Kumar Wealth Creation in the World's Largest Mergers and Acquisitions

Integrated Case Studies
1. Auflage 2018
ISBN: 978-3-030-02363-8
Verlag: Springer International Publishing
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 359 Seiten

Reihe: Management for Professionals

This book highlights research-based case studies in order to analyze the wealth created in the world’s largest mergers and acquisitions (M&A). This book encourages cross fertilization in theory building and applied research by examining the links between M&A and wealth creation. Each chapter covers a specific case and offers a focused clinical examination of the entire lifecycle of M&A for each mega deal, exploring all aspects of the process. The success of M&A are analyzed through two main research approaches: event studies and financial performance analyses. The event studies examine the abnormal returns to the shareholders in the period surrounding the merger announcement. The financial performance studies examine the reported financial results of acquirers before and after the acquisition to see whether financial performance has improved after merger. The relation between method of payment, premium paid and stock returns are examined. The chapters also discuss synergies of the deal-cost and revenue synergies. 

Mergers and acquisitions represent a major force in modern financial and economic environment. Whether in times of boom or bust, M&As have emerged as a compelling strategy for growth. The biggest companies of modern day have all taken form through a series of restructuring activities like multiple mergers. Acquisitions continue to remain as the quickest route companies take to operate in new markets and to add new capabilities and resources. The cases covered in this book highlights high profile M&As and focuses on the wealth creation for shareholders of acquirer and target firms as a financial assessment of the merger’s success. The book should be useful for finance professionals, corporate planners, strategists, and managers.

Autoren/Hrsg.

Kumar, B. Rajesh

Inhaltsverzeichnis

1;Preface;6
2;Acknowledgment;9
3;Contents;10
4;1: Mergers and Acquisitions;12
4.1;Introduction;12
4.2;Strategic Drivers for M&A in Different Industry Sectors;13
4.3;Different M&A Strategies;16
4.4;Motivation for Mergers and Acquisitions;17
4.5;Types of M&As;18
4.6;Synergies in Mergers;19
4.7;Value Creation in Mergers;21
4.8;Due Diligence in Mergers and Acquisitions;21
4.9;Methods of Payment in M&A;22
4.10;Post-merger Integration;22
4.11;Review of Research Studies on Mergers and Acquisitions;23
4.12;References;25
5;2: Vodafone Acquisition of Mannesmann;27
5.1;Introduction;27
5.2;The Merger Story;28
5.3;Merger Highlights;30
5.4;Regulatory Issues;31
5.5;Strategic Perspective of the Merger;31
5.6;Post-merger Integration;33
5.7;Merger Analysis;34
5.8;Operating Performance Analysis (Table 2.6);35
5.9;Stock Wealth Analysis: Acquirer;37
5.10;Wealth Analysis of Target Firm;39
5.11;References;39
6;3: American Online: Time Warner Merger and Other Restructuring;40
6.1;Introduction;40
6.1.1;Highlights of Time Warner;40
6.1.2;Corporate Restructuring by Time Warner (Table 3.1);41
6.1.3;Time Inc. Merges with Warner Communications;42
