Company Mergers Research Articles

Possibilities For Managing Financial Crises Of Macedonian Companies

Frequent economic crisis, led a large number of companies to cumulate losses. On these conditions are not immune Macedonian companies, also. Such businesses, if not undertake adequate measures, over time, become indebted and lose solvency, or are facing a serious problem - financial crises. Considering that the recovery from financial crisis is very difficult process, it is especially important companies to undertake certain actions that would prevent the occurrence and escalation of the crisis. In that context, main objectives of this paper is to identify the main causes of financial crisis of companies, briefly to present current methods of managing financial crisis as strategies whose implementation will prevent the liquidation of companies and to explore the level of implementation of financial restructuring, merger and acquisition and turnaround concept in companies of Republic of Macedonia. For that purpose, different qualitative and quantitative methods are implemented. For collecting primary data from companies in the Republic of Macedonia, constructed questionnaire is used. The analysis will lead to achievement of main goal of the paper and will contribute to identify the frequently used opportunities for managing and overcoming financial crisis of companies in the Republic of Macedonia. Findings will direct to the following: there is no unified way for managing financial crisis, that could be applied in any company and that common in application of current ways to overcome the financial crisis (turnaround concept, financial restructuring, merger and acquisition of companies) is that their adequate implementation contributes to improving efficiency and effectiveness in managing the financial crisis and subsequently have positive implications company performances.

Acquisition based dynamic capabilities and reinvention of business models: bridging two perspectives together

Dynamic capabilities in merger and acquisition are complex events in the process of sustaining completive advantage of merging business for which we have incomplete understanding. The aim of the paper is to identify the role of dynamic capabilities in reinvention of business model of merging company in related diversification process by means of acquisition. The major contribution of paper is emerging conceptual model of research that connect acquisition based dynamic capabilities frameworks (Capron & Anand, 2007; Teece, 2007) with nine building blocks of business model (Osterwalder & Pigneur, 2009) together and illustration how acquisition based dynamic capabilities foster a reinvention of business models in ICT Industry. Presented methodology is encouraging to analyse importance and strengths of acquisition based dynamic capabilities and their role in changes of business models in M&A processes.

How is a bottled water market created?

From the 1940s until 2015, while the French population grew 60%, the bottled water per capita consumption grew 2350%, from 6 L to about 140 L per person, per year. These figures rank France as one of the biggest bottled water markets in the world. Contrary to other top water markets, most of France's population has access to good quality tap water, which is trusted and consumed by most of its citizens. I explain this paradox, analyzing the creation and development of the French bottled water market. Based on data on the history of mineral water, marketing, and consumer behavior, I describe the origins and development of this market, highlighting the most important historical events and laws that created the economic and political conditions that shaped its structure and regulation. I analyze the influence of food and beverage groups like Nestlé, Danone, and Group Castel/Alma (Neptune), demonstrating how these companies radically reshaped the market structure through aggressive strategies of merger and acquisitions of smaller companies and their brands. I also examine how their marketing strategies and actions transformed the cultural meaning of water, gradually shifting from a banal, life‐essential good into a commodity that connects to a range of different cultural images, lifestyles, and changing consumers’ tastes and behavior. I also situate bottled water markets into the wider debate of water politics and policy. WIREs Water 2018, 5:e1220. doi: 10.1002/wat2.1220This article is categorized under: Human Water > Value of Water Human Water > Water as Imagined and Represented

Minority Shareholder Protection in Cross-Border Mergers: A Must for or an Impediment to the European Single Market?

The main goal of the Cross-Border Merger Directive, adopted in 2005, is to facilitate the mergers of companies registered in different Member States. Therefore, a structure that is highly similar to that of the Third Directive on domestic mergers has been adopted. However, according to Article 4.2 of the Directive, the Member States are free to introduce additional protection mechanisms for minority shareholders opposing the merger. This article discusses whether that provision presents an obstacle to the successful implementation of the Directive and argues that additional minority shareholder protection is indeed necessary, considering the low level of harmonisation among Member States’ company law systems.

Přeshraniční fúze na vzestupu - nebo ne?

