334,207 research outputs found
A Risk Management Model for Merger and Acquisitio
No full textIn this paper, a merger and acquisition risk
management model is proposed for considering risk
factors in the merger and acquisition activities. The
proposed model aims to maximize the probability of
success in merger and acquisition activities by managing
and reducing the associated risks. The modeling of the
proposed merger and acquisition risk management
model is described and illustrated in this paper. The
illustration result shows that the proposed model can
help to screen the best target company with minimum
associated risks in the merger and acquisition activity
Downstream Merger with Oligopolistic Input Suppliers
No full textWe examine how a downstream merger affects input prices and, in turn, the profitability of a such a merger under Cournot competition with differentiated products. Input suppliers can be interpreted as ordinary upstream firms, or trade unions organising workers. If the input suppliers are plant-specific, we find that a merger is more profitable than in a corresponding model with exogenous input prices. In contrast to the received literature, we find that it can be more profitable to take part in a merger than being an outsider. For firm-specific input suppliers, on the other hand, results are reversed. We apply our model to endogenous merger formation in an international oligopoly, and show that the equilibrium market structure is likely to be characterised by cross-border merger.merger profitability, input suppliers, trade unions, cross-border merger
Negotiating remedies : revealing the merger efficiency gains
No full textThis paper aims to contribute to the normative economic analysis of mergers control by taking into account the possible efficiency gains for the design of structural merger remedies. We show that a larger asset transfer should be requested from a less efficient merged firm than from a more efficient one, wich conforms with the recommendations of competition policy practitioners. However, since cost savings are private information of merging firms, the Competition Authority will require them to reveal their efficiency gains, so as to tailor the optimal remedy. We propose a revelation mechanism combining the use of divestitures with the regulation of their sale price. We discuss the opportunity of such a merger policy tool, and argue that in practice it may be used to signal the efficiency gains of notified mergers.Merger control, structural merger remedies, asymmetric information.
Downstream merger with oligopolistic input suppliers
No full textWe examine how a downstream merger affects input prices and, in turn, the profitability of such a merger under Cournot competition with differentiated products. Input suppliers can be interpreted as ordinary upstream firms, or trade unions organising workers. If the input suppliers are plant-specific, we find that a merger is more profitable than in a corresponding model with exogenous input prices. In contrast to the received literature, we find that it can be more profitable to take part in a merger than being an outsider. For firm-specific input suppliers, on the other hand, results are reversed. We apply our model to endogenous merger formation in an international oligopoly, and show that the equilibrium market structure is likely to be characterised by cross-border merger. -- Wir untersuchen, inwiefern nachgelagerte Fusionen Inputpreise erhöhen und wie diese wiederum die Fusionen bei Cournot-Wettbewerb mit unterschiedlichen Produkten beeinflussen. Inputanbieter können als normale vorgelagerte Firmen oder als Gewerkschaften, die Arbeiter organisieren interpretiert werden. Wenn die Inputanbieter werksspezifisch sind, finden wir, daß eine Fusion profitabler ist, als in einem vergleichbaren Modell mit exogenen Inputpreisen. Im Gegensatz zur herkömmlichen Literatur finden wir, daß es profitabler sein kann an einer Fusion teilzunehmen, denn ein Außenstehender zu sein. Für firmenspezifische Inputanbieter andererseits, ist das Ergebnis umgekehrt. Wir wenden unser Modell auf endogene Fusionsformierung in einem internationalen Oligopol an und zeigen, daß die Gleichgewichtsmarktstruktur wahrscheinlich durch grenzüberschreitende Fusionen gekennzeichnet ist.merger profitability,input suppliers,trade unions,cross-border merger
Merger, partial collusion and relocation
No full textWe set up a three-firm model of spatial competition to analyse how a merger affects the incentives for relocation, and conversely, how the possibility of relocation affects the profitability of the merger, particularly for the non-participating firm. The analysis is carried out for the assumptions of both mill pricing and price discrimination, and we also consider the case of partial collusion. For the case of mill pricing, a merger will generally induce the merger participants to relocate, but the direction of relocation is ambiguous, and dependent on the degree of convexity in the consumers' transportation cost function. We also identify a set of parameter values for which the free-rider effect of a merger vanishes, implying that the possibility of relocation could solve the `merger paradox', even in the absence of price discrimination.spatial competition, merger, relocation, partial collusion
Merger momentum and investor sentiment: the stock market reaction to merger announcements
No full textThis paper examines the effects of mergers on bidding firms’ stock prices. We find evidence of merger momentum: bidder stock prices are more likely to increase when a merger is announced if recent mergers by other firms have been received well (a “hot” merger market) or if the overall stock market is doing better. However, there is long run reversal. Long-run bidder stock returns are lower for mergers announced when the either merger or stock markets were hot at the time of the merger than for those announced at other times.Consolidation and merger of corporations ; Stock market ; Prices
Merger, partial collusion and relocation
No full textWe set up a three-firm model of spatial competition to analyse how a merger affects the incentives for relocation, and conversely, how the possibility of relocation affects the profitability of the merger, particularly for the non-participating firm. The analysis is carried out for the assumptions of both mill pricing and price discrimination, and we also consider the case of partial collusion. For the case of mill pricing, a merger will generally induce the merger participants to relocate, but the direction of relocation is ambiguous, and dependent on the degree of convexity in the consumers’ transportation cost function. We also identify a set of parameter values for which the free-rider effect of a merger vanishes, implying that the possibility of relocation could solve the ‘merger paradox’, even in the absence of price discrimination.Spatial competition; Merger; Relocation; Partial collusion.
