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Merger
Stability in a Cost Asymmetric Industry - - Margarida
Catalão-Lopes
This
paper analyzes the formation and stability of mergers involving
asymmetric firms, as a function of efficiency differences
and fixed cost savings. Mergers are allowed to include any
number of participants, out of an n-firm industry. Attention
is restricted to individual movements and the focus is on
the identity of insiders, with predictions on which mergers
are more likely to survive perturbations or estimation errors
by proponents and/or by the regulatory authority across
the parameter space.
©
2008 The Icfai University Press. All Rights Reserved.
The
Choice of Payment Method in Dutch Mergers and Acquisitions
- - Jorrit
Swieringa and Marc B J Schauten
This
paper examines which bidder, deal and target characteristics
significantly affect the choice of payment method in Dutch
Mergers and Acquisitions (M&As). The final data sample
consists of 227 M&As announced during the 10-year period
between January 1996 and December 2005 by public bidders
from The Netherlands. These bidders successfully acquired
a public firm, a private firm or a subsidiary. It is found
that: (i) bidders with an intermediate fraction of closely
held shares prefer cash as compared to bidders with a relatively
low or high ownership stake; (ii) large firms prefer cash
than small firms; (iii) high-growth firms prefer equity
as compared to low-growth firms; (iv) relatively large deals
are more likely to be financed with stock than relatively
small deals; (v) intra-industry deals are more likely to
be financed with equity than cross-industry deals and (vi)
asset acquisitions are more likely to be financed with cash
than stock acquisitions.
©
2008 The Icfai University Press. All Rights Reserved.
Impact
of Mergers on Profitability of Acquiring Companies - - Fulbag
Singh and Monika Mogla
This
paper studies the impact of mergers on corporate performance
in India. It compares the pre-merger and post-merger operating
performance of merged companies. The aim is to identify
the reasons behind the mergers. Considering a sample of
56 companies merged between 1994 and 2002, it is seen that
profitability declined significantly after the mergers.
However, the profitability of matching firms also declined
significantly over the same time period. Thus, the decline
in profitability cannot be attributed to mergers alone.
The benefits of mergers are visible only in the form of
increased size and improved interest coverage ratio. Regression
analysis shows that current ratio, debt equity ratio and
size are negatively related to profitability, whereas interest
coverage ratio and age affect the profitability positively.
The performance of group firms is better than that of non-group
firms.
©
2008 The Icfai University Press. All Rights Reserved.
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