Case Studies on Mergers and Acquisitions in Manufacturing Sector

Manufacturing remains the most attractive sector. Many multi-national companies are increasingly considering corporate restructuring and mergers and acquisitions as a necessary condition for continued growth and success. Firms decide to merge with or acquire other companies for various reasons. Some transactions may be motivated by firms trying to take advantage of free cash flows. Others may be explained by the strategies pursued by multinationals to enter new markets and extend their competitive advantage abroad, to seek strategic assets such as technology and management capabilities, to realize economies of scale and scope by restructuring their businesses on a global basis and, last but not the least, to eliminate actual or potential competitors. Merger activity can have substantial and complex effects on the economy. The strategic and financial opportunities arising from combining the businesses may create synergies, which maximize benefits to both parties. The pooling of assets through mergers and acquisitions can lead to efficiency gains, with benefits to all stakeholders involved. At the same time, mergers and acquisitions are not without risks. Corporations need to secure the right deal at the right time and price, and integrate the acquisition to realize their strategic objectives. The success or failure of the whole process depends on the right balance of tangible attributes like corporate governance strategies, value creation strategies and financial strategies with intangible attributes like human resource strategies and management policies. The global M&A deals amounted to $3.7 trillion with 31825 closed deals in 2006. During the first half of 2007 the value of global M&A deals had leaped to $2.5 trillion in the first quarter. This clearly shows the accelerated pace in M&A activity across the globe. This book is an attempt to decipher the important elements of success and reasons for failure of mergers and acquisitions in manufacturing industry in general, with specific cases from cement, medical equipment, beverage, consumer goods, computers and white goods industries.