MERGERS AND ACQUISITIONS

Mergers and Acquisitions



Mergers and Acquisitions

Abstract

During the past few years, as network technologies and communication infrastructure continue to progress, Mergers and Acquisitions (M&As) have become a growing trend for companies. All type of companies including large, small, domestic, and foreign are engaged in forming strategic alliances within their particular industries. Also, Cross border mergers or acquisitions (also known as Internationalization) have sharply increased, as a result of financial recessions, market uncertainty conditions, government policies and cross border agreements. This paper describes the corporate strategies of the companies involved in mergers and acquisitions by discussing the examples of companies that involve in mergers, company that does not acquire mergers and acquisitions, companies that conduct international business and those which do not conduct international business operations.

Mergers and Acquisitions

In today's advanced and connected world, (M&As) have become an everyday's event in the business world (Shimizu K., et.al, 2004). Firms use these strategies to strengthen their market position.  M&As are the best source for company to respond the changing market situations (Bruner 2004). The main motivation behind any merger is to maximize the shareholders wealth. Companies always perform such mergers in which both parties are benefited. The terms Merger and Acquisition are often used alternatively, while there is a significant difference between the two. Merger is, when two companies jointly create a new corporation. As a result of merger, a single corporate structure is developed, but its original identity still remains. On the other hand, an acquisition is when one company buys another company, the existing problems are dissolved and a totally new company is formed. An acquisition is different from a merger in the sense that it involves resolving of major problems, and an entirely new company is produced, which is profitable and agreeable for both the companies.

Two firms generally merge in the situation, when combining them increases the value in the thoughts of the managers who are going to acquire. M&As can be deployed in order to replace an inefficient management, but most of the times the two businesses become more valuable together than separate. Next we discuss the strategies of the companies that acquired mergers and acquisitions.

Example of Companies involved in Mergers and Acquisitions

Since last couple of years, large international mergers and the development of new markets have greatly affected international finance (Sudarsanam, 2010). As when two major corporations merge, naturally a company with a very large amount of economical and political power is produced, which is easily capable of causing threat for competitors.

Wall-Mart Stores Inc acquired Netto Food stores Ltd.

In 2011, Wall-Mart Stores (US) acquired Netto Food stores Ltd. (UK) for £778 million.

Wall mart acquired the complete chain of Netto Food stores including 193 stores, covering 8000 square feet each. Management of Wall mart, the Asda group had plans to convert the entire chain into its new supermarkets division for units under 25,000 square feet. The chain is undoubtedly the market leader of Denmark. The stores are also considered to be the best discounters in many ...