M&A

Do Mergers and
Acquisitions improve firm
performance?
A close look at success/failure factors

By: Priscilla Distelvelt

Course: Bachelorthesis
Professor: drs. Hans Wiebes
Student ID: 1709267
Email: 1709267@student.vu.nl

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Table of contents

Introduction ..................................................................................................................... 3

Chapter 1: Mergers and acquisitions ............................................................................... 6

Chapter 2: Main reasons behind mergers & acquisitions ................................................ 8

Chapter 3: Company valuation ...................................................................................... 11

Chapter 4: Pre- M&A difficulties .................................................................................... 13

4.1 Regulation ............................................................................................................ 14
4.2 Price ..................................................................................................................... 16
4.3 Shareholders........................................................................................................ 17

Chapter 5: Factors that affect the firm performance after the M&A ............................... 19
5.1 Culture ................................................................................................................. 19
5.2 Company size ...................................................................................................... 21
5.3 Dyssynergy .......................................................................................................... 21
5.4 Acquisition premium ............................................................................................. 22
5.5 External factors .................................................................................................... 22
5.6 Shareholders........................................................................................................ 24

Chapter 6: Empirical research on company improvement after a M&A ......................... 25

Conclusion .................................................................................................................... 27
Reference list: ............................................................................................................... 28
Newspapers ............................................................................................................... 30
Websites .................................................................................................................... 30
Reports ...................................................................................................................... 31
Appendix 1 .................................................................................................................... 32
Appendix 2……………………………………………………………………………………..33

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Introduction

Do Mergers & Acquisitions improve firm performance? Mergers are always in the news
and make up for an important part of the financial market. This makes it logical to
assume that they do indeed improve firm performance. In this thesis I try to find out if
this is true or if the expectations are set too high. Furthermore I want to explain the
factors that explain success or failure. I will mainly focus on M&A in the United States
for the most important reason that the United States because they have a lot of M&A
activity.

Graph 1: Announced Mergers & Acquisitions North America, 1985-2011

As shown in graph 1 by the Institute of Mergers, Acquisitions and Alliances, there has
been quite some movement in M&A deals and volumes last couple of years. This is
even more clear in the following graph which shows the quarterly M&A activity.

The amount of announced mergers and acquisitions went down very fast after the first
quarter of 2008 (as seen in graph 2). This was due to the economic crisis that hit the
world in 2008. Investors started to be risk- averse or would have a hard time getting the
financing done for the deal. Not only these two influences were affecting the M&A
market in 2008 and the sharp downfall of the number of M&As. Because more and more
M&A deals are cross- nation, the exchange rate is very important. Because when the
crisis started this was very volatile, a lot of companies did not want to take the risk of
merging. The announced M&A rose again in 2009 when the world was anticipating on
the economic crisis worldwide. Despite the economic crisis, the United States was still
the leader when it came to deal values in 2009. When compared to Asia and Europe
1
http://www.imaa-institute.org/statistics-mergers-acquisitions.html#MergersAcquisitions_Worldwide

3
they are twenty and eighty percent larger, respectively. 2 Not only does this have an
influence on the market but also the investment bankers dealing with the M&A. They get
paid a certain percentage of the deal value and when the deal does not go through they
experience a sharp downfall in their income stream.3

Graph 2: Quarterly M&A Deals

Washington Post, July 17, 2011: “The most watched mergers of 2011”:5

 AT&T’s bid for T-Mobile, which would create the nation’s largest wireless
provider; Deal value: $39 billion, Announced: March 20, 2011

 Duke Energy’s bid for Progress Energy, which would create the nation’s largest
utility company, Deal value: $25.8 billion, Announced: Jan. 10, 2011

 Johnson & Johnson’s bid for medical device manufacturer Synthes,

Deal value: $21.2 billion, Announced: April 27, 2011

 Real estate trust AMB Property’s bid for ProLogis,

Deal value: $14.8 billion, Announced: Jan. 31, 2011

2
http://dare.co.in/strategy/business-essentials/mergers-and-acquisitions-in-times-of-financial-crisis.htm
3
http://www.ft.com/intl/cms/s/0/d322de98-d056-11dd-ae00-000077b07658.html#axzz1xgsbzQBR
4
http://mergermarketgroup.com/wp-content/uploads/2012/05/monthly_Insider_May_2012.pdf p. 2
5
http://www.washingtonpost.com/business/capitalbusiness/five-major-mergers-of-2011-and-whos-
working-on-them/2011/07/13/gIQASDFFKI_story.html

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  Deutsche Boerse’s bid for NYSE Euronext, which would create the world’s
largest exchange group, Deal value: $9.4 billion, Announced: Feb. 15, 2011

This Washington Post article shows that mergers can have a lot of influence in stock
markets, after all, these ‘most watched mergers’ are well- known companies in the
United States market. Also, these mergers have a significant value, and thus make up
for an important part of the economy in the United States, and with globalization, the
global economy as well.

Chapter 1 will be a short description about what mergers and acquisitions are and how
they differ. I will explain the different forms that exists.

Chapter 2 will discuss the reasons behind mergers. I will use theory and apply this to
the recent merger between United Airlines and Continental Airlines. The specific
reasons for mergers vary, but all come down to the same: companies believe they have
a financial advantage with a merger or acquisition. Is this actually true?

Chapter 3 discusses the valuation of the company. How is the price set of the target
company? I will use three models to show how companies (with or without help from
investment bankers) can value the target company.

Chapter 4 is about the process that happens pre- M&A. Before the companies can seal
the deal there is still a lot that can go wrong. A lot of M&A already fail during the
negotiations and are withdrawn. In this chapter I will discuss the most likely reasons
why this happens.

Chapter 5 discusses the literature about factors that affect and influence M&A after the
merger. I will talk about factors that have a huge influence on whether or not a merger
will be a success.

Chapter 6 will be about previous empirical studies that show the firm performance after
the merger.

