Case Study On Cemex Group

This paper is about two companies that went through same type of change (merger and acquisition) with different outcomes. Merger is combination of two or more companies in which the assets and liabilities of the selling firms are absorbed by the buying firm. Although the buying firm may be a considerably different organization after the merger, it retains its original identity while Acquisition is the purchase of an asset or an entire company (Sherman, A. J., & Hart, M. A. (2005). Chapter 1: The Basics of Mergers and Acquisitions. In, Mergers & Acquisitions from A to Z. American Management Association International.).

Mergers and acquisitions have become a growing trend for companies to inorganically grow a business within its particular industry. There are many goals that companies may be looking to achieve by doing this, but the main reason is to guarantee long-term and profitable growth for their business. Companies have to keep up with a rapidly increasing global market and increased competition. With the struggle for competitive advantage becoming stronger and stronger, it is almost essential to achieve these mergers. Through research I will attempt to dissect the best practices for achieving merger success.

Careful thinking about what it means for an acquisition to succeed, coupled with an analysis of why deals fail, can lead to some practical advice for managers, thus helping them to develop a more refined view. More specifically, in order for acquisitions to pay off, they ought to pass four tests. I describe the tests below, showing how each offers a way to head off common sources of merger malfunction.

In the recent finance literature, most empirical analyses of the returns to M&A are based on event studies and the findings from these differ depending on whether the research is focused on the target or the acquiring companies. Varying time frameworks, abnormal return metrics, benchmarks and weighting procedures also make comparisons difficult and measurement of long-term abnormal performance complex. Loderer and Martin (1992) investigate 304 mergers and 155 acquisitions that took place from 1965-1986 and document a negative but statistically insignificant

In order to have a successful M&A many different steps are involved. Each step in the process is just as important as the next and cannot be over looked. Some of the broader area’s that require focus are; accounting, taxes, and legal. Within each of these categories are several sub categories that are important to focus on when attempting to complete a successful merger or acquisition. While every organization may have a different process for doing so, and place more importance on one than another would, all of the aspects listed are important. However, it is up to each individual organization to designate how important each one is.

Oftentimes, M&As look like an easy way to improve a company’s portfolio and market position. Disney’s acquisition of Pixar is a compelling example of successful M&As. However, the dangers of such M&A agreements tend to be underestimated (Rein, 2009). The merger of AOL & Time Warner was disaster because of the lack in harmony and collaboration (DiMaggio, 2009). One of the biggest mistakes acquiring companies can fall into is taking the cultural differences of the acquired company for granted (Rein, 2009).

Since the early 20th century, mergers began to play a great role in the development of modern corporations in different fields such as foods, construction, manufacture, natural resources and technology. A merger can be defined as the absorption of one firm by another (Ross, Westerfield and Jeffrey, 2002). The acquiring firm maintains its name and identity, and it obtains all the assets and liabilities of the target company. The acquired company no longer exists as an independent entity. While mergers could be categorized into three types: horizontal mergers, vertical mergers and conglomerate mergers. Horizontal merger means that a firm takes over another firm in the same industry and at the same stage of the production

To protect the business from the drastic downfall, many firms chose to take a step by making business combinations. Stepping towards M&A is a winning way to combine to successful alike business. With M&A synergy power of the two companies are combined to crater a business that is most suitable for the demand of the market and its stakeholders. Merger is a case where the acquired company deliberately delivers it assets and liabilities in the hands of the acquiring company. As a result, the company being acquired can survive another phases of competition in business cycle. However, the phenomena of merger and acquisitions of the two businesses would certainly leave an impact on its stakeholders; it may be negative or positive. Due to the financial stress of the company being acquired the stakeholders may feel the off-putting impact and hence it is quite obvious for the stakeholders to be nervous and uneasy at the kick-off of the initial phase of M&A.

There are a number of competing theories of mergers and acquisitions (M&As) based on the purpose for which such M&As are undertaken. Among these theories are empire building (Baumol, 1967, & Mueller, 1969), establishment of monopolies (Roll, 1986, & Mueller, 1993), management entrenchment (Shleifer & Vishny, 1989), and the attainment of greater efficiencies (Mead, 1968, & Jensen, 1988). These theories are built on the motivations that prompt compa-nies to enter into M&A transactions (Motis, 2007:2). There are instances, however, when target companies do not voluntary agree to a takeover but are compelled by aggressive manoeuvres of the acquiring company. In such

Today’s business world hosts a phenomenon, a way to expand business activities by consolidating or buying another company, so called Mergers or Acquisitions (M&A’s). M&A’s is a corporate strategy that was introduced in the 1960s. It has experienced ‘waves’ of popularity and success while at the same time suffered criticism due to numerous failures. In today 's global, competitive environment, mergers are sometimes the only means for long-term survival. Mergers can be categorized as either horizontal, vertical or conglomerate. They also exhibit other characteristics, for example, they can be complimentary or supplementary in nature.

Every merger is demanding on individuals at all levels of the organizations involved (Appelbaum, Gandell, Yortis, Proper, & Francois, 2000; Buiter & Harris, 2013). In addition to the financial perspective, there are many parts that must be managed during a merger, including people and processes (Appelbaum et al., 2000; Buiter & Harris, 2013; Mackenzie &

The modern world has seen the formation of firms as a mechanism of integration, which enables individuals to develop an enterprise and to combine capital and expertise from different individuals. Mergers, especially the mega-mergers, change the market structure. Mergers and Acquisitions (M&A) have unparalleled capability to transform firm and supplement corporate renewal. Research in M&A has been done taking into consideration a multitude of disciplines, e.g. finance, economics, law, business, strategy formulation, organization theory, human resource management and sociology. M&A becomes a real time phenomenon due to the attention it receives from different walk of life.

Today’s fast growing globalize economies and competition have forced industries to fine ways to survive in today’s perplexed business environment and generate profit for their shareholders. There are many methods to develop the organizations one of them is Mergers and Acquisitions. This is where strategies for success are developed by acquiring new companies or by the merger of two (P.Gaughan, 2000).

Many reasons such as globalization, technical developments, changing political relations between countries and liberalization cause a compelling and competitive business environment for the companies. This pressure to remain standing in corporate finance world makes companies to be in quest of rapidly effective ways to gain strenght and expand their business activities. At this point, Mergers and Acquisitions, which are two of the essential activities in capital markets to restructe a corporation or business activities and to achieve economic growth and reinforcement, can be counted as two of the mainstream activities of the today 's business world because of its advantages and immediate effects.

Since 2000, the number of transnational mergers and acquisitions (M&A) is increasing not only for Chinese enterprises but slao for the international market as well. However the overall result of transnational M&A is not satisfactory. Analysis the international market, about 61% of mergers and acquisition in faliure (Mendenhal, 2005). Identically, more than 70% China companies were failed due to culture shock when they taken the process of merger, such as TCL, SAIC (Shanghai Automotive Industry Corporation) and others enterprises (Wang, 2010). It has been indicated (Wang, 2010) that the