive manner for promoting mergers within the organization. In relation to merger, the organizations look at the potential health corporate balance sheets. In relation to the potential healthy balance sheets, the organizations look to get merged with another organization which has huge numbers in the balance sheet so that, the size of the balance...
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...Subject: FINANCIAL MANAGEMENT Course Code: M. Com Author: Dr. Suresh Mittal Lesson: 1 Vetter: Dr. Sanjay Tiwari FINANCIAL MANAGEMENT OF BUSINESS EXPANSION, COMBINATION AND ACQUISITION STRUCTURE 1.0 Objectives 1.1 Introduction 1.2 Mergers and acquisitions 1.2.1 Types of Mergers 1.2.2 Advantages of merger and acquisition 1.3 Legal procedure of merger and acquisition 1.4 Financial evaluation of a merger/acquisition 1.5 Financing techniques in merger/Acquisition 1.5.1 Financial problems after merger and acquisition 1.5.2 Capital structure after merger and consolidation 1.6 Regulations of mergers and takeovers in India 1.7 SEBI Guidelines for Takeovers 1.8 Summary 1.9 Keywords 1.10 Self assessment questions 1.11 Suggested readings 1.0 OBJECTIVES After going through this lesson, the learners will be able to • Know the meaning and acquisition. 1 advantages of merger and • Understand the financial evaluation of a merger and acquisition. • Elaborate the financing techniques of merger and acquisition. • Understand regulations and SEBI guidelines regarding merger and acquisition. 1.1 INTRODUCTION Wealth maximisation is the main objective of financial management and growth is essential for increasing the wealth of equity shareholders. The growth can be achieved through expanding its existing markets or entering in new markets. A...
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...UTAH SYMPHONY AND UTAH OPERA: A MERGER PROPOSAL Case study prepared by Kristian Alexander for Professor John Oesch. © Rotman School of Management, Kristian Alexander, 2004. ____________________________________________________________ _______________________ 1. The case1 Unlike major arts organizations in Europe and Canada that rely heavily on government agencies for their funding, orchestras and opera companies in the United States operate according to a very different financial model and generate income primarily through ticket sales (approximately 46%) and individual contributions (approximately 36%). Since September 11, 2001, all arts organizations in the United States had experienced a dramatic decline in public and government subsidies that had led to revenue loss and major operating deficit. To compensate for the decline in attendance, ticket prices had been slightly increased but this did not stop the stagnation in the arts organizations. Utah Opera was formed in 1976 by the renowned European operatic talent Glade Peterson who served as a General Director until his death in 1990. The following year Anne Ewers was named General Director. Under her direction, the opera continued to 1 Case study written by Professor Thomas J. DeLong and Ph.D. Candidate David L. Ager, Harvard Business School, No. 9-404-116, Boston, MA, 2004. 1 grow, increasing its number of annual productions and the number of young people attending the performances of the...
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...Merger Acquisition BUS 508 Name Date Instructor Life Technologies and Thermo Fisher Scientific Introduction There are a lot of examples of Merger in present business world. If we search the world economic journals and magazines, then we will see that almost every year a lot of mergers and acquisitions are taking place in the modern corporate world. In the year 2013, some vital merger and acquisitions took place. In this paper a very important merger process will be described. The merger which will be described is not only important for the companies, but also important for the customers and the consumers of those companies. After reading through this paper, the reader will be able to know the reason, circumstances, effects and conclusions of the merger process. Then they will be able to judge whether the merger process brought any good for the companies or the people who are related to the companies or not. Before goring in through discussion, let’s see what is actually a merger? (Sherman & Hart, 2006) Merger is a process which adds two or more similar corporate companies or organizations together. This can happen in quite a few ways. First of all, two companies with similar expansion may come to an agreement and start a whole new combined company. This kind of merger is not seen a lot in the recent times. There is another kind of merger. That is, a bigger company can simply buy a similar smaller company. This is mainly a common type of merger. Most of the...
