Talk:Mergers and acquisitions

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Motives behind M&A[edit]

The claim that Vertical Integration cannot add profit to the integrated firm is disputable. For a citation see: Hastings, Justine. "Vertical Relationships and Competition in Retail Gasoline Markets: Empirical Evidence from Contract Changes in Southern California." The American Economic Review, Vol. 94, No. 1 (Mar., 2004), pp. 317-328. Although the US Federal Trade Commission WP 291 failed to reproduce Hastings' results with alternative data. Mjakubowski (talk) 04:37, 24 July 2008 (UTC)

Additionally a Vertically Integrated firm is not a conglomerate as conglomerates are comprised of unrelated businesses. Mjakubowski (talk) 04:40, 24 July 2008 (UTC)

Proposed edit[edit]

Replace:

  • Vertical integration: Companies acquire part of a supply chain and benefit from the resources. However, this does not add any value since although one end of the supply chain may receive a product at a cheaper cost, the other end now has lower revenue. In addition, the supplier may find more difficulty in supplying to competitors of its acquirer because the competition would not want to support the new conglomerate.

With:

  • Vertical integration: Vertical Integration occurs when an upstream and downstream firm merge (or one acquires the other). There are several reasons for this to occur. One reason is to internalise an externality problem. A common example is of such an externality is double marginalization. Double marginalization occurs when both the upstream and downstream firms have monopoly power, each firm reduces output from the competitive level to the monopoly level, creating two deadweight losses. By merging the vertically integrated firm can collect one deadweight loss by setting the upstram firm's output to the competitive level. This increases profits and consumer surplus. A merger that creates a vertically integrated firm can be profitable.

Mjakubowski (talk) 05:02, 24 July 2008 (UTC)

Done Mjakubowski (talk) 14:53, 26 July 2008 (UTC)

the biggest merger[edit]

Arcelor-Mittal padgh singh

Isn't that the World's biggest merger ever. How come that isn't mentioned here ?

151.200.35.176 16:15, 9 July 2006 (UTC)

In one table, i saw that by 1999, the biggest one occured in 1999, Pfizer bought Warner-Lambert with offer price $82.3996 billion. However, in 1999, there was a bigger one: MCI worldcom bought sprint for $129billion. Jackzhp 22:43, 24 April 2007 (UTC)

There's no mention of the Rio Tinto acquisition by BHP Billiton for 147.4 Billion in 2008 and happens to be the 2nd largest Merger after Vodafone airtouch acquisition of Mannesmann in 1999(172.7 Billion). Arcelor-Mittal isnt the world's biggedt Merger ever.Mittal paid to arcelor US $ 33 billion for acquiring 43% stake in the combined entity. Jain puneet (talk) 12:50, 23 June 2008 (UTC)

suggest archiving this para (the discussion is not going anywhere ) Sanjiv swarup (talk) 06:45, 11 September 2008 (UTC)

Agree - the text isn't fair to the subject[edit]

I would like to see text on the thinking behind why companies do this, references to famous "cases", references to important literature in the subject.

Opps, there seems there have been a lot of activities here since I last read it. [1]

Any information/study done on social and psychological implications of people laid off by meergers or similar studies?

worth archiving now Sanjiv swarup (talk) 06:50, 11 September 2008 (UTC)

Clean Up Required[edit]

There are several mistakes in the already existing article, ex. ChevronTexaco was created in 2001. And there are many mergers left out that need to be recognized, ex. ConocoPhillips, One of the largest companies in the world and its excluded. The numbers are also questionable on the merger values. Gunis del 06:07, 16 February 2007 (UTC)

M&A Financing[edit]

Can anyone support the statement that cash offers are usually mergers because "shareholders of the target company are removed from the picture"? - This doesn't make sense to me.