In the conclusion I will give answer to the question: do M&A improve firm performance?
and discuss the most interesting and influencing factors.

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Chapter 1: Mergers and acquisitions

There are three main types of mergers; vertical, horizontal and conglomerate mergers.
Vertical mergers are mergers between companies that will shorten up the supply chain.
The merger will combine two companies that were in separate business markets before
but were both necessary for the same finished product. For example, the merger
between Walt Disney and Pixar in 2006.6 A horizontal merger is a merger between two
companies in the same industry, for example an airline merger. In Chapter 2 I will
mainly focus on the horizontal merger, in particular the recent merger between United
Airlines and Continental Airlines. The third type of merger is the conglomerate merger.
The conglomerate merger is a merger between companies that are not in the same type
of business. There are two types; a pure conglomerate merger and a mixed
conglomerate merger. Pure means that the companies that decide to merge have
nothing in common. Conglomerate mergers can also be mixed and this means that
even though the companies are in different industries, afterthe merger they try to also
get access to the other market.7 The merger between General Electric and Comcast is
an example of a conglomerate merger.8

For the most part mergers and acquisitions are very similar. The significant difference is
that for a merger a mutual agreement is needed. For an acquisition this is not
necessary. Sometimes in a takeover it can happen that the shareholders are very
dissatisfied when the company is taken over. Takeovers can appear in two forms:
friendly or hostile. Research by Morck et al (1987) shows that the motive for a takeover
can have a large influence on the kind of takeover that will be used. They distinguish a
difference between a disciplinary motive and a synergetic motive. A disciplinary motive
is there to correct the managers and change the policy to one of maximizing
shareholders value again. The research shows that the disciplinary motive will have a
hostile takeover. In the process of a hostile takeover the board of directors wants to fight
this attempt. The acquiring company on their turn needs to buy enough shares of the
target company to replace the board of directors. When they have a disciplinary motive,
this is exactly what they want to change the policy of the company.

The second motive Morck et al. (1987) discuss in their research is the synergetic
motive, they want to take over another company because of the synergy gains that can
be accomplished when the two companies work together. When this is the motive there
the takeover method will be the friendly takeover. This is the exact opposite of the
hostile takeover, because in this case the board of directors of the target firm supports

6
http://money.cnn.com/2006/01/24/news/companies/disney_pixar_deal/
7
http://www.economywatch.com/mergers-acquisitions/type/conglomerate.html
8
http://money.cnn.com/2011/01/29/news/companies/comcast_ge_nbc/index.htm

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the merger, negotiates and agrees on a price before they let the shareholders vote
about the proposal.

M&A have in common that the acquiring company will acquire the assets or shares of
the target company. Acquisition can be of the shares or an acquisition of the assets
(Chunlai Chen and Findlay, 2003). The companies can either merge with or be taken
over by the other company because the acquirer takes over the assets or pays the
target company a premium for their shares. After the merger or acquisition is completed
two things can happen to the target company. The target company can be eliminated
and become completely a part of the acquiring company, this is the so called absorptive
merger or the target company and the acquiring company are both starting over to
create a completely new company, this is called a creative merger. (Wen et al, 2005)

The latest trend of the last couple of years is the cross- border merger. This means that
companies that have their headquarters in a certain nation merge with a company from
another nation. In the graph below is shown a clear uprising trend for global mergers
from 1985 on. This trend stopped temporarily around 2000, when the internet bubble
burst, but rose again in 2002. During the economic crisis worldwide the number of
transactions and value of the transactions reversed again temporarily, and has since
2009 resumed climbing again through present day.

Graph 3: Announced Mergers & Acquisitions, Worldwide 1985 - 2011

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http://imaa-institute.org/statistics-mergers-acquisitions.html#MergersAcquisitions_Worldwide

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Chapter 2: Main reasons behind mergers & acquisitions

There are many reasons for a company to decide to engage in a merger or an

acquisition. Companies assume the firm performance will improve. They assume the
value of the companies combined is higher than the sum of the two companies
separated. The value of a merged company (VAB) is assumed to be higher than the sum
of the value of separate companies (VA,VB); VAB > VA + VB (Ali- Yrrko, 2002).

As said in the introduction, in this chapter I will apply the reasons of merger to the
recent merger of United Airlines and Continental Airlines.

Synergy is seen as the most important reason by companies. The broad definition of
synergy applied here is that companies combined (as in a merger) are more valuable
together than they are separate. This is also the case with the merger announced
between United Airlines and Continental Airlines; “United and Continental predicated
their merger on the basis that they could extract synergies of between $1bn and $1.2bn
of which about $300m to $400m should come from cost savings”.10 After the merger
turns out to be successful they should be able to work more efficiently have substantial
cost savings. Synergies [are defined in four types] (Ansoff, 1965) and can be used for
the merger between United and Continental.

Sales synergy can be obtained when different products use common distribution
channels, common sales administration, or common warehousing. In the case of
United/Continental the product is the same (airline) but they can now use the same
sales administration and the same warehousing for the airplanes.

Operating synergy is a synergy that comes from advantages in the case of personnel
and the operation of the business. This will save a lot of cost because administration
overhead can be consolidated and spread over a larger operation. Consolidation and
creation of a larger single operation can also give leverage in negotiating larger volume
discounts on aircraft and other purchases. Further, internal knowledge between
employees can work to create other operational efficiencies through employees learning
from each other’s best practices. “Cost synergies from learning shall encompass all
types of cost reduction that result from improving know- how and procedures
independent of scale” (Porter, 1985)

Investment synergy can be the result of the use of the same materials or the transfer of
research and development. In the case United/Continental there is definitely the use of

10
http://www.ft.com/cms/s/0/61b547b2-cd63-11df-ab20-00144feab49a.html#axzz1oowdkNty

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the same materials and R&D. These costs can all be combined now and this synergy
can be really valuable.