An Empirical Assessment of the 2004 EU Merger Policy Reform
No full textBased on a database of 326 merger cases scrutinized by the European Commission between 1990 and 2007, we evaluate the economic impact of the change in European merger legislation in 2004. We ?rst propose a general framework to assess merger policy effectiveness, which is based on standard oligopoly theory and makes use of stockmarket reactions as an external assessment of the merger and the merger control decision. We then focus on four different dimensions of effectiveness: 1) legal certainty; 2) frequency and determinants of type I and type II errors; 3) rent-reversion achieved by different merger policy tools; and 4) deterrence of anti-competitive mergers. To infer the economic impact of the merger policy reform, we compare the results of our four tests before and after its introduction. Our results suggest that the policy reform seems to have been only a modest improvement of European merger policy
Merger Clusters during Economic Booms
No full textMerger activity is intense during economic booms and subdued during recessions. This paper provides a non-financial explanation for this observable pattern. We construct a model in which the target-by setting the takeover price-screens the acquirer on his (expected) ability to realize synergy gains when merging. In an economic boom, it is less profitable to sort out relatively "bad fit" acquirers, leading to a hike in merger activity. Although positive economic shocks produce expected gains at the time of merging, these mergers turn out to be less efficient in the long term-a finding that is broadly consistent with the existing empirical evidence. Furthermore, again because of the absence of boom-time screening, the more efficient acquirers earn higher merger profits during "merger waves" than outside of waves, which is also in line with empirical evidence. ZUSAMMENFASSUNG - (Fusionscluster in Boomphasen) In Zeiten wirtschaftlicher Hochkonjunktur ist die Zahl der Firmenzusammenschlüsse hoch, in Rezessionszeiten eher niedrig. Dieser Aufsatz gibt eine Erklärung für diese Beobachtung, die nicht auf rein finanzwirtschaftlichen Faktoren beruht. Im vorgestellten Modell ha das Unternehmen, welches übernommen wird, die Möglichkeit, den Übernahmepreis festzulegen und kann damit auch die übernehmende Firma auswählen. Das Auswahlkriterium sind die erwarteten Synergiegewinne im Falle einer Fusion, die für eine gute Passung der beiden fusionierenden Unternehmen sprechen. In Phasen der Hochkonjunktur ist es allerdings für Unternehmen generell interessant, zu fusionieren, und es wird relativ weniger profitabel, großen Auswahlaufwand zu treiben, um schlecht passende Fusionspartner auszusortieren und eventuell gar keinen Fusionspartner zu finden. Daher kommt es in diesen Zeiten zu mehr Fusionen als in anderen Konjunkturphasen, die als Fusionswellen bezeichnet werden. Zum Zeitpunkt der Fusion lassen sich auch die erwarteten Gewinne durch die günstige ökonomische Gesamtsituation realisieren. Im weiteren Verlauf stellen sich jedoch solche Fusionen mit schlecht passenden Partnern als wenig effizient heraus-was auch empirische Analysen bestätigt haben. Darüber hinaus zeigt das Modell, dass-wiederum wegen der fehlenden Auswahlprozedur in Boomphasen-die effizienteren Fusionspartner während Fusionswellen höhere Gewinne machen als außerhalb von Fusionswellen. Dies ist zuvor bereits empirisch beobachtet worden.Mergers, Merger Waves, Screening
Managerial delegation and merger incentives
No full textWe analyse how the internal organisation of firms affects the correspondence between private and social incentives for horizontal merger. Applying a model of endogenous merger formation in a three-firm asymmetric Cournot industry, we contrast the cases of entrepreneurial and managerial firms. The use of strategic delegation increases both the probability that a merger takes place and the likelihood that the ‘wrong’ type of merger is undertaken, from a viewpoint of social welfare. This suggests that managerial delegation increases the scope for antitrust policy.Managerial delegation; Endogenous mergers; Cost asymmetry; Antitrust policy.
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