6.1.4;Time Warner–Turner Broadcasting Merger;43
6.1.5;American Online and Time Warner Merger;44
6.1.6;Strategic Perspective;44
6.1.7;Reasons for Merger Failure;45
6.1.8;Wealth Effects of Merger on Time Warner (Tables 3.3 and 3.4);47
6.1.9;Operating Performance Analysis;47
6.1.10;Other Acquisitions;50
6.1.11;Spin-Offs;50
6.1.11.1;Spin-Off of AOL;50
6.1.11.2;Spin-Off of Time Warner Cable;50
6.1.11.3;Spin-Off of Time Inc.;50
6.1.12;AT&T Acquires Time Warner;51
6.2;References;52
7;4: Acquisitions by Verizon;53
7.1;Introduction;53
7.2;Verizon Communications Acquisition of Verizon Wireless;54
7.3;Financial Highlights of the Deal;55
7.4;Strategic Perspective of the Deal;55
7.5;Verizon’s Acquisition of AOL;58
7.6;Acquisition of Yahoo by Verizon Communications;60
7.7;Other Corporate Restructuring by Verizon;63
7.8;References;64
8;5: DowDuPont Merger;65
8.1;Dow Chemical Company;65
8.2;Divestitures;66
8.3;Restructuring Plan;66
8.4;DuPont;66
8.5;Restructuring by DuPont;67
8.6;DowDuPont;68
8.7;Merger Announcement;68
8.8;Merger Highlights;69
8.9;Merger Completion;69
8.10;Strategic Advantages;70
8.11;Integration Process;70
8.12;Regulatory Issues;71
8.13;Merger and Wealth Effects;72
8.13.1;Announcement Effects for DuPont;72
8.13.2;Announcement Effects for Dow Chemical;73
8.14;References;75
9;6: Mergers and Acquisitions by Anheuser-Busch InBev;76
9.1;InBev’s Acquisition of Anheuser-Busch;77
9.2;Merger of AB InBev with SABMiller;78
9.3;Transaction Highlights;79
9.4;Merger Synergy;80
9.5;Divestments due to the Merger Deal;80
9.6;Other Acquisitions of AB InBev;81
9.7;Merger Announcement Effect on Acquirer AB InBev’s Stock Price (Table 6.2);81
9.8;References;84
10;7: Merger of Kraft and Heinz Company;85
10.1;Introduction;85
10.2;Kraft Heinz Merger;86
10.3;Terms of the Merger;86
10.4;Merger Synergies;87
10.5;Valuation Analysis;88
10.5.1;Effect of Merger Announcement;90
10.6;References;90
11;8: Acquisitions by Pfizer;91
11.1;Introduction;91
11.2;Strategic Drivers for M&A in Pharmaceutical Industry;92
11.3;Mergers and Acquisitions by Pfizer;93
11.4;Pfizer Acquisition of Warner–Lambert;94
11.5;Highlights of the Deal;95
11.6;Strategic Perspective of the Deal;95
11.7;Acquisition Announcement Effect on Stock Wealth;96
11.8;Pfizer–Pharmacia Merger;96
11.9;Strategic Advantage;98
11.10;Merger Highlights;99
11.11;Wealth Creation in Pfizer–Pharmacia Merger;99
11.12;Merger with Wyeth;99
11.13;Terms of the Merger;100
11.14;Deal Synergies;101
11.15;Strategic Advantages;101
11.16;Merger Announcement and Stock Wealth Impact;102
11.17;Operating Performance Analysis;104
11.18;References;105
12;9: ExxonMobil Merger;106
12.1;Industry Scenario;106
12.2;ExxonMobil Corporation;107
12.3;ExxonMobil Merger;107
12.4;Deal Highlights;109
12.5;Merger Motivations;109
12.6;Strategic Benefits from the Deal;110
12.7;Regulatory Issues;110
12.8;Merger Valuation;110
12.9;Wealth Creation in ExxonMobil Deal;111
12.10;Operating Performance Analysis (Table 9.4);112
12.11;References;114
13;10: Citicorp–Travelers Group Merger;115
13.1;Consolidation in the Financial Industry;115
13.2;Citigroup;116
13.3;Acquisitions by Citi Group;116
13.4;Travelers Companies;117
13.5;Citicorp–Travelers Group Merger;118
13.6;Terms of the Deal;118
13.7;Strategic Motivations for the Deal;119