Managerial synergy will probably be the most valuable synergy for United/Continental.
They face the same strategic issues and decisions, especially with an ever more difficult
market. After the 9/11 terrorist attacks, airlines have had difficulties making profits. Also
a leading contributor is the rising oil costs and in 2008 the hit of the economic.11 After
the merger the airlines combined can operate under one management team and apply
their capabilities and knowledge leading the combined United/Continental.

More reasons for mergers include:

Less competition
This is especially the case when two companies in the same industry merge (horizontal
merger). Customers are limited to fewer vendors to choose from, allowing the vendor to
charge higher premiums on products and services than they otherwise could while
competing. This is a very big advantage for United/Continental. Before they were both
serving the market in the United States and the international market. They are not
competitors for the same flights anymore. They can trim advertising costs. They can
potentially apply higher ticket prices to their market segments. A disadvantage to the
customer is that flights likely will become more expensive. Customers will have less
choice in picking an airline. United/Continental as a result will be able to cut their cost
and increase their revenues in a post-merger world.

United/Continental will after the merger have a market share of 7%.12 Because their
market share is relatively high, they can also beat other competitors out of the market.
Market power can also grow due to the less competition in the market and grow the
profits higher than the profits would have been in a more competitive environment
(Sudarsanam, 2010) and this can grow the value of equity for the investors.

Empire building
“We define an agency relationship as a contract under which one or more persons (the
principal(s)) engage another person (the agent) to perform some service on their behalf
which involves delegating some decision making authority to the agent. If both parties to
the relationship are utility maximizes, there is good reason to believe that the agent will
not always act in the best interests of the principal” (Jensen and Meckling, 1976)
When companies have a lot of free cash flow, managers can be tempted to spend this
money on things that are not in the best interest of the equity holder, but in their private
best interest. These private interests can include overly lavish offices, company
“retreats” (or vacations) or over compensation. Empire building can then be promoted

11
http://www.nytimes.com/2010/05/03/business/03merger.html
12
http://www.nytimes.com/2010/05/03/business/03merger.html

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by the management (agent) to do excessive investment or try to grow the business
excessively to further their own personal interests. A merger certainly grows the
business and this can trigger further to a manager’s need for status, power and
compensation. (Marris, 1964). Manager’s compensation can be based on a share of the
profit and with merging with another company this total profit will be higher and increase
the compensation for the manager.

Growth
Companies want to grow. A good way of growing is to merge with another company.
Especially during times of economic slowdown it can be a good way to generate returns
to shareholders to merge with another company.13 Due to the synergies and higher
market share there is a lot of opportunity to grow for the company.

13
http://money.cnn.com/2011/12/30/markets/merger_2012/index.htm

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Chapter 3: Company valuation

“First, the bidding firm identifies a potential target firm. Second, a “valuation” of the
equity of the target is undertaken. In some cases this may include nonpublic
information. The valuation definitely would include, of course, any estimated economies
of scale due to synergy and any assessments of weak management et cetera that might
a have caused a discount in the target’s current market price. Third, the “value is
compared to the current market price. If value is below price, the bid is abandoned. If
value exceeds price, a bid is made and becomes part of the public record. The bid
would not be generally be the previously determined “value” since it should include
precision for rival bids, for future bargaining with the target and for valuation errors inter
alia.” (Roll, 1986). This is a typical description of the process of a merger. The valuation
is very hard for management because they have to make a bid without knowing the
correct value. Investment bankers usually guide mergers and do the work for the
company calculating the value of the company and the price.

In the introduction of this paper the most important merger deals of 2011 are stated with
their deal values. Important to note is how these values or prices are established. In this
chapter I will focus on some of the models that are used to determine the price of the
company that will be taken over. This price will consist of the value of the company plus
a specified premium. The premium consists of things that are not in the value of the
company already like the future prospects and the synergy the company will derive from
the merger. Many uncertainties exist in obtaining a “correct” premium and thus the after
merger market price of a company is very hard to obtain. (Sudarsanam, 2010).
Sudarsanam writes about 3 models in his book; the Discounted Cash Flow model, Price
Earnings model and the Residual Income. Important to note is that all these models are
based on forecasts and assumptions.

Discounted Cash Flow Model

In this model the target value after the acquisition is calculated by discounting the future
free cash flows based on the numbers after the acquisition with the weighted average
cost of capital (WACC). The terminal value of the target discounted with the same
weighted average cost of capital will be added to that. The WACC can be obtained in
two ways, the WACC from other companies in the same industry can be used, or the
firm specific WACC can be calculated using the well- known formula from finance
(assuming a perfect world with no taxes):
Weighted average cost of capital (WACC) = Re * + Rd * .
Rd is the cost of debt and this is usually easier to calculate than the cost of equity. The
cost of debt is known through analysis of the outstanding loans the company has and
the agreed rate of interest that is paid on those loans. The return on equity is a different

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story. This percentage can be estimated by using historic returns on equity from the
company that will be taken over. This can be done using the Capital Asset Pricing
Model (CAPM). This required return on equity using CAPM is the risk premium for the
equity times the risk there is for the equity stock added to the risk free rate. Calculating
the WACC is often a very complicated process, because there are a lot of factors that
have to be taken into account, for example; dependency of management, suppliers and
customers. Other factors that can influence the final discount percentage are liquidity
and the reputation of the company.

Price Earnings Model

This model calculates the price of the target company by using the share price and the
earnings per share.
This is calculated by the formula: . This price earnings ratio will then be
used to determine the book-to- value ratio. The book to value ratio is very important in
determining the correct price for the company to be taken over because the company
that takes over can have different ideas and views about the book to value ratio. It is
important for the company to check the balance sheet because the company that is
going to be taken over can have higher numbers on the balance sheet than is the truth.
The company that makes the bid will make sure to check this twice so the price of the
company will not be too high. They will also have to consider the costs and profits they
will have in the future with this new company. Think about the synergy and the possible
increase in profit from working together. This book to value ratio will be used to
determine the correct price for the company and can be obtained by multiplying the
price earnings ratio times the return on equity.