V roce 2008 nabyl účinnosti zákon o přeměnách, který vznikl jako důsledek implementace směrnice Evropského parlamentu č. 2005/56/ES o přeshraničních fúzích kapitálových společností s cílem zajistit podmínky pro přeshraniční fúze v rámci Evropské Unie. Článek se zaměřuje na prezentaci výsledků výzkumu, jehož cílem je identifikace vývoje charakteristických rysů přeshraničních fúzí s účastí české společnosti po dobu osmi let počínaje účinností zákona. Data byla ručně získána z veřejně dostupných zdrojů, z dokumentů uložených ve sbírkách listin rejstříkových soudů. Získaná data vypovídají o přetrvávajících odlišnostech v národních legislativních úpravách jednotlivých členských států, které nadále brání plnému rozvoji přeshraničních fúzí. Východiskem z této situace je dle autorek důslednější sjednocení legislativy zejména v oblasti účetního řešení v rámci celé Evropské Unie.

The Gazprom Case: Lessons of the Past For the Future

Under the EU Merger Regulation, if the Commission has concerns that a merger may significantly affect competition in the European Union, the merging companies may propose modifications to the project that would guarantee continued competition on the market. The Commission may declare a concentration compatible with the common market following such a modification by the parties and attach to its decision conditions and obligations intended to ensure that the undertakings comply with the commitments. In other words, commitments have to be offered by the parties but the Commission may introduce conditions and obligations if they are required to ensure the enforceability of commitments. Meanwhile the scope to propose merger modifications and the level of discretion of the competition authority are quite different under the Law on Competition of the Republic of Lithuania, adopted almost two decades ago. The goal of this paper is to reveal those differences and, with the help of the jurisprudence of the Supreme Administrative Court of Lithuania in the Gazprom case, to explain how this may impact future cases

Effects of Mergers and Divestitures on Airline Fares

U.S. antitrust authorities have increasingly forced merging companies to divest assets as a condition for merger approval, with the goal of creating a more competitive postmerger environment. This study examined the effectiveness of this government strategy in the context of the airline industry, in which forced divestitures have occurred in recent consolidations. The study used unique data on assets critical to airport facilities that were involved in the divestitures to document the reallocation of those assets to low-cost carriers. Estimates of the impact of the divestitures on airfares were then calculated. The results show that, at the affected airports, fares for merging carriers fell by 3% and fares for nonmerging carriers fell by 1% relative to airports at which no divestiture occurred. These results provide evidence that the divestiture strategy used by antitrust authorities is effective in this setting in mitigating market power.

Health insurer market power and employer size: an empirical evaluation of insurer concentration and wages through compensating differentials

ABSTRACTThis article explores the differentiated effects of health insurer market concentration on net compensation of employees across distinct firm sizes. Consistent with the existing literature evaluating insurer market concentration and the theory of compensating differentials, we find evidence of higher premiums and reduced net compensation for employees in markets with more concentrated insurers. Furthermore, we find evidence that the magnitude of these effects is distinctly smaller for large employers. This implies that mergers of large health insurance companies may have a significant impact on small businesses but that the effect is mitigated for larger employers.

Company Mergers

Company Mergers

Efficiency of Mergers of Mechanical Engineering Companies in the Czech Republic

Abstract This paper presents the research results in the field of the efficiency of mergers and acquisitions in the mechanical engineering industry of the Czech Republic. The aim of this paper is to determine whether mergers taking place in mechanical engineering are successful, or possibly to identify factors which may be deemed as synergies sources. In our research, the success rate of mergers is identified on the basis of the increasing revenues and operating profit. It has been established that out of mergers completed in 2004 - 2011, success has been achieved in approximately half of them. For this reason, we have focused on identifying the factors which may serve as the reasons for such a difference. The selected indicators of the cost-to-revenue ratio and utilization of fixed assets, investments, and net working capital we analysed before and after the mergers in both groups of successful and unsuccessful mergers. The Mann-Whitney U test was used to test the results. The research results have demonstrated that synergies are not achieved due to the change in the market power of the merged companied but owing to operational efficiency which is reflected in a drop in labour costs and depreciation to revenues ratios and increasing asset utilization.

أحكام اندماج الشركات في الفقه والقانون وأثرها على تطوير الصناعة المالية

The merger among the companies has become a common phenomenon in the contemporary economic life. This phenomenon has different reasons, particularly among the large companies. This merger is one of the methods for forming large economic projects and a means of the formation of holding companies. It has become a point of economic, jurisprudential and legal interest. Merger of the companies is a way towards changing the shape of the companies, increasing their capital and overcoming the difficulties that they may encounter. Merger of the companies is one of the forms of financial engineering and modern financial industry. The study aimed to investigate the provisions of the merger of companies in the Islamic jurisprudence and Yemeni law and find out jurisprudential and legal solutions for the problems that may arise during the merger of the business companies. It also aimed at identifying the impact of the merger of the business companies on the Islamic financial industry development. The study used the analytical comparative method to achieve the intended results and propose certain recommendations to the specialists and Islamic financial industry professionals. It employed practical applications in the jurisprudential authentication for merging companies. The results of the study revealed that the merger of companies has an impact on the development of the Islamic financial industry through developing and focusing on the economic activity of the merged companies. The merger provides technical and specialized expertise that contributes to the development and engineering of the Islamic finance industry. Additionally, it provides economic efficiency and Islamic credibility for the Islamic financial innovations along with a conducive environment for the financial innovation in the Islamic financial industry in light of the purposes of the Islamic law. The results indicate the need to encourage national companies to compete and increase their quality levels so that they can participate and interact with other companies in light of globalization. This interaction should be consistent with the principles of Islamic religion and never harm the interests of its citizens.

