The functional importance of mergers and acquisitions is under going a sea change since liberalization in India. Several major merger movements have occurred in the united States and each was more or less dominated by particular type of merger. Mergers completed in the period 1887 through 1904 were estimated to involve 15 %of the total numbers of plants and employees comprising manufacturers in 1900.
The functional importance of mergers and acquisitions is under going a sea change since liberalization in India. Several major merger movements have occurred in the united States and each was more or less dominated by particular type of merger. Mergers completed in the period 1887 through 1904 were estimated to involve 15 %of the total numbers of plants and employees comprising manufacturers in 1900.
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The functional importance of mergers and acquisitions is under going a sea change since liberalization in India. Several major merger movements have occurred in the united States and each was more or less dominated by particular type of merger. Mergers completed in the period 1887 through 1904 were estimated to involve 15 %of the total numbers of plants and employees comprising manufacturers in 1900.
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Attribution Non-Commercial (BY-NC)
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Download as DOC, PDF, TXT or read online from Scribd
The functional importance of mergers and acquisitions is under going a sea change since liberalization in India. The MRTP act and other legislations have been amended paving way for large business groups and foreign companies to resort to the merger acquisition route for growth. Further, the SEBI (substantial acquisitions of shares and take over) regulations, 1994 and 1997, have been notified. Mergers and acquisitions as a strategy by several corporate groups like R. P. Goenka, vijay Mallya and manu chhabria for growth and expansion of the empire in India. Some of the companies taken over by RPG group included Dunlop, ceat, Philips carbon black, gramophone India. Mallya’s united breweries (UB) group was straddled mostly by mergers and acquisitions. Companies under the UB conglomerate included best and Crompton, mangalore chemicals and fertilizers, kissan foods besides four liquor firms (united breweries, carew phipson, herbertson and McDowell). MERGERS AND ACQUISITIONS IN DEVELOPED COUNTRIES USA: several major merger movements have occurred in the United States and each was more or less dominated by particular type of merger. All of the merger movements occur when the economy experienced sustained high rate of growth and conceded well particular development in business environments. 1895-1904movements: the combination movement at the turn of the century comprises mainly of horizontal mergers, which resulted in high concentration in many industries; including heavy manufacturing industries. The period was one of rapid economic expansion. The movements peaked in 1899 and almost ended in 1903, when a severe economic recession set in [1] mergers completed in the period 1887 through 1904 were estimated to involve 15 %of the total numbers of plants and employees comprising manufacturers in 1900 (markhar, 1955). The mergers of 1895-1904 followed by major changes in economic infrastructure and production technologies. The period was followed by the completion of the transcontinental railroad system, the advent of a national economic market and thus, paving the way for regional firms becoming national firms (markhan, 1955 salter and weinhold, 1980). While the preceding argument by markhan does mergers some economists cast doubt on the possibility that largescale production was a motive to combination. Lynch points out three problems in economy of scale national. (A) although scale economics can be more easily accomplished in combination of small firms than of large firms; the merger activity was concentrated in the large-firm category. However, markhan notes that nearly all the tabulation of early mergers were based on large mergers and did not include merger involving a capitalization of less then $1 million (Markhan, 1955).(B) lynch’s second point is that combinations resulted in multi plant operations but scale economics are obtained when production is integrated by investments in large replacement facilities. Clearly, horizontal combination between geographically separated plants will not have any production economics of scale in the absence of their physical integration. However, economics of scale can exist not only in production but also in administration and marketing. (C) Finally, lynch observe that merger activity in the early period occurred in a wide variety of industries and technological advancements motivating horizontal mergers cannot surface in a number of industries with in a short time span. This appears to miss the point that economies of scale available not form technological advancements in individual industries but rather became realizable from the reduction in transportations costs, whose impact could have been pervasive. EUROPE: Since the middle 1950s a wave of takeovers, historically unprecedented in its scope, and its effects had swept through British industry. In a study of UK manufacturing industries by Ajit Singh (1971), it was found that 2,126 firms engaged in manufacturing, which were quoted on the U.K. stock exchanges in 1954; more than 400 had been acquired by 1960. Out of the next 100 large firms in 1954, 10 were taken over during the next 6 years. The number of unquoted manufacturing companies and other smaller concerns acquired in the same period runs into thousands. This take over movement has been far larger than those which occurred at the turn of the century and in the early 1920s. The reasons for the enormous volume of acquisitions in the 1980s were manifold. The stock market in the UK, in harmony with markets in other countries, experienced a strong bull phase while culminated as the October crash of 1987, there was a mire relaxed, laissez-faire governmental attitude to mergers and acquisitions embodied in the new vision of Thatcherism. The 1980s also witnessed divestments on a large scale. The simultaneous increase in acquisitions and divestments suggest a considerable amount of corporate restructuring in the UK economy in recent years. Such restructuring has been made possible by new organizational innovations like, leveraged buyouts, management buyout (Sudersan 1995). Even though Taggarts’ figure does not cover the period from 1987 to the present, junk financing was certainly curtailed by market conditions starting in late 1989. even if junk bonds did not play a major role in the 1980s mergers deals, the dramatic increase in corporate leveraging during the 1980s served to deteriorate the quality of debt worldwide especially when coupled with high interest rates supported by governments contending with inflation caused by increase lightly, itself due in part to more lending and easier consumer credit. This has led to the highest levels of foreclosure and bankruptcies since the great depression in the 1930s.