Residual income
This model looks at the asset value of the two companies together. The asset value is
calculated from the equity and debt of the two companies combined. The value of the
asset is calculated using the book value taken into consideration the future value (grow)
discounted by the weighted average cost of equity and debt.

The extreme difficulty with models is that they are based on assumptions. This is the
reason why it is very hard to value a company. The assumptions are made about
growth, earnings, future cash flows and so on. Because the future is unexpected there
is a lot of risk involved in determining the company value. External factors like an
economic crisis and the influence of this changing market are very difficult to predicted
but have a major influence on the forecast of the company.

Companies can do the valuation themselves or they can hire a financial intermediary.
Investment bankers often assist M&A deals. Generally speaking, they are more skilled
than CEO’s or managers to value a company.

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Chapter 4: Pre- M&A difficulties

Potential problems can already arise from the moment the two parties come together to
negotiate the deal. The most deals are withdrawn because of one of these three
reasons: regulation (either the European Commission or the Federal Trade
Commission), price (the bid is too low or overbid by other competitors that also want to
buy the target company) and shareholder problems. Not all deals that are announced
are actually completed. For example, in 2011 there were 8,198 Worldwide M&A deals
announced in the United States, but only 6,910 deals were completed that same year.14
When we split this out by region, we get this graph:

Graph 4: Number of worldwide M&A deals 2011; announced and completed

15

This can of course have multiple reasons why some deals were withdrawn or did not
complete the same year. There will be a percentage that could not be completed
because they could not complete it in one year, but a percentage of these
announcements were also withdrawn. I did some research on the largest US withdrawn
deals and found out that the most often reasons are regulation, the price of the target
company and the shareholders.

14
Data used from Thomsonone.com (Appendix 1)
15
Data used from Thomsonone.com (Appendix 1)

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The graph below shows the value of withdrawn M&A deals and the reason why they did
not go through. As seen in graph 5 regulation is the biggest difficulty for a merger or
acquisition to overcome and seal the deal and also has the highest loss of value. The
deals were together the highest value of the total.

Graph 5: Value of withdrawn M&A deals split up by reason

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4.1 Regulation
Before the merger process starts, it is smart for the companies to figure out regulation
about the business they want to become. Sometimes regulation does not allow
companies to merge or do an acquisition. They often use the argument that companies
will get too much monopoly power and this will harm the consumers. The two guards
that protect the consumers are The European Commission and the Federal Trade
Commission. Because more mergers are cross- border, not only do they have to
consider regulation in the nation of the acquirer, but also in the nation where they
operate. For example, the merger between Sprint Corporation and MCI Worldcom (both
American based companies) was withdrawn because the European Commission
prohibited the merger.17 The European Commission states on their website: “M&A merit
special attention, because they affect all of us in the EU, whether we are consumers,
entrepreneurs, academics, regulators or policymakers. Consumers may or may not
benefit from mergers and acquisitions. The pooling of assets through M&A can lead to
efficiency gains, with benefits to consumers if the gains are passed on in the form of

16
Data used from Thomson Reuters (Appendix 2). Used this data and found the reasons why the deal
was withdrawn. Put this in an excel spreadsheet.
17
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/00/668

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lower prices, higher quality or new products and services. However, if mergers and
acquisitions are not controlled by an effective competition policy they may lead to
excessive market concentration and anti-competitive behavior, so that consumers find
themselves paying higher prices or faced with poorer quality goods and services.”18

But is this true? Some researchers think this strict regulation might be to protect
“privileged companies”(Aktas, N. et al, 2004 p. 1). The research done by Nihat Aktas et
al, 2004 shows evidence that the European regulation sometimes is protectionist. They
took a sample of 290 companies proposals and found that the European Commission is
more likely to say no to a merger or ask for concessions if European rival firms will be
harmed by this merger. Another interesting fact is that proposals from acquirers that are
not based in the European Union also have more chance to be denied.

Not only the European Commission decides if a merger can go through. The “antitrust
watchdog” in the United States is the Federal Trade Commission together with the
Department of Justice. Their main goal is to protect the rights of American consumers.
The Federal Trade Commission reviews M&A to make sure that they do not interfere
with free competition which might lead to fewer supply (and thus higher prices). On their
website the Federal Trade Commission says the following about mergers and their
approach: “Many mergers benefit consumers by allowing firms to operate more
efficiently. Other mergers, however, may result in higher prices, fewer choices, or lesser
quality. The challenge for the FTC is to analyze the likely effects of a merger on
consumers and competition – a process that can take thousands of hours of
investigation and economic analysis.”19

Even though the main goals are basically the same, there are quite some differences
between the Federal Trade Commission and the European Commission. These
differences became very clear during the merger process of Honeywell International Inc.
and GE. This merger proposal was already approved by the Federal Trade Commission
but the European Commission prohibited this merger. The argument they used was: “In
the post-merger market structure, the merged entity will be able to offer a package of
products that has never been put together on the market prior to the merger and that
cannot be challenged by any other competitor on its own.”20 Thus the European
Commission prohibited this merger because in their opinion rivals would be harmed and
this will affect the competition in the market. While the opinions strongly differ if the
European Commission made the right decision prohibiting this decision, there seems to
be a lack of evidence that the European Commission can show regarding this
prohibition. There might even be good things about the large size and capital that they
have. The European Commission says that the “size” and “financial strength”21 have a
large influence on the rivals because this can make sure they have more money to
18
http://ec.europa.eu/economy_finance/structural_reforms/product/mergers_acquisitions/index_en.htm
19
http://www.ftc.gov/bc/edu/pubs/consumer/general/zgen01.pdf
20
http://ec.europa.eu/competition/mergers/cases/decisions/m2220_en.pdf p. 86 (number 350)
21
http://ec.europa.eu/competition/mergers/cases/decisions/m2220_en.pdf p. 32, 34 (number 110,117)