The creation and further development of the corporate structure based on processes of mergers and acquisitions

The article explores the issue of privatization based on processes of mergers and acquisitions. The analysis of the stages of the integration of the companies on the basis of reorganization processes. Addresses the issue of financing the operations consolidation companies. The special role in the creation and further development of the corporate structures occupy the processes of mergers and acquisitions. The basis of the integration of the companies using the processes of mergers and acquisitions, business development and the investment component of the mechanism of realization of association of companies with accounting and evaluation of effectiveness data, corporate action for participants of the integration process. However, the practice of creating and developing corporate structures based on the processes of merger and acquisition companies indicates that is not developed fully the organizational mechanism of the data management processes at an early stage, as well as the methodology of estimation of efficiency of corporate development in terms of mergers and acquisitions. One of the most significant reasons for this situation, there is insufficient processing phase of the mechanism of corporate procedures for mergers and acquisitions of the aggregated results of the integration process and the overall efficiency of corporate development. Analysis of the content of integration processes on the basis of merger and acquisition companies allowed to highlight the most important typological signs data processes, which should include: the type of integration of the companies; national affiliation of companies that join together; the attitude of companies towards mergers and acquisitions; how to combine building companies; the terms of mergers and acquisitions; mechanism for mergers and acquisitions; the nature of the integration of the companies. As a result of the fact that integration processes based on mergers and acquisitions require substantial financial resources, as well as complex further complex corporate changes company-initiated, correct and accurate evaluation and selection of companies for mergers and acquisitions is a condition of effectiveness data integration processes. Valuation of the company for the purpose of merger and acquisition can be carried out within the methods and models of the two major approaches: the valuation of the company; evaluation of the value of the company equity share in equity or stake. The peculiarity of the decision-making on the use of a particular method of financing transactions in the merger and acquisition companies is the need to determine not only the efficiency of financing structure for the absorbing side, but also external conditions, in which the acquiring company. Such external conditions that influence the choice of a particular financing structure include: conditions of taxation of the holders of the target company, the nature of the market assessment of future mergers and acquisitions, the degree of asymmetry of a distribution of information between absorption and the target company. Decision on restructuring of the activities of the corporate structure in the form of mergers and acquisitions is, above all, achieving greater efficiency of companies within the new corporate merger. Evaluation of the effectiveness of the development of the corporate structure in terms of mergers and acquisitions can be defined on the basis of two fundamental approaches differ: a prospective and retrospective.

C&EN profiles Evotec, serving drug discovery with an upside

Offering contract research to the pharmaceutical industry appears to be a relatively safe business. On the other hand, drug discovery, although risky, is more interesting and potentially more lucrative. The German firm Evotec has settled on a business model that balances some of both. After some fits and starts, the 23-year-old company is now building a business to meet the drug industry’s need for cost-efficient discovery services. But knowing that the real upside comes in the long term, Evotec also has devised a partnered drug development pipeline that has the potential to generate big future returns. For Evotec, getting there has been part of an evolution that over two decades has included numerous acquisitions of small firms, as well as a few divestitures. A seminal moment was the 2000 merger of the originator company, Evotec BioSystems, with Oxford Asymmetry International to create a chemistry and biology services firm. Not too

The impact of the merger goodwill on the profitability of the enterprise

In this paper, 2008–2012 listed in Shanghai and Shenzhen information industry companies as samples, empirical information industry listed companies merger affect the goodwill of corporate profitability. The study found that the information industry listed companies in general goodwill positively correlated with profitability, and the greater the proportion of goodwill, to bring the stronger profitability. The research results provide reference information industry, listed companies in the merger process, whether the acquisition premium.