13.8;Failure of the Deal;119
13.9;Merger Analysis;120
13.10;Stock Wealth Analysis Surrounding the Merger Period;120
13.11;Stock Returns for Travelers During Merger Period;121
13.12;References;123
14;11: AT&T–Time Warner Acquisition;124
14.1;Introduction;124
14.2;Acquisitions Related to AT&T;124
14.3;AT&T’s Acquisition of Time Warner;126
14.4;Deal Highlights;127
14.5;Synergies from the Deal;128
14.6;Regulatory Issues;128
14.7;Wealth Analysis;129
14.7.1;Acquisition Effects on AT&T;129
14.7.2;Acquisition Effects on Time Warner Stock Price;129
14.8;References;132
15;12: ABN AMRO Acquisition by RFS Holding;133
15.1;Acquisition of ABN AMRO by the Consortium Bank;134
15.2;Wealth Creation for RBS Stock;136
15.3;References;137
16;13: GlaxoSmithKline Merger;138
16.1;Introduction;138
16.2;Growth of GlaxoSmithKline Beecham (GSK) through Mergers and Acquisitions;139
16.2.1;Beecham and SmithKline Merger;139
16.2.2;Glaxo Wellcome Merger;140
16.2.3;GlaxoSmithKline Merger;141
16.2.4;Merger Highlights;142
16.2.5;Merger Benefits;142
16.2.6;Announcement Effects of GlaxoSmithKline Merger;144
16.3;References;146
17;14: Acquisitions by Royal Dutch Shell;147
17.1;M&A by Shell Group;148
17.2;Formation of Royal Dutch Shell Group;148
17.3;Terms of the Transaction;149
17.4;Acquisition of BG Group;150
17.5;Terms of Deal Agreement;152
17.6;Announcement Effect on Stock Wealth;152
17.7;References;153
18;15: Bell South Merger with AT&T;154
18.1;Introduction;154
18.2;Advantages of the Merger;155
18.3;Terms and Conditions;156
18.4;Expected Synergies of the Deal;156
18.5;Merger Announcement and Wealth Effects;157
18.6;Post-merger Operating Performance;158
18.7;References;160
19;16: Comcast Acquisition of AT&T Broadband;161
19.1;Acquisition of AT&T Broadband;161
19.2;Acquisition Highlights;162
19.3;Merger Process;164
19.4;Wealth Creation During Acquisition Announcement;164
19.5;References;164
20;17: Key Mergers of JPMorgan Chase;165
20.1;Chase Manhattan and JPMorgan Merger;167
20.2;JPMorgan Chase–Bank One Deal;168
20.3;Terms of the Deal;169
20.4;Merger Effects;169
20.5;Stock Wealth Creation in Merger;170
20.6;References;171
21;18: Charter Communications Acquisition of Time Warner Cable;173
21.1;Highlights of Charter Communications;173
21.2;Time Warner Cable;173
21.3;Bright House Networks;174
21.4;Acquisition of Time Warner Cable;174
21.5;Deal Highlights;175
21.6;Regulatory Approvals;176
21.7;Synergy from the Deal;176
21.8;Wealth Creation in Charter Communication Time Warner Cable Deal;177
21.9;References;179
22;19: Actavis-Allergan Merger Deal;180
22.1;Actavis Generics;180
22.2;Allergan;180
22.3;Strategic Acquisitions of Actavis;181
22.4;Actavis Merger with Allergan;182
22.5;Terms of the Deal;182
22.6;Financing of the Deal;183
22.7;Benefits of Acquisition;183
22.8;Synergy;184
22.9;Merger Announcement Effect on Wealth Creation;185
22.10;References;186
23;20: Dell’s Acquisition of EMC;187
23.1;Dell;187
23.2;EMC;188
23.3;Acquisition of EMC;188
23.4;Financial Terms of the Deal;189
23.5;Synergies from the Deal;189
23.6;Other Acquisitions;190
23.7;References;191
24;21: Altria Group’s Spin-Off of Philip Morris International Inc.;192
24.1;Philip Morris International Inc. Spin-Off;192
24.2;Stock Wealth Creation for Altria Group;195