15
compete with their competitors and because they are bigger they can afford to do
investment projects that might fail. According to Patterson & Shapiro (2001) this can
also be a good thing for the market. More capital also means more money for research
that can be a positive influence for the market. Competitors might learn from the
mistakes that are made by GE. They have the resources to recover from a failed
investment. As stated in their annual report 2000, p.3: “Our size allows us to do this
knowing that we don't have to be perfect, that we can take more risks, knowing that not
all will succeed.”22

While the European Commission’s arguments might not sound to convincing for
prohibiting this deal, especially taken into consideration that this merger was already
approved by the Federal Trade Commission, it might be that the two watchdogs use
different approaches in the process to approve a M&A. Patterson & Shapiro (2001)
point out these differences. The most important difference in handling mergers like this
is that in the United States approval is needed from an independent judicial authority to
before going to court with this case. In the European Union the European Commission
takes care of all this by itself; their role is to be the investigator, prosecutor and judge at
the same time. They do not need approval from an independent party. Other differences
are that the Federal Trade Commission has much more people to work on M&A cases
than the European Commission does and this gives them more expertise. Another
crucial difference is the level of guidance the watchdogs use and the transparency that
comes with that. The Federal Trade Commission and the Department of Justice have a
guideline on their website to improve the transparency of their investigation and work.
This “Horizontal merger guidelines”23 gives companies a better insight in what they have
to account for when doing a proposal for a merger.
This is completely different than the approach the European Commission chooses. The
European Commission afterward states why they could not approve the deal, but
because they do not have guidelines accompany this, it is hard to compare this to the
standard and have a more clear view on why they prohibited the deal.

4.2 Price
Another important reason why mergers are withdrawn sometimes is because the target
company does not agree with the price. As discussed in chapter 3 determining the
company value is one of the most difficult things to do. A lot of factors have to be taken
into account. Companies do not always have the skills to take care of this whole
process by themselves and seek for advice and guidance from investment bankers.
Investment bankers take over their client tasks and negotiate on a price for the
companies. It is up to the management to decide if they want to use the services of an
investment banker. The management should treat this like any other investment project;
is it worth investing in an intermediary and will this add value to shareholders wealth.
(Bowers and Miller, 1990 p. 34). The financial advisor works for a compensation fee.

22
http://www.ge.com/annual00/letter/page3.html p. 3
23
http://www.ftc.gov/os/2010/08/100819hmg.pdf

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This is usually a percentage of the deal value. As it turns out, Bowers and Miller (1990
p. 36) state that the fees are even higher for a intermediary with a perfect reputation.
When the services are performed excellent when it comes to the merger, investment
bankers charge a higher fee.

Obviously, the CEO and managers of the target firm want the highest price possible and
maximize shareholders’ wealth. There might be other bidders involved too, so the target
company might get a better bid and decide to take that one. There can be multiple
reasons why the merger is withdrawn because of price related causes. In the case of
the investor group that was trying to acquire SLM Corp they had to take into account
that SLM had a threatening law suit above their heads. This affects the price and the
synergy advantages that can be made after the merger because of a potential high
cost.24

Another possibility is that there are more competitors looking for the target company to
buy. They might overbid the other acquiring company. When the negotiations happened
between American Home Products Corp and Warner- Lambert Company, Pfizer started
bidding too. Pfizer had to offer a higher acquisition premium than American Home
Products Corp did and this caused the withdraw of the merger between American Home
Products Corp and Warner- Lambert Co.25

4.3 Shareholders
Sometimes shareholders are not willing to work with the target company when the
target company can be taken over. One of the shareholders or multiple shareholders
can be dissident. They do not agree with the decisions management makes and try to
challenge this. They might do this because they want a better deal in the negotiations in
the merger. A good example is Kirk Kerkorian, the owner of Tracinda. His company
Tracinda wanted to acquire Chrysler corporation in 1995. Tracinda owned 10% of the
shares in Chrysler. In the meantime Chrysler was negotiating a merger with
DaimlerBenz. Kirk Kerkorian wanted to prevent this merger from happening but could
not stop it eventually.26 When the acquisition between DaimlerBenz and Chrysler go
through Kirk Kerkorian lost his representative on the board at Chrysler. He claimed to
have lost billions of dollars because of this acquisition and tried to sue
DaimlerBenz/Chrysler. This was without success though.27

In other cases like the announced merger between Walt Disney Company and Comcast
Corporation the shareholders lost confidence in their own company. Comcast Corp was

24
http://www.reuters.com/article/2007/10/15/idUSIN20071015114939SLM20071015
25
http://articles.latimes.com/2000/feb/07/business/fi-61839
26
http://news.bbc.co.uk/2/hi/business/6531629.stm
27
http://money.cnn.com/2000/11/27/news/chrysler/

17
willing to use a lot of their financial resources to acquire Walt Disney that shareholders
felt like the board of Comcast lost confidence in their own company and operations.28

28
http://news.cnet.com/Comcast-walks-away-from-Disney-bid/2100-1035_3-5201532.html

18
Chapter 5: Factors that affect the firm performance after the M&A

A merger is a risk because management does not know upfront for sure how (or if) the
merger will improve firm performance. There is a lot of literature and research covering
how companies respond to mergers and if the firm performance improves or not.
Important determinants to decide whether the merger will be a success or a failure are:
employee support, size of the company and dyssynergy. These determinants already
have a big influence when the merger negotiations start, but will also determine the firm
performance after the merger.

5.1 Culture

“While culture may seem like a “small thing” when evaluating mergers, compared to
product- market and resource synergies, we think the opposite is true because culture is
pervasive. It affects how the everyday business of the firm gets done- whether there is
shared understanding during meetings and in promotion policy, how priorities are set
and whether they are uniformly recognized, whether promises that get made are carried
out, whether the merger partners agree on how time should be spent, and so forth.”
(Weber, R. and Camerer, C, 2003 p. 401). In the results of their experiment it shows
that conflicts between the cultures between the companies play a big role in success or
failure of the merger. Management that is too focused on only the numbers may forget
to consider the corporate cultures that might be different between the two companies to
merge. This is especially the case when companies from different industries merge.

