Cross Border Mergers And Acquisitions

* For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

2016 is said to be “Record Breaking Year” for Chinese Investors. According to Forbes News, five major acquisitions of U.S companies and stakes totaled up to 28.16 Billion dollars. Yet, this was only a quarter of China’s entire outward investments in 2016. Many foreign firms suppose that China’s oversea merging and investing in next decade will reach tremendous amount, but it will not occur as they expected depending on Emma Johanningsmeier’s current event reports on Wall Street Journal about “New Chinese Regulations and wary foreign governments hamper M&A investors” in august 2017.

The United States’ market for mergers and acquisitions formally began at the dawn of the 20th century, when industry began to evolve and capital needed to be more efficiently allocated. Economic historians and academics alike have concluded that the market advanced to its current stage through a series of cycles, the first of which began in the early 1900s, that occurred due to technological advances, disproportionate cash flows, and capital displacements. As the economy developed, the market for mergers grew and became more convoluted due to growing consumer bases in virtually all industries and a need for more efficient markets and lower costs.

Mergers and acquisitions represent the ultimate in change for a business. No other event is more difficult, difficult, or chaotic as a merger and acquisition. According to oxford, the term "merger" means "the combination of two commercial companies into one." the term "acquisition" refers to the acquisition of assets by a company from another company. In an acquisition, the both companies may continue to exist. The acquiring company will remain in business and the acquired business will be integrated into the acquiring company and therefore, the acquired company ceases to exist after the merger. Technology transfer to developing perspectives of multiple challenges any business. The prospects include access to new markets that were previously closed because of the cost, regulatory or indirect obstacles, the ability to beat resources such as capital, knowledge and work. Challenges come from foreign competitors entering domestic markets businesses, as well as domestic competitors reduce costs through global sourcing in offshore production moving or saving money expansion in scale in new markets. Globalization challenges the businesses to become more streamlined and efficient, while simultaneously extending the geographical scope of their activities [kraemer et al., 2002]. The transition to faster growth and elimination of the position of the third largest economy, the indian

Mergers and Acquisitions (M&A) is a precise significant strategic interchange to sustain in competitiveness within the global market and it turns out to be one of a popular tools for corporate-level strategy. M&A is the amalgamation of two corporate entities to convert into solitary legitimate entity by combining resources and capabilities in order to attain a competitive advantage. Merger typically means reunion two particular companies together on equivalent basic whereas acquisition ordinarily means a greater sized corporation procuring a smaller sized corporation. The M&A activity has been continuously increased over the last 100 years and this phenomena is described by several M&A ‘waves’ (refer to Table 1).

Cross border merger and acquisition become a fundamental characteristic of the global business landscape. With the increasing significance of globalization in business sector, it is one of the quickest ways to achieve the objective. This phenomenon is not only noticeable in the developed country like American, Europe and Japan but also in the developing market like India. Since, 1991 the period of liberalization has influenced functioning of Indian corporate enterprise. This growing trend towards cross-border merger & acquisition has raised new urgency to understand and manage the tax consequences of international expansion.

Much of the progress of Sunlight and Berendsen involves organic growth. These businesses are market front-runners in their countries, which helped them to learn a lot from each other and share knowledge. Sometimes the only way to grow in an organic way is to extend existing resources.

The list of M&As analysed in this study were extracted from two databases: Bloomberg L.P and Zephyr. The reason for choosing these two sources were the fact that they were the only relevant databases that the researcher had access to. Having two databases gives a more round scope of M&A transactions and the share prices were extracted from Bloomberg L.P as Zephyr do not have any share price information. The criteria of the sample are as follows: the M&A deal was announced between 01/01/2003 and 31/12/2014, the deal to be completed, the acquiring country should be one of the GCC members (Saudi Arabia, Qatar, United Arab Emirates, Kuwait, bahrain, Oman) and finally the acquirer must be a listed company in its country’s stock exchange.

Another type of acquisition is a reverse merger, a deal that enables a private company to get publicly-listed in a relatively short time period. A reverse merger occurs when a private company that has strong prospects and is eager to raise financing buys a publicly-listed shell company, usually one with no business and limited assets. The private company reverse merges into the public company, and together they become an entirely new public corporation with tradable shares. Regardless of their category or structure, all mergers and acquisitions have one common goal: they are all meant to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved.

enter into another country. When a company is looking to enter in these different countries the

Cross-border M&A studies on financial institutions are rare and inconclusive, possibly due to the unavailability of data and to sample differences. There is as yet no paper examining foreign financial institution M&As in one emerging market. This paper

Additionally, through acquisition, enterprise can be benefited with reduced industry rivalry and increased market power to bargain down the input price over suppliers and raise up the selling price to buyers. In contrast, there are challenges associated with acquisition. The biggest challenge in the international acquisition is how to deal with inter-culture difference. Overestimating the economic benefits also contributes to the failure to increase profitability.

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

A significant part of Indian overseas investment has gone into acquisitions abroad. In its latest report, Grant Thornton, a global consultancy firm, stated that 'The total number of M&A deals during the first 11 months of 2008 stood at 433, with an announced value of US$ 31.95 billion. The number of outbound deals has far exceeded the domestic ones in terms of value break up. According to Grant Thornton's Special Advisory Services official, for the month of November alone, there were 26 M&A deals with a total announced value of US$ 3.40 billion, which is higher than October 2008 at US$ 2.13

This level of activity was never seen in Indian corporate sector. InfoTech, Banking , media , pharma, cement , power are the sectors, which are more active in mergers and acquisitions.