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Essay / Research Paper Abstract
This 6 page paper looks at the level of mergers which are taking place and the reasons that mergers are so popular. The paper then considers how and why mergers fail to realise the potential benefits and the difficulties faced in trying to achieve those targets. The paper cites real examples and argues that the benefits are much harder to realise than is commonly believed. The bibliography cites 8 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEmergerf.rtf
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Unformatted sample text from the term paper:
to the current bid by Comcast to acquire Disney. The rate of mergers over the globe show that thus is a phenomenon where there must be some great perceived
advantages, even with some drops, in the levels during 2002 the levels have been increasing since. 2002 saw a decrease of global activity by 26% (Mattich, 2002). However
2003 appears to still show a high level of merger and acquisition activity taking place. During the first three months of 2003 there were 20,010 deals, compared to 19,993
over the same period in 2002, the value was lower, with $866,781 million in 2003 and $900,746 in 2002 (Investment Dealers Digest, 2003). Therefore, in terms of value the activity
is falling, but in terms of number of deals it is increasing. Only just over a quarter of these deals were in the US, but more than a third of
the value was located in this region (Investment Dealers Digest, 2003). This level of activity indicates an underlying trend and to understand this trend the motivation has to be considered.
In most case a company will seek to gain some form of competitive advantage as a result of the merge, such as economies of scale leading to a potential cost
advantage, the merging of contrasting advantages following the merger or the aspect of economies of scale or added value through synergy. The idea has also been that gaining market share
or getting a bargain may also increased value of the stock holders. However, when looking at the motivation it needs to be assessed if these are real or only
perceived benefits. It is also worth remembering that mergers can also be seen as a defensive strategy, to avoid being taken over themselves and can be used to introduce
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