Overcoming the Trend Toward Healthier Foods: The Impact of Advertising and Intangibles on Investor Returns in the Packaged Food Industry

ABSTRACTThe study analyzes the impact of advertising, goodwill, and other intangibles on investor returns in the consumer packaged food and beverage industry during 2008–2012, a timeframe during which smaller brands wrestled $18 billion in sales away from large manufacturers of processed foods. The findings demonstrate that those firms that were able to allocate a greater percentage of their revenue to their ongoing advertising efforts were able to enhance investor holding period returns (HPR). In addition, those firms with a higher ratio of intangible assets other than goodwill to total assets were also able to enhance HPR. However, there was not a significant positive relationship between the ratio of acquired goodwill to total assets and HPR. Hence, packaged food and beverage manufacturers are advised to seek competitive advantages through their own brand-building efforts rather than seeking to enhance investor returns through a strategy based on company mergers and acquisitions.

Measuring Post Merger Performance – A Study of Metal Industry

In today's globalised economy, mergers and acquisitions activity has gained importance caused by intensifying competition liberalization and globalization, integration of national and international markets. The aim of this paper is to study the impact of merger on the financial performance of merging companies by examining some pre- merger and post- merger financial ratios. The sample consists of 9 BSE listed companies of metal industry involved in mergers during the year 2009-10. Paired sample t-test is carried out to assess the difference in performance between post-merger and pre-merger periods. The findings showed a marginal but not significant improvement in case of liquidity and leverage but the profitability results showed significant decline in RONW and ROA which are contrary to our hypothesis. The results of this study suggest that in case of M&A, synergy can be generated in long run with the careful usage of the resources. The success of M&A deals depends on post integration process, timely action and to keep check on the costs of integration process.

The Effect of Companies’ Transformations on Legally Binding Contracts

This article aims at analysing how different types of contracts are impacted by a merger or acquisition of companies or by a spin-off (grouped under the concept of ‘company’s transformations’) under Romanian law. This article will expose some of the problems that may arise due to the transformation of a legal entity and will try to present specific solutions in light of the Romanian legal framework.

Does a Flexibility/Support Organizational Initiative Improve High-Tech Employees’ Well-Being? Evidence from the Work, Family, and Health Network

This study tests a central theoretical assumption of stress process and job strain models, namely that increases in employees’ control and support at work should promote well-being. To do so, we use a group-randomized field trial with longitudinal data from 867 information technology (IT) workers to investigate the well-being effects of STAR, an organizational intervention designed to promote greater employee control over work time and greater supervisor support for workers’ personal lives. We also offer a unique analysis of an unexpected field effect—a company merger—among workers surveyed earlier versus later in the study period, before or after the merger announcement. We find few STAR effects for the latter group, but over 12 months, STAR reduced burnout, perceived stress, and psychological distress, and increased job satisfaction, for the early survey group. STAR effects are partially mediated by increases in schedule control and declines in family-to-work conflict and burnout (an outcome and mediator) by six months. Moderating effects show that STAR benefits women in reducing psychological distress and perceived stress, and increases non-supervisory employees’ job satisfaction. This study demonstrates, with a rigorous design, that organizational-level initiatives can promote employee well-being.

A Comparative Study of the Effect of Interlocking Directorates on Merger Target Selection under Different Merger and Acquisition Modes

This paper, taking the directors of listed companies as point of penetration, studies the effects of interlocking directorates on the company’s merger decisions. With a focus on interlocking directorates’ influence on the selection of M & A targets, a Probit regression test was conducted by pairing potential M & A targets to real acquisition sample according to the industry of the real sample. The innovation of this paper lies in the study of whether there is a significant difference in the effect of interlocking directorates through differentiating various M & A modes, including horizontal mergers, vertical mergers and mixed mergers. The empirical analysis concludes that when there are interlocking directorates in merger company and potential target company, it is more likely for the potential target to be the object company. What’s more, by comparison, when the acquiring company and the target company are from different industries, there is greater impact of interlocking directorates, and the effects are stronger in vertical mergers than in mixed mergers and horizontal mergers.

Comparison of Premiums of Chinese and European Companies in Mergers and Acquisitions in Europe

The goal of the study is to analyse whether Chinese Mainland companies were paying higher premiums for similar target companies in Europe in comparison with Europe-based companies during the period of 2000-2013. To determine the difference between premiums paid by Chinese and European companies, two samples were analysed: one represented all Chinese acquisitions in Europe which matched the set criteria, another included comparable European targets acquired by European companies. Quantitative research methods were applied to measure statistical difference in the premiums of the two samples. Results of the research indicate that the average premiums paid by Chinese companies are double the size of the European acquisition premiums for the similar target company in Europe. Significant evidence suggests that premiums of Chinese and European companies for similar targets in Europe are not equal.