24.3;References;195
25;22: Vodafone AirTouch Merger;197
25.1;Highlights of Vodafone;197
25.2;Vodafone AirTouch Deal;198
25.3;Characteristics of Merger;199
25.4;Financial Terms of the Deal;199
25.5;Practical Issues in Merger;199
25.6;Strategic Reasons for Merger;200
25.7;Synergistic Effects;201
25.8;Stock Market Wealth Effects on Deal Announcement;202
25.9;References;203
26;23: Bell Atlantic- GTE Merger;204
26.1;Introduction;204
26.2;Merger Between Bell Atlantic and GTE;206
26.3;Deal Highlights;206
26.4;Merger Benefits;207
26.5;Merger Announcement and Wealth Effects;208
26.6;References;208
27;24: British Petroleum Merger with Amoco;209
27.1;Introduction;209
27.2;The Merger of BP Amoco;209
27.3;Merger Highlights;210
27.4;Expected Synergy from the Deal;211
27.5;Stock Reaction to Merger Announcement;213
27.6;References;214
28;25: Qwest Merger with US West;215
28.1;Growth Strategy of Qwest Telecommunications;215
28.2;US West;216
28.3;Qwest Acquisition of US West;217
28.4;Strategic Advantages of the Merger;218
28.5;Stock Market Reaction;218
28.6;CenturyLink Acquires Qwest;218
28.7;References;219
29;26: WorldCom’s Acquisition of MCI;220
29.1;Introduction;220
29.2;WorldCom MCI Deal;220
29.3;Terms of the Deal;221
29.4;Stock Market Reaction;222
29.5;Reasons for the Merger;222
29.6;Advantages of Merger;223
29.7;Verizon Communication’s Acquisition of MCI;223
29.8;References;224
30;27: Microsoft’s Acquisition of LinkedIn;225
30.1;LinkedIn;227
30.2;Microsoft’s Acquisition of LinkedIn;227
30.3;Deal Highlights;228
30.4;Strategic Drivers for the Deal;228
30.5;Post-acquisition Integration;229
30.6;Stock Market Reaction to Acquisition Announcement;229
30.7;References;230
31;28: Procter & Gamble’s Acquisition of Gillette;232
31.1;Introduction;232
31.2;Gillette;233
31.3;Gillette’s Acquisition by P&G;233
31.4;Deal Highlights;234
31.5;Strategic Advantages of the Deal;234
31.6;Stock Market Reaction;236
31.7;Operating Performance;237
31.8;References;239
32;29: Oracle’s Hostile Takeover of PeopleSoft;240
32.1;Introduction;240
32.2;PeopleSoft;241
32.3;Industry Scenario;242
32.4;The Takeover Battle;242
32.5;Reasons for Acquisition;245
32.6;Stock Market Reaction to Deal;245
32.7;References;246
33;30: Mergers and Acquisitions by Bank of America;248
33.1;Introduction;248
33.2;Acquisitions by Bank of America;249
33.3;Merger of NationsBank and Bank of America;249
33.4;Acquisitions by Fleet Group;250
33.5;Bank of America’s Acquisition of Fleet Boston;251
33.6;Bank of America’s Acquisition of MBNA Corporation;252
33.7;Lloyds Bank Acquires MBNA;253
33.8;Acquisition of US Trust by Bank of America;253
33.9;Bank of America’s Acquisition of LaSalle Bank;254
33.10;Acquisition of Countrywide by Bank of America;255
33.11;Acquisition of Merrill Lynch by Bank of America;256
33.12;Effect of Acquisition Announcement on Wealth Creation;257
33.13;References;258
34;31: Gaz de France Merger with Suez;260
34.1;Gaz de France Merger with Suez;260
34.2;Terms of the Deal;262
34.3;Strategic Drivers for the Merger;262
34.4;Financial Performance After Merger;263
34.5;References;263
35;32: Sanofi–Aventis Merger;265
35.1;Sanofi–Aventis Merger;266
35.2;Terms of the Deal;266
35.2.1;Stock Market Returns During the Announcement of Deal;267