The corporate culture that lives in a company can be strong or weak. A strong corporate
culture is characterized by a high number of shared beliefs, values and assumptions.
The acceptance of these beliefs and the number of employees who share and accept
these beliefs makes the corporate culture even stronger. In weak corporate cultures
there will not be as many shared beliefs, values, and assumptions. Also, the employees
will not feel really attached to these beliefs. (Nahavandi and Malekzadeh, 1993).
Companies that are smaller (local companies that only have one location where
everybody works together) will have a stronger corporate culture than large companies
with multiple offices (for example a multinational). (Nahavandi and Malekzadeh, 1993).
Management of the acquiring firm will have to put a lot of effort into the corporate culture
of the smaller target firm. This corporate culture can be very different than what they are
used to. Even though it might be difficult for a company to get through this barrier of
corporate culture there can be multiple reasons why they want to acquire a target firm
anyway. Right now in North Dakota, United States a big oil boom is going on. A lot of
corporate companies want to expand their business to this very profitable area. One of
the ways for them to accomplish this is to take over a small company. December 15,

19
2011 Thomas Petroleum bought Herman Oil, a local oil company with a very tight
corporate culture.29 As we will see later in this chapter is that even a weak merger will
look good in a good economic environment. (Epstein, 2004) This can definitely be the
case in North Dakota. So despite the fact that there is a strong corporate culture that will
most likely raise the cost (because not all of the synergy advantages can be made) the
merger will still be successful.

Graph 6: Employee opinions with M&A and without M&A

30

Graph 6 shows that employees are more uncertain about their job during times of a
merger, especially when there are layoffs in the company. Confidence in the future is
also lower therefore it is very important for management to make sure they can maintain
the trust of their employees and keep them committed to the company. Employees tend
to lose their motivation for the job during a merger and this affects the business and the
firm performance.

Employees have to find their ‘spot’ in the new company. It will be best if management
guides them for that because a merger can be a big change for a corporate culture. To
get the employees working together it is best to find a common ground in times of
change and use this as a basis for the new company culture (Appelbaum et al, 2002).

29
http://www.willistonherald.com/news/article_a322b127-b29d-5db3-8845-89a8456fc81d.html
30
Graph made in excel using the data of a survey performed by Kenexa Research Institute in 2010 under
10,000 employees. The results were rated using a 5-point Likert-type scale. The values in the following
tables and graphs represent the percent of employees who answered, “Strongly agree” or “Agree (%
favorable). Kenexa Research Institute, 2010.

20
The important task is for management to implement this change and merge the
corporate cultures. There can be different approaches on how management want to do
this: directed change (change that is implemented quickly and is dependent of
authority), planned change (this change is supported by the top of the organization but
is dependent on the active members that want to help this change) and guided change
(with guided change, employees and management are involved in the change,
continuing learning process) according to Kerber and Buono (2009). Leadership is key
in implementing this kind of changes. It depends on what the company wants to do.
During direct change there is no room for employees to express their compassion to the
company or if they have a different view on how processes work in the company. This
makes this approach more vulnerable for resistance from the employees. According to
Kerber and Buono (2009) planned change is the most popular approach, this can be
explained because employees can be involved in the process.

5.2 Company size

Sirower (1997) found in his research that there is a significant positive relationship
between the size of the firm and the returns after the merger. Thus, the bigger the firm,
the more likely the merger will succeed.

5.3 Dyssynergy

After the merger, management has to deal with the integration of the two companies
into one. A lot of cost will incur when doing this, think about the cost of integration of the
software program, training for employees, conforming the accounting standards all the
same. All these cost create negative synergies (Porter, 1985), also called dyssynergies
and after the merger these costs will become clear. If these negative synergies are
higher than the positive synergies gained after the merger, the deal results in a failure.

Price Waterhouse Coopers, one of the bigger investment bankers worldwide, gives
attention to dyssynergy in one of their reports as well. They acknowledge that often
dyssynergies are overlooked during mergers and acquisitions.31 In this report they give
a few examples of negative synergies that might be neglected during the negotiations.
For instance, it can be that one of the two companies have a very generous paycheck
and benefits to its employees. After the merger the two companies have to pay the
same for the same functions. Because it does not make sense to downscale the
salaries, all the salaries have to rise and all benefits have to be equal for everyone in
the company that is performing the same kind of work. One of the companies might
have health insurance for all its employees and spouses and children while the other
company only insured the employee. This will bring a lot of unexpected costs.

31
http://www.pwc.com/us/en/transaction-services/assets/how-synergies-drive-successful-acquisitions.pdf

21
For mergers in the same industry there is the risk that the customers will overlap. This
means a loss of revenue and thus a cost that might not have been in the previous
calculations before the merger was negotiated.
Another example that is in the report are the additional marketing investments. When a
company just merged with another company they have to make this public and
advertise for their customers that maybe their brand name has changed.

5.4 Acquisition premium

If the price is negotiated and the bid is accepted it can be a reason for failure after the
merger is completed. As mentioned in chapter 3, the price of a company includes the
value of the company and a certain premium that is paid to the shareholders of the
company. Valuation of the company is very complex and not always accurate. Kusewitt
(1985) states that it makes sense that the firm performance will be affected if the
premium that was paid was overvalued. This overvaluation does not make up for the
synergy benefits that can be achieved with the merger.

There is more literature to support this point. Sirower claims that the success of a
merger is based on the acquisition premium paid for the merger. His research shows
that there is a small negative correlation between firm performance and size of
acquisition premium (Sirower, 1997).

If the acquisition premium is high it is more difficult for a company to live up to the new
business performance they had in mind for the merged company. In general, companies
that require a high premium have a lot to offer. The shareholders think of this as a firm
improvement. Also, if a premium is high, this leaves less money ‘on the table’ to invest
in creating the new merged company. Another issue can be that a company after
merging struggles with the outlay of a large debt financing, a result of too large an
acquisition premium for the company they merged with.