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...MGMT E 2720 Mergers and Acquisitions Supplemental Case Questions 1. The New York Times a. Why is there so much family control in the newspaper business? b. How did the Sulzberger family manage to retain control on the NYT after it went public? c. How does the NYT dual class structure differ from the one used by Dow Jones, prior to its takeover by Rupert Murdoch? d. What explains the behavior of the NYT institutional shareholders – not just Morgan Stanley but also Private Capital Management, T Rowe Price and Vanguard? e. How should Arthur Sulzberger, Jr. respond to Morgan Stanley’s proposal? 2. Valuing AOL Merger a. The Merger was completed on January 11, 2001. Was it a good idea? Did AOL stockholders receive value? Did Time Warner shareholders receive value? b. Do you believe the new company will succeed? If so, how will value be created short and long term? c. What could go wrong with this “mega merger”? What are the most significant threats on the horizon for AOL Time Warner? d. Do you believe the company will achieve its aggressive goals for 2001? e. Any advice for AOL Time Warner execs in summer of 2001? 3. Upjohn Case a. Evaluate the strategic reasoning behind the merger. Will the merger effectively address the strategic alliances faced by Upjohn? b. How do you interpret the stock market reaction to the announced deal? What is the magnitude of performance improvement the...
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...technology and the government’s healthcare reform is pushing hospitals to seek refuge in another resulting in a merger. A merger is the consolidation of two establishments into a single legal entity (Hayford, 2012). In the health care industry, mergers are rising in numbers. Mergers transpire due to a variety of reasons; to increase in size to gain better negotiation power with managed care providers who tend to bypass smaller organizations, to penetrate new markets to attract additional customers, to improve efficiency evolving from centralized administrative practices, and to express overall value of promoting readily available comprehensive care by shoring up smaller community-based facilities, keeping them from closure (Liebler & McConnell, 2008). Despite the reason for the merger, when two health care organizations merge, the organizational dynamics change considerably from the leaders in the board room to the medical staff on the hospital floors, and the impact has a short and long-term ripple effect throughout the newly formed organization as performance, mission, values, and culture will be restructured. The restructure of a new organization resulting from a merger and the role of the middle manager in developing an environment that the combined staff can work on will be analyzed further. Additionally, a description of the newly formed organization from the merger in terms of system and shape will be discussed. Case Study Scenario A healthcare organization, Kindred Hospital...
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...Chapter 5 Conclusion and Recommendations 5.1 Summary of Findings In this paper, we study the M&A performance in U.S banking industry in the period 2005-2010. Our results show that shareholders of the acquiring banks only experience positive excess return during announcement period, which is during 3-day event window { t-1, t+1} and 31-day event window {t-30,t+1}. For 3-day period, shareholders experience 0.43% of excess return. In long term, they experience negative excess return. Shareholders of target banks experience significant and considerably large positive excess return during pre-announcement and post-announcement. During a 3-day event window {t-1, t+1}, the average excess return is 23.17%. When we look at the correlation between total announced value and the excess return, total announced value has negative correlation with acquirers’ excess return only during event window {t-1, t+1}. Similarly, negative correlation is spotted between total announced value and target’s excess return during the same window. The difference in excess return between large and small deal gives us an overview of the relationship between transaction value and excess return. For both acquirers and targets, majority speaking, small deals give them more excess return pre-announcement, announcement, and post-announcement period. Only 1 year after the announcement that large deals allow them to experience more excess return. Regression analysis shows us that financial crisis...
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...pp. 395–421 Mergers with differentiated products: the case of the ready-to-eat cereal industry Aviv Nevo* Traditional merger analysis is difficult to implement when evaluating mergers in industries with differentiated products. I discuss an alternative, which consists of demand estimation and the use of a model of postmerger conduct to simulate the competitive effects of a merger. I estimate a brand-level demand system for ready-to-eat cereal using supermarket scanner data and use the estimates to (1) recover marginal costs, (2) simulate postmerger price equilibria, and (3) compute welfare effects, under a variety of assumptions. The methodology is applied to five mergers, two of which occurred and for which I compare predicted to actual outcomes. 1. Introduction Traditional analysis of horizontal mergers is based primarily on industryconcentration measures. The market is defined and pre- and postmerger market shares of the relevant firms are used to compute pre- and postmerger concentration measures, which give rise to presumptions of illegality. Using this approach to evaluate mergers in industries with differentiated, or closely related but not identical, products is problematic. In many cases the product offerings make it difficult to define the relevant product (or geographic) market. Even if the relevant market can easily be defined, the computed concentration index provides a reasonable standard by which to judge the competitive effects of the merger only under strong...
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