The Missing Links of Mergers & Acquisitions Waves

-- Humberto R Ribeiro

The research in the Mergers and Acquisitions (M&A) field has been prolific in recent years. This is unsurprising, as M&A have been increasingly relevant in the scope of corporate growth and restructuring, as proved by the magnitude of the latest M&A global wave. Nevertheless, despite the large contribution from literature, some relevant issues remain to be explained by economic and finance research. Although much is known about the pattern of the M&A activity, the fact that M&A tend to occur in waves continues to puzzle researchers worldwide. This paper examines the M&A wave's phenomenon and discusses the need for a theoretical framework that may shed light on the determinants of its complex occurrence. Accordingly, this paper studies the evolution of M&A over time, focusing on its pattern of activity, and also covering different methodologies used in M&A activity research. This paper also considers the M&A abandonment issue. A substantial number of announced M&A deals is never completed, often resulting in significant loss of resources for economic agents. Like the waves issue, the topic of the abandonment in M&A activity raises questions that are yet to be addressed, thereby offering interesting prospects for further research, as both theory and evidence are missing in literature.

© 2010 IUP. All Rights Reserved.

Performance Comparison of Group Firms and Individual Firms in the Indian Iron and Steel Industry

-- Shirshendu Ganguli

The Indian government has meticulously built the Iron and Steel industry from the time of independence. The industry scenario has changed a lot after liberalization and globalization phenomenon of 1991 as the need was felt for continuous improvement in the production processes and products. As it has always been a capital intensive industry, huge investments are required in order to continue its growth. In countries like India, where economy is still growing, it is a common phenomenon that the firms which are part of big business groups perform financially much better than the stand alone individual firms. This is because the group firms are often in a better position with regard to investment and innovation capabilities. This study aims at comparing the performance efficiency of the group firms and individual firms based on certain parameters (Net Sales, NOPAT, ROCE) in the Indian iron and steel industry, in different size categories (high, medium and low).

© 2010 IUP. All Rights Reserved.

Mergers and Acquisitions in India with Special Reference to the Financial Sector: Recent Trends and Patterns

-- Priya Bhalla

There has been an increase in both the number and size of Mergers and Acquisitions (M&As) in all sectors of Indian economy. The financial sector in India is highly fragmented and is characterized by a large number of small banks and financial institutions. It needs size and scale to grow and compete internationally. Consolidation is the ideal way to achieve this. The trends in M&As in this sector would, therefore, be of special interest to economists, researchers and policy makers. Keeping in mind, the dearth of literature on the subject, the study intends to capture the trends and pattern of M&Ass in some sectors of Indian economy with special reference to the financial sector. It has been observed that there has been a rising number of M&As in this sector, especially so after the Narasimhan Committee II recommendations on consolidation in the banking sector were reported. A newly constructed database is used to identify the kind of deals (horizontal or vertical) and nature of companies (banks, financial institutions or non bank financial companies) involved.

© 2010 IUP. All Rights Reserved.

The Indian Mid-Segment Passenger Car Industry

-- Nitin Gupta and Vaibhav Shekhar

The Indian automobile industry is one of the fastest growing automobile industries in the world. The low penetration level of cars in India coupled with rise in the disposable income of its working population has made it an attractive destination for global automobile manufacturers. This case deals with the mid-size car segment of the passenger car industry in India. In 2009-10, this segment accounted for approximately 12.7% of the total passenger cars manufactured in India and its Year-on-year (YoY) growth rate was approximately 15%. The major players in this segment include Tata Motors, Maruti Suzuki, Hyundai Motors India, Ford India, General Motors India, Honda Siel India, Mahindra-Renault and Hindustan Motors. In addition to the existing players, various new players like Volkswagen, Nissan, Fiat, etc., have either already entered in this segment or are about to enter. The case highlights various issues being faced by current as well as new entrants in this segment. The case provides exhaustive contemporary data on the mid-size car segment of the passenger car industry in India. Analysis of the case can be done using Porter's five forces model.

© 2010 IUP. All Rights Reserved.