5.5 External factors

External, uncontrollable factors also influence mergers. The failure or success of a

merger does not rely only with how firm management handles the merger. Consider the
economic environment. This can cause merger waves. Sometimes there can be a lot of
transactions and other times the market for mergers will be calm (Harford, 2004).
Harford discovered in his research that industry merger waves have to do with shocks.
These shocks can be economical, technological or regulatory. But a merger wave does
not only occur when the shocks are present, there also has to be enough liquid capital
for the transaction to occur.

22
A recent development are the new technologies to get crude oil and natural gas out of
the ground in North Dakota. North Dakota has a lot of crude oil in the ground.

32

Thanks to new drilling techniques in hydraulic fracturing oil can be pumped out of the
ground and economic opportunities arise. This makes oil and gas mergers very popular
at this moment in time. When it comes to oil, companies make a lot of effort to get that
oil as soon as possible to refine it. This makes the spending go up in a region with a lot
of economic resources, including all the activities that come with an increase, like
M&A.33 PwC US Rick Roberge, principal in PwC’s energy M&A practice has a good
explanation for this: “New drilling techniques in hydraulic fracturing and uncovering vast
amounts of crude oil and natural gas in a very accessible environment to oil and gas
reserves and this what is contributing to the huge interest in shale plays. The low price
of natural gas, partially due to the increase in supply, has also driven a shift toward
more oil and liquid plays as companies and inventors look to take advantage of oil
prices, which is holding steady at $100 a barrel. We expect deal flow to remain active in
2012, despite continuing economic uncertainty, due to attractive commodity prices-
which promotes exploration and development as well as upstream M&A activity.”34
This is a good example of how external factors can influence the number of mergers.

32
http://www.eprinc.org/pdf/EPRINC-BakkenBoom.pdf.
33
http://www.worldoil.com/August-2011-Oil-plays-old-and-new-drive-US-drilling-surge.html
34
http://www.pwc.com/us/en/press-releases/2012/2011-us-oil-and-gas-deals.jhtml

23
Epstein (2004) wrote in his article that in a good economic environment even a poor
merger can look good. This is a misperception, as the real value of a merger is covered
by the good state of the economy. This can also be misleading when the economy is
weak because the merger value will be lower than the merger value would have been in
good economic years (Epstein, 2004).

5.6 Shareholders

Shareholders hold the equity of the firm and thus are the owners of the company. The
shareholders of the target firm usually have a positive return after the merger. In the
paper from Agrawal and Jaffe (1999) they discuss that previous research showed that
abnormal returns for the shareholders of the target company around the announcement
date. The reason for this is the large premium that is usually paid for the company.
Other research also shows that the returns for shareholders of the acquiring company is
not this high (Healy, Palepu and Ruback, 1990). Researchers also found that long term
returns after mergers are usually lower, a reason for this can be that the company
cannot meet up to the high expectations that accompany the merger (Paulter, 2001).
This is also found by Healy, Palepu and Ruback when they did their research on 50
merging firms. This test showed that there was an improvement of the firm performance
long term, but there is no significant evidence that this is because of the merger and the
possible increased productivity. This can also have to do with tax benefits. As it turns
out, the cost reductions from the merger can also be offset by costs that incur from the
merger.

24
Chapter 6: Empirical research on company improvement after a M&A

Mergers and acquisitions is very popular topic. There has been a lot of empirical
research done about whether or not M&A are successful. Most often the method of
abnormal returns is used like in the empirical research done by Malmendier et al (2012).
They tested the cumulative abnormal returns for US mergers between 1985 and 2009
with at least two bidders. One of those bidders won the merger contest and in their
research they tested to see if the “winner” had better results after the merger than the
“loser” did. What can be proved with this study is if merger improve performance. While
the pre- merger performance was basically similar after the merger this changed. It
turned out that the “winners” were not the big winners of this contest because the
shareholders of the “losing” company had zero of positive abnormal performance while
the shareholders of the merged company had negative abnormal performances.

Not only Malmendier et al did a study with the conclusion that mergers have a negative
influence on firm performance. Loughran and Vijh (1997) came to the same conclusion
but were more focused on the long run performance. This long run performance after a
merger was not as good as expected especially when the target company was a share
acquisition or if the acquirer was very valuable.

Agrawal et al (1992) are not so sure if the outcome of his research is purely because of
the merger or because of other causes. In this empirical study two models are used; the
stock abnormal returns performance and a cross- sectional regression. This regression
is adjusted for firm size because Agrawal et al believe that in earlier research there was
not enough attention for this important factor in firm performance. The conclusion of this
research “stockholders of the acquiring firms suffer a statistical significant wealth loss of
about 10% over the five years following the merger completion.” (Agrawal et al, 1992 p.
1618) Because they are not sure if this is all due to the merger, this topic stays one of
the most researched topics in finance.

Important for all these empirical research and studies is the reason why the returns are
lower than expected or even negative for the acquirer. In chapter 4 and 5 I already
discussed some of these reasons but Capron and Pistre (2002) were interested in when
the acquiring firms do make abnormal returns. In their research they try to find
significant evidence on scenarios in which the acquirer has a positive return. They ran a
regression on Cumulative Abnormal Returns and found out that their models both were
not significant enough to proof a difference. Because their research was based on
horizontal mergers they tested if relatedness would have a positive influence on the
abnormal returns. It turned out that there was no evidence for this statement. Another
statement they had was that resource management might from target to acquirer might
have a positive influence on the returns. There was no evidence found that these
resources affect the abnormal returns. “Overall, we find that value creation does not
ensure value capture for the acquirer.” (Capron and Pistre, 2002 p. 790)