  • to the best of my knowlege the name of the transaction (merger vs acquisition) has nothing to do with the method of financing. Some view acquisition is a special case of merger - one where a controlling interest is obtained -- see http://www.investorwords.com: merger vs. acquisition. In other cases "acquisition" simply refers to act of gaining some sort of possession (not necessarily a controlling interest) and merger is the result of that acquisition. The term M&A comes from that definition. Firms involved in the process of acquiring (the acquisition) also assist in the definition of the legal and organizational structure of the end product (the merger).
  • shareholders are always involved, directly or indirectly. Increases in corporate ownership are always obtained by buying stock, even if it is paid for in cash. The only sometimes exception are LLCs which can function like a cross between a partnership and a corporation. So the only way control can be obtained without purchase of stock on the open market is via a release of treasury shares. However, any significant release that would affect corporate control must be done with board approval. Major shareholders usually have the right to hire and fire a certain number of board positions. In addition, some companies also have covenents that require any action significantly affecting ownership be brought to a shareholder vote.

I'd like to edit the M&A financing section - does anyone object? Egfrank 06:26, 23 March 2007 (UTC)

Further cleanup[edit]

I propose major edits to the following sections:

  • Major mergers and acquisitions in the 1990s: Create a chart of the Top 10 M&A in the 1990s in the same format as the 2000-2007 section. Delete the remainder of the list. If we seek to include every M&A in this time period, these lists could easily go on for several pages. Leaving only the Top 10 M&A would give ample examples, as well as ensure that we meet the qualification of "Major mergers and acquisitions". Listing only the Top 10 would also result in a much cleaner, more readable article.
  • Major mergers & acquisitions 2000-2007: Change name to "Major mergers and acquisitions from 2000 to present". Leave the list of the Top 10 M&A and delete the rest of this section, for all the same reasons as above.
  • M&A Advisors: Delete this section entirely or move it to its own article. These charts are incomplete, but could easily be completed and turned into an article on M&A Advisors. Mergers and acquisitions would be better served by a paragraph or two on the roles of M&A Advisors and perhaps examples of major companies in the field. The current level of detail is not essential to describing the large field of mergers and acquisitions.

I will probably proceed with these changes within two weeks, depending on any feedback.
--JKeene 07:16, 16 June 2007 (UTC)

Done.
--JKeene 02:11, 3 July 2007 (UTC)

In the Classification section, the definition of success ("increase shareholder value faster than if the companies were separate, or prevent the deterioration of shareholder value more than if the companies were separate") should specify a time interval to make complete sense.Scorwin (talk) 01:56, 10 July 2008 (UTC)

Categories?[edit]

Are these categories correct?

They seem like a strange set to me. RJFJR 16:29, 19 April 2007 (UTC)TARE GAND

takeover premium[edit]

It was said that the takeover premiums are generally range from 50% to 100% of the target firm's share price before the acquisition. Can someone put a distribution here? or a link? thanks. Jackzhp 22:31, 24 April 2007 (UTC)

More equity ownership by the manager may increase corporate performance because the managers are more capable of opposing a takeover threat from the market for corporate control and as a result, the raiders in this market will have to pay higher takeover premiums.The average premium on leaked deals was 24%, versus 28% for non-leaked deals according to a study of over 350000 M&A(done by Cass Business School) Intuitively,The premium would have been higher on leaked deals than non-leaked deals. The premium [conclusion] is counterintuitive.Jain puneet (talk) 12:28, 19 June 2008 (UTC)

is this link a good case study ?[edit]

is this link a good case study ? Sanjiv swarup (talk) 06:43, 11 September 2008 (UTC)

http://wiki.edeskonline.com/Shipyards_Indian#What_investment_banking_advise_can_be_given_to_Indian_Shipyards_.3F

Post-2000 list large error[edit]

You have Royal Dutch Petroleum Co. and Shell Transport & Trading Co merging in 2004, when that actually happened in 1907. I couldn't see where it was changed in the article history. I didn't take it out become I assume something else is supposed to occupy that place in the table. Rather glaring mistake though. --Kevlar (talkcontribs) 00:09, 25 March 2009 (UTC)

Kevlar, I found this article that will explain the 2004 date: http://www.petroleumnews.com/pntruncate/980696136.shtml Gulbenk (talk) 20:09, 17 July 2012 (UTC)