35.3;References;268
36;33: Bayer’s Acquisition of Monsanto;269
36.1;Bayer Group;269
36.2;Monsanto;270
36.3;Bayer’s Acquisition of Monsanto;271
36.3.1;Industry Scenario;271
36.4;Motivation for the Acquisition;272
36.4.1;Deal Value;273
36.5;Synergies;274
36.6;Impact of Acquisition on Stock Market;274
36.7;References;275
37;34: Roche Holding’s Acquisition of Genentech;276
37.1;Roche Holding;276
37.2;Genentech;276
37.2.1;Roche’s Acquisition of Genentech Inc.;277
37.3;Key Benefits of Acquisition;278
37.4;Stock Market Reaction to Final Acquisition Offer;279
37.5;References;279
38;35: France Telecom SA–Orange PLC Merger;281
38.1;Deal Terms;282
38.2;Merger Advantages;283
38.3;Stock Market Reaction;283
38.4;References;284
39;36: Merck–Schering-Plough Corp Merger;286
39.1;Merck;286
39.2;Alliances, Mergers, Spin-Off, and Divestitures by Merck & Co.;286
39.3;Schering-Plough;287
39.4;Merck-Schering-Plough Merger;288
39.5;Terms of the Deal;288
39.6;Financing of the Deal;288
39.7;Strategic Merger Benefits;289
39.8;Wealth Reaction in Merger Event;291
39.9;References;292
40;37: Astra–Zeneca Merger;293
40.1;Astra AB;293
40.2;Zeneca Group Plc;293
40.3;Corporate Restructuring by AstraZeneca;294
40.4;Zeneca–Astra Merger;295
40.5;Stock Market Reaction on Merger Event;297
40.6;References;297
41;38: HP Compaq Merger;299
41.1;Compaq Computer Corporation;299
41.2;HP Compaq Merger;301
41.3;Operating Performance Analysis: Pre- and Post-merger Period (Table 38.5);302
41.3.1;Stock Market Reaction to Merger Announcement;304
41.4;References;304
42;39: Major Acquisitions by Facebook;305
42.1;Acquisitions by Facebook;306
42.2;Facebook’s Acquisition of WhatsApp;309
42.3;Stock Performance on Acquisition Announcement of WhatsApp;310
42.4;References;311
43;40: JDS Uniphase Corp and SDL Inc. Merger;312
43.1;JDS Uniphase Merger;312
43.2;JDS Uniphase: SDL Merger;314
43.3;Stock Market Reaction to the Deal;315
43.4;References;316
44;41: KKR’s Acquisition of First Data;317
44.1;KKR;317
44.2;First Data Corp;318
44.3;KKR’s Buyout of First Data;319
44.4;References;320
45;42: Lucent Technologies Acquisition of Ascend Communications;321
45.1;Lucent Technologies;321
45.2;Ascend Communications;322
45.3;Acquisition of Ascend Communications;323
45.4;Deal Terms;323
45.5;Strategic Motives for the Acquisition;323
45.6;Deal Impact on Stock Market;324
45.7;References;324
46;43: Vivendi–Seagram Deal;325
46.1;Vivendi Highlights;325
46.2;Seagram Highlights;326
46.3;Merger of Vivendi and Seagram;327
46.4;Terms of Deal;327
46.5;Legal Issues with Merger;328
46.6;Stock Market Reaction;328
46.7;References;330
47;44: Daimler–Chrysler Merger;331
47.1;Highlights of Daimler;331
47.2;Acquisitions by Daimler AG;333
47.3;Highlights of Chrysler Corporation;333
47.4;Daimler–Chrysler Merger;334
47.5;Terms of the Deal;334
47.6;Stock Market Reaction to Merger Announcement;335
47.7;References;336
48;45: Arcelor–Mittal Merger;337
48.1;Growth of Mittal Steel;337
48.2;Arcelor Steel;338
48.3;Arcelor–Mittal Deal;338
48.4;The Merger Battle;338
48.4.1;Defensive Mechanism Against the Deal;338
48.4.2;Reactions from Mittal Steel;339
48.4.3;Terms of the Deal;340
48.4.4;Expected Benefits of Merger;340
48.4.5;Merger Announcement and Wealth Creation;340
48.5;References;341