Failures of International Mergers and Acquisitions
Table of contents
Introduction 3
Types of Mergers 3
Types of Acquisitions 4
Motives behind M&A 5
Problems faced in Mergers and Acquisitions 6
Problems faced in Cross Border Mergers and Acquisitions 7
Sony's Acquisition of Columbia Pictures 8
Sony 8
Columbia Pictures 9
Analysis: Star Framework 9
Fig: Choice of Entry Mode 15
Failure of the Acquisition 15
Reasons for the Failure 16
Merger between Daimler-Benz and Chrysler Corporation 18
Daimler-Benz 18
Chrysler Corporation 18
Analysis: Star Framework 19
Reasons for the Merger 22
Failure of the Merger 23
Reasons for failure 23
Culture Clash 23
Mismanagement 25
Literature Review 27
Conclusion 29
Introduction
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and merging of different companies.
A purchase deal will be called a merger when both CEOs agree that joining together is in the best interest of both of their companies. But when the deal is unfriendly - that is, when the target company does not want to be purchased - it is always regarded as an acquisition. Whether a purchase is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile and how it is announced. In other words, the real difference lies in how the purchase is communicated to and received by the target company's board of directors, employees and shareholders.
Types of Mergers
Horizontal merger - Two companies that are in direct competition and share the same product lines and markets.
Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.
Market-extension merger - Two companies that sell the same products in different markets.
Product-extension merger - Two companies selling
Introduction 3
Types of Mergers 3
Types of Acquisitions 4
Motives behind M&A 5
Problems faced in Mergers and Acquisitions 6
Problems faced in Cross Border Mergers and Acquisitions 7
Sony's Acquisition of Columbia Pictures 8
Sony 8
Columbia Pictures 9
Analysis: Star Framework 9
Fig: Choice of Entry Mode 15
Failure of the Acquisition 15
Reasons for the Failure 16
Merger between Daimler-Benz and Chrysler Corporation 18
Daimler-Benz 18
Chrysler Corporation 18
Analysis: Star Framework 19
Reasons for the Merger 22
Failure of the Merger 23
Reasons for failure 23
Culture Clash 23
Mismanagement 25
Literature Review 27
Conclusion 29
Introduction
Mergers and acquisitions (M&A) and corporate restructuring are a big part of the corporate finance world. The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and merging of different companies.
A purchase deal will be called a merger when both CEOs agree that joining together is in the best interest of both of their companies. But when the deal is unfriendly - that is, when the target company does not want to be purchased - it is always regarded as an acquisition. Whether a purchase is considered a merger or an acquisition really depends on whether the purchase is friendly or hostile and how it is announced. In other words, the real difference lies in how the purchase is communicated to and received by the target company's board of directors, employees and shareholders.
Types of Mergers
Horizontal merger - Two companies that are in direct competition and share the same product lines and markets.
Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.
Market-extension merger - Two companies that sell the same products in different markets.
Product-extension merger - Two companies selling