Request for input about need for new categories[edit]

It appears to me that a lot of organizational restructuring that doesn't fit into the the main hierarchies Category:Establishments and the related but less extensive Category:Disestablishments by year could use some new categories. We have Category:Mergers and acquisitions, but this category is basically just one category. I would be looking for categories where I could add organizations that continue to operate but within the structure of another organization. Another possible new category would be for organizations that are continuations of merged entities. I'm sure more refined ways of cutting and slicing these groups are possible, but I feel a first move has to be effected. My proposal would include not only business ventures which the present article predominantly deals with, but also organizations, public and private. __meco (talk) 17:39, 13 February 2012 (UTC)

Perhaps it would be better to use the broad category of "mergers and acquisitions" for the categorization issues you state. The Sound and the Fury (talk) 00:52, 19 February 2012 (UTC)
The reason I brought this up is the lack of descriptiveness of this category if we lump everything remotely related to mergers and acquisitions into this category. It would seem more appropriate to me to have a separate category (for starters - maybe several categories later on) for organizations that have been the objects of mergers and acquisitions to distinguish from topics that aren't about individual organizations. If we really start adding all such organizations to this category, the topical articles will be drowned out and very hard to spot. How about Category:Organizations targeted by mergers and acquisitions or Category:Organizations restructured through mergers and acquisitions? __meco (talk) 14:37, 19 February 2012 (UTC)

Financing M&A - Financing Options: Something missing[edit]

By reading the section on financing of the deals I found that this part:

  • Cash on hand: it consumes financial slack (excess cash or unused debt capacity) and may decrease debt rating. There are no major transaction costs.
  • What here?: It consumes financial slack, may decrease debt rating and increase cost of debt. Transaction costs include underwriting or closing costs of 1% to 3% of the face value.
  • Issue of stock: it increases financial slack, may improve debt rating and reduce cost of debt. Transaction costs include fees for preparation of a proxy statement, an extraordinary shareholder meeting and registration.

Has something missing in the second point (bold insert by me). I assume it should be something like debt financing, bond issue or the like - but I'm not entirely sure, so I won't mingle with it... If anyone has an idea, please correct it! Thanks a lot! --Alpenfreund (talk) 19:43, 7 August 2012 (UTC)

New Page for listing of Globally largest mergers & acquisitions[edit]

There are already lists of Mergers & Acquisitions that are company specific:

I would like to see an (additional) consolidated list of the largest X number of acquisitions — Preceding unsigned comment added by 69.174.87.100 (talk) 13:14, 31 October 2012 (UTC)

I looked for and did not find such a list today. Seems like a useful article. The closest I've found so far is January 5 2010|07.15 AM UTC by Stan Reybern The 12 Biggest Mergers in American History http://www.billshrink.com/blog/6834/the-12-biggest-mergers-in-american-history/ Maybe there should be a link to it. Fholson 11:23, 19 May 2014 (UTC) — Preceding unsigned comment added by Fholson (talkcontribs)

What's MAIC?[edit]

This article uses the acronym MAIC twice without defining it. Could someone please decrypt this -- and add the decryption to MAIC (disambiguation)? Thanks. DavidMCEddy (talk) 22:13, 26 October 2013 (UTC)

If the dab page no longer exists, but useful information on MAIC is created in this article or elsewhere, please consider adding a {{redirect}} hatnote to Center for International Stabilization and Recovery which is where MAIC currently redirects. Thanks. PamD 09:02, 27 October 2013 (UTC)


Proposed edit[edit]

Replace: "while when the deal is unfriendly (that is, when the target company does not want to be purchased)"

With: "while when the deal is unfriendly (that is, when the management of the target company opposes the deal)"

Motivation for this edit is that the "will of a company" is fuzzy concept. Does it refer to the will of the board or broader owner community or the management or other employees or what. If owners oppose the deal then they just do not sell their stake -> the text must refer specifically to the will of the target company management -> lets say it. — Preceding unsigned comment added by 194.100.27.29 (talk) 09:54, 21 August 2014 (UTC)