Use Of Merger And Acquisition As A Growth And Survival Strategy In A Depressed Economy

The Use Of Merger And Acquisition As A Growth And Survival Strategy In A Depressed Economy (PDF/DOC)

Abstract

The Nigeria business climate has been adjustment by expect as one of the hostile, turbulent and volatile and vet challenging. It stands to reason, therefore, that for tangible success or survival (as the case may be ) to be recorded the active player must know his onion, be acquainted with the train of the Nigeria economy and be able to interpret accurately the hand writing of the inter playing force in the economy, some of which have taken renown financial analysts to their wits end. The volatility and vulnerability of the national economy, complete with fragment changes in government policies and legist ration have under accurate fore cast as a vital manegment tool an economic mizage.
Unfortunately through as the situation may seen it offers the “wise group’’ both corporate and individual to prove its mettle when chips are down.
The concept of merger and acqnisituation, which is the theme of the study is contemporary and throw up of many unfolding challenges of Nigeria depressed economy as the wise group of business companies scheme not only to stay afloat but also to flourish.

Chapter One

1.0 INTRODUCTION
Growth is necessary to determine the performance and continual of any business organization. Without growth, a business can hardly attract good management to itself.
The use of merger and acquisition as a growth and survival strategy in a depressed economy like ours appears to be on the increase in recent times. This is not surprising, considering the large number of business failures and foul-ups as result of advise micro and macro economic climate.
In the face of such hostile business climate , however, some business organization that belongs to the “wise group’’ started thinking of how to pull their resource together by the way of merger and acquisition as a survival cum growth strategy.
Business merger and acquisition has played ad important role in the growth and survival of many firms in Europe, USA, and Nigeria. But before venturing into such a gargantuan adventure, financial managers should view it as organization or employers.

1.1 STATEMENT OF PROBLEM
In the high of the confusion and tumults of the modern business environment globally, some firms have flooded up while other only managed to keep afloat. It is but interesting to observe that in the midst of such unfavorable business environment, some enterprises do not merely survive but post super profit. The logical question is what factors could account for the divergent fortunes of some firm of identical size and status in the same industry and operating in the same economy?
While not pretending to have all the answers, I make bold to state, that business merger and acquisition has become one of the fashionable surviving strategy for many companies.
It is therefore, the intension of the study to investigate the effect merger and acquisition on the performance some selected companies in Nigeria.
Further more the study will also seek to establish any possible relationship as otherwise between profitability of a company or increase in its earning per share and its merger and or acquisition scheme.
At this junction, it may be pertinent to acknowledge the view of some expects that many business fusion and acquisition had often resulted in disappointment, as the profit level of the business organization took a nose dive. Should this be the organization wishing to diversity or expand its operation would be compelled to seek out any ailing firm with suitable production plant and technology as well as good distribution network.
For the purpose of the study three public limited liability company have been selected, namely.
1. John Holt plc
2. Unilever Nigeria plc
3. Nigeria bottling company plc

1.2 PURPOSE OF THE STUDY
The study is a deliberate effort to enquire into the effect of business merger and acquisition strategy on the performance of the above selected Nigeria firm. The purpose of the studies also includes:
(i) to find out whether the profitable of the companies are dependent on or independent on merger and acquisition.
(ii) To ascertain whether the employees of the companies have improved since the adoption of merger and acquisition
(iii) To find out whether the earning per share of the companies have improved since the adoption of merger and acquisition
(iv) To ascertain whether the increment of the companies market share are due toi the adoption of merger and acquisition.

1.3 SIGNIFICANT OF THE STUDY
With the recent increase in the incident of investigation and bankruptcy of company together with dwindling economic situation of the country, there is need for the examination of the effect of business merger and acquisition in the performance of Nigeria business organization. It is however believed that with the study of the companies that are involved in the strategy as a means of survival, one would be able to assess the profitability of the strategy being widely adopted in the Nigeria business environment as a survival cum growth strategy. It is in the light of the foregoing that the subject of this study is considered very significant.

1.4 STATEMENT5 OF HYPOTHESIS
(i) Ho : the profitability of the companies are not dependent on or independent on merger and acquisition.
Hi : the profitability of the companies are dependent on or independent on merger and acquisition.
(ii) Ho : the general staff welfare and moral of the employees of the companies have not improved since the adoption of merger and acquisition.
Hi : The general staff welfare and moral of the employees of the companies have improved since the adoption of merger and acquisition.
(iii) Ho : the earnings per share of the companies have not improved since the adoption of merger and acquisition.
Hi : the earnings per share of the companies have improved since the adoption of merger and acquisition.
(iv) Ho: the increments of the companies market share are not due to the adoption of merger and acquisition
Hi: the increments of the companies market share are due to the adoption of merger and acquisition
1.5 SCOPE AND LIMITATION OF STUDY
It is very important to acknowledge the fact that the study is restricted to the three (3) companies earlier mentioned. Hence the researcher will base his conclusion (s) on the findings from such a few numbers out of many similar companies in the country.
Further to the above restriction is the problem of lack of eleventh materials such as annual reports of some of the companies under study from their corporate head quarters or from the corporate affairs commission .
Finally, time posed yet another constraint. Time and energy and also finance. With these entire problems not withstanding, it is hoped that the study will satisfy its objectives.

1.6 DEFINITION OF TERMS
The following definition were used strictly for this study:
ACQUISITION: the purchase and take over of one company by another company.
BUSINESS MERGER: this is when two or more independent companies combine or fuse to form a new company
STRATEGY: an integrated plan through which a business organization accomplishes its set objectives.
GOING PRIVATE: the process of transmuting a publicly held company into a private held on (plc).
HOSTILE TAKEOVER: An acquisition offer or take over attempt that is opposed by the management of the target company.
PROXY FIGH: A contend wayed by competing manegment terms for the shareholder vote necessary to gain control over manegment of the firm.
SYNERGIES: increase in the value of a company’s activities, which result from combining separate operation into a single operation.
TARGET COMPANY: a company that another firms aims to acquire.
TENDER OFFER: a public offer by a firm to buy the share of another company.

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Related Field(s):

Accounting (2350), Economics (1237)