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Title of The Project Report: Horizontal Merger / Acquisition

This project report examines the impact of mergers and acquisitions on stock markets. It analyzes stock price performance before and after mergers in three sectors: banking, automobile, and telecom. The objectives are to analyze the impact on share prices, evaluate pre- and post-merger performance, and compare effects across industries. The methodology involves quantitative analysis of stock price data surrounding merger dates. The report aims to understand the impact on shareholders and operating performance of acquiring firms, as not all mergers maximize shareholder wealth.

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Neha Singh
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76 views4 pages

Title of The Project Report: Horizontal Merger / Acquisition

This project report examines the impact of mergers and acquisitions on stock markets. It analyzes stock price performance before and after mergers in three sectors: banking, automobile, and telecom. The objectives are to analyze the impact on share prices, evaluate pre- and post-merger performance, and compare effects across industries. The methodology involves quantitative analysis of stock price data surrounding merger dates. The report aims to understand the impact on shareholders and operating performance of acquiring firms, as not all mergers maximize shareholder wealth.

Uploaded by

Neha Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Title of the project report

Impact of Merger and Acquisition on Stock Market

Introduction

A merger is a blend of two or more companies to form a new company or continue with same company.
Acquisition is one company taking over another company or purchase of one company by another and there is
no new company is formed.

Mergers and Acquisitions are corporate strategy employed by the organizations to realize its business goals. It
aims at increasing profit, empire building, and market dominance; reduce the level of competition and long
term survival. To strengthen the market position multinational companies start to acquire small sector.
Because of high competition it’s difficult to local firms to develop as much as they expected. Mergers and
acquisition have become worldwide be- cause of high level of competition, foreign direct investment and
globalization of business.

When a firm gains another substance, there generally is an anticipated transient impact on the stock cost of
both organizations. By and large, the securing organization's stock will fall while the objective organization's
stock will rise. The reason the objective organization's stock for the most part goes up is that the se- curing
organization ordinarily needs to pay a premium for the obtaining: unless the procuring organization offers
more per offer than the present cost of the objective organization's stock, there is minimal impetus for the
present proprietors of the objective to offer their shares to the takeover organization.

Companies will merge together and acquire each other for a variety of reasons. Here are four of the main ways
companies join forces:

Horizontal Merger / Acquisition

Two companies come together with similar products / services. By merging they are expanding their range but
are not essentially doing anything new. In 2002 Hewlett Packard took over Compaq Computers for $24.2
billion. The aim was to create the dominant personal computer supplier by combining the PC products of both
companies.

Vertical Merger / Acquisition

Two companies join forces in the same industry but they are at different points on the supply chain. They
become more vertically integrated by improving logistics, consolidating staff and perhaps reducing time to
market for products. A clothing retailer who buys a clothing manufacturing company would be an example of
a vertical merger.
Conglomerate Merger / Acquisition

Two companies in different industries join forces or one takes over the other in order to broaden their range of
services and products. This approach can help reduce costs by combining back office activities as well as
reduce risk by operating in a range of industries.

Concentric Merger / Acquisition

In some cases, two companies will share customers but provide different services. An example would be Sony
who manufacture DVD players but who also bought the Columbia Pictures movie studio in 1989. Sony were
now able to produce films to be able to be played on their DVD players. Indeed, this was a key part of the
strategy to introduce Sony Blu-Ray DVD players.

Motivation of the Research


I have focused towards learning something about finance. In this entire journey in studying about finance and
the markets, as a student I have learnt about many companies merging and get acquired in India through the
medium of news channels and newspapers. In India, the media gives due attention to mergers and acquisitions
which increases the curiosity to know more about such happenings. Over the years I have seen many mergers
happening in India across varied industries. Because of this reason mergers and acquisitions as a subject has
been very close to my heart. At this point in my career I am motivated to study about mergers and an
acquisition happening in India and the impact it has on the operating performance and shareholders of the
acquiring firm. I have noticed that not all mergers have been successful and the shareholders wealth in most of
the mergers have also not been maximised. My main motivational factor for doing this research comes here
where I want to understand what impact does post-merger and acquisitions hold on the shareholders and
operating performance of the firm.

Objectives

The main objectives of the study are:

 To analyse the impact of Mergers on the performance of company share prices in the stock market.
 To evaluate the performance before and after Mergers.
 To compare the impact of mergers among industries.
Research methodology

Research methodology is a method to solve the problem systematically. The effects of the merger companies
on share prices was examined by taking daily adjusted market price data for sample stocks days before merger
and days after the merger date. The merger dates of companies are collected from the BSE website and the
sampling technique is convenience sampling.

To analyse the impact of mergers and acquisition on the stock market, we will do the qualitative and
quantitative analysis of majorly three sector.

1. Banking Sector
2. Automobile sector
3. Telecom Sector

Sources of Data

In the current study employs secondary data for analysis. Types of secondary data used in this study are:

 Annual report.
 Books. Websites.
 News articles.
 Research papers.

Limitations

The following are the limitations of the study.

 Information taken from secondary data.


 There is absence of practical study in the company or industry.
 Study is conducted only for Indian companies.
 While conducting the research I was unable to collect data from primary source, which I feel would have
had a bearing on the outcome of the research.

References

 Abraham D.J., A study on the effects of merger & acquisitions, 2011


 www.moneycontrol.com
 www.bse.com
 www.nseindia.com
 https://blog.finology.in/investing/merger-and-acquisition-deals-startup

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