Mergers & acquisitions (M&A) are an important part of corporate financial management. In 2018, the worldwide transaction volume of M&A amounted to 3888 billion USD, which represents an increase of 159 billion USD compared to the previous year.
In the outlook for 2020 the bank J.P. Morgan expects companies to stick to their core competencies in the year ahead as opposed to adding new growth legs or entering unproven markets, and M&A activity to be driven by companies looking to strengthen their businesses during periods of prolonged uncertainty.
The major US bank sees the reason for this as the influence of success on the company's share price, which rises in successful transactions and falls in risky ones.
This influence will be explained further with examples of companies in various industries.
Inhaltsverzeichnis (Table of Contents)
- List of abbreviations.
- 1. Introduction.
- 2. Mergers and Acquisitions.
- 2.1 Effects on chemical and pharmaceutical companies - Bayer and Monsanto as example.
- 2.2. Effects on telecommunications companies - Vodafone Group and Mannesmann as example.
- 2.3. Effects on media companies - Walt Disney and Pixar as example.
- 3. Conclusion...
- Bibliography..
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This scientific essay aims to analyze the effects of mergers and acquisitions (M&A) on the stock prices of companies from different industries. The study focuses on examining the historical performance of shares involved in M&A transactions and identifying any correlation between these events and share price developments.
- The influence of M&A on stock prices across different industries.
- The impact of synergies and risks associated with M&A transactions.
- Case studies examining the effects of M&A on specific companies.
- The role of legal and regulatory considerations in M&A transactions.
- The importance of due diligence and risk assessment in successful M&A.
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the importance of M&A in corporate financial management, highlighting the global transaction volume and discussing the outlook for M&A activity in 2020. It emphasizes the significance of M&A on company share prices and outlines the approach used in the study.
- Mergers and Acquisitions: This chapter provides a general overview of M&A, explaining the distinction between mergers and acquisitions and divestitures. It explores the motivations behind M&A, emphasizing the potential for synergy and the risks associated with these transactions.
- Effects on chemical and pharmaceutical companies - Bayer and Monsanto as example: This chapter examines the merger between Bayer AG and Monsanto Company, highlighting the transaction's size and the legal challenges faced by Bayer following the acquisition. It analyzes the impact of the merger on Bayer's share price, demonstrating the negative effects of legal risks and shareholder concerns.
Schlüsselwörter (Keywords)
The core keywords and focus topics of this study encompass mergers and acquisitions (M&A), corporate financial management, stock prices, industry analysis, legal risks, shareholder value, due diligence, and synergy effects. It explores the relationship between M&A events and share price performance, considering the impact of legal and regulatory issues on the success of these transactions.
Frequently Asked Questions
How do Mergers & Acquisitions (M&A) generally affect stock prices?
Stock prices typically rise in successful transactions due to anticipated synergies and fall in risky ones where shareholders fear overvaluation or integration challenges.
Why did Bayer's share price drop after acquiring Monsanto?
The decline was largely driven by significant legal risks associated with Monsanto's products and shareholder concerns regarding the long-term liabilities of the deal.
What was the transaction volume of M&A in 2018?
The worldwide transaction volume in 2018 amounted to 3,888 billion USD, an increase of 159 billion USD over the previous year.
What is the difference between a merger and an acquisition?
A merger is typically a combination of two companies into a new legal entity, while an acquisition involves one company purchasing another, which then becomes part of the buyer's business.
What roles do synergies play in M&A transactions?
Synergies are the primary motivation for M&A, aiming for a combined value that is greater than the sum of the two separate companies through cost savings or increased market power.
Why is due diligence important in M&A?
Due diligence is a comprehensive risk assessment that helps the acquiring company identify hidden liabilities and verify the financial health of the target company before finalizing the deal.
- Citar trabajo
- Sebastian Kleinschmidt (Autor), 2020, Effects of M&A on the stock prices of companies from different industries, Múnich, GRIN Verlag, https://www.grin.com/document/1370005