25
As always, there are other opinions and methods of research to determine the success
rate of mergers. Accenture did their own research and showed that most of the merger
deals are successful. They looked at the total return to the shareholder (TRS). They
used a sample of 500 M&A deals between 2002 and 2009. Instead of looking at the
abnormal returns, they looked at the share price performance of the company that
merged and compared this to equally firms in the same industry. Their research shows
that 39% of the deals are significantly value- creating. Significant means here that the
total return to shareholder is more than 20%. Of the 500 deals 19% was value creating
(total return to shareholder is more than 0, but it is not significant. The other 42% was
value destroying of which 22% were significantly destroying deals.35

35
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Outlook-Who-says-MA-doesnt-
create-value.pdf

26
Conclusion

After studying all the literature and the empirical evidence there is I do not think that
M&A improve firm performance. Of course there are exceptions, but in general the
returns are the same or even negative after the merger than they were before. There is
plenty of empirical evidence that the abnormal returns for the acquirer do not make the
firm improve. In this thesis I discussed multiple reasons and causes of why M&A do not
always succeed or add value to the company.

Even though companies have plenty of reasons and motives to engage in a merger,
theory shows that the firm does not necessarily improve after a merger. After the
merger it can turn out that the management was too optimistic, or the costs turn out to
be higher or the synergistic effects they expected turn out to be less. The value creation
on paper is often very different in real life because of volatile determinants and
motivations.

Due to the complex and variations in valuation models the deal value is hard to
calculate correctly. It is likely that the company that takes over paid too high a premium
to the target company shareholders. As it turns out, because this premium is very often
relatively high, expectations are high for the merging company. The cost of the premium
also turns out to be a burden on the new company because these costs have to be
earned back in some way.

A underestimated and overlooked success factor is the corporate culture. The clash of
corporate cultures have more influence on the merger than so far is assumed by
managers and CEOs. They should not forget that employees are often called “the most
valuable asset of the company”. Leadership and communication are a crucial key to
merger success and should focus on keeping the employees motivated and involved
during the merger process.

27
Reference list:

Literature

Agrawal, Anup; Jaffe, Jeffrey F and Mandelker, Gershon N. (1992) The post-merger
performance of acquiring firms: A re- examination of an anomaly. Journal of Finance,
VOL XLVII no 4. p. 1605-1621

Agrawal, Anup and Jaffe, Jeffrey F. (1999); The post merger performance puzzle.

Aktas, Nihat; Bodt, Eric de; and Roll, Richard (2004); European M&A Regulation is
Protectionist. Published by: Anderson Graduate School of Management – Finance UC
Los Angeles. P. 1; 29-30

Ali- Yrrkö, Jyrki (2002); Mergers and acquisitions- reasons and result, Discussion
papers no. 792. P. 11

Ansoff, H. Igor (1965); Corporate Strategy; an analytic approach to business policy for
growth and expansion. p. 75- 80

Appelbaum, Steven H; Gandell, Joy; Yortis, Harry; Properand, Shay; Jobin, Francois
(2000); Anatomy of a merger: behavior of organizational factors and processes
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Bowers, H.M. & Miller, R.E. (1990) Choice of investment banker and shareholders’
wealth of firms involved in acquisitions. Financial management 19, p. 34, 36

Buono, Anthony, F and Kerber, Kenneth W. (2009) Building organizational change.

p. 5-6

Capron, Laurence and Pistre Nathalie (2002) When do acquirers earn abnormal
returns? Strategic Management Journal 23, p. 781-794

Chunlai Chen, Z., and Findlay, C., (2003). A Review of Cross-border Mergers and
Acquisitions in APEC. Asian-Pacific Economic Literature, 17 (2), 14-38.

Epstein, Marc. J (2005); The determinants and evaluation of merger success. Business
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Harford, Jarrad (2005); What drives merger waves?, Journal of Financial Economics 77.
p. 529-560

Healy, Paul M.; Palepu, Krishna, G.; Ruback, Richard S.(1990); Does corporate
performance improve after merger? Working paper Alfred P. Sloan School of
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28
Jensen, Michael C. and Meckling, William H.(1976), Theory of the firm: managerial
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Karenfort, Stefan (2011) Synergy in mergers and acquisitions: the role of business
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Kusewitt J. B. (1985) An exploratory study of strategic acquisition factors relating to

performance. Strategic Management Journal. p. 84-101

Loughran, Tim, and Anand M. Vijh, (1997) Do long-term shareholders benefit from
corporate acquisitions? Journal of Finance 52, p. 1765-1790.

Malmendier, Ulrike; Moretti, Enrico and Peters, Florian (2012). Winning by losing:
evidence on the long run effects of mergers. p. 18-20, 33-34, 43

Marris, R. (1964) The Economic Theory of “Managerial” Capitalism. MacMillan & Co.,
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Morck, Randall; Shleifer, Andrei; Vishny, Robert W. (1987) Characteristics of Targets of

Hostile and Friendly takeovers. P. 101, 127-128. From the book: Corporate Takeovers:
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Nahavandi, Afsaneh, and Ali R. Malekzadeh. 1993. Organizational culture in the

management of mergers. Westport, CT: Quorum Books. P. 19, 21

Patterson, Donna E. and Shapiro, Carl (2001); Transatlantic Divergence in

GE/Honeywell: Causes and Lessons. Published by Antitrust, fall 2001 p. 18-23

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Porter, E. Michael (1985); Competitive Advantage. P. 73-75; 331

Roll, Richard (1986); The hurbris hypothesis of corporate takeovers. The Journal of
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Shughart II, William F. (1998) The Government’s war on mergers; the fatal conceit of
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Sirower, Mark L. (1997) The Synergy trap: how companies lose the acquisition game, p.
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Sudarsanam, Sudi(2010), Creating Value from mergers and acquisitions, Essex,

England, Pearson Education Limited

29
Weber, Roberto A. and Camerer, Colin F. Cultural Conflict and Merger Failure; an
experimental approach. Management Science/Vol. 49, No. 4, April 2003 p. 400-415

Wen, W.; Wang, W.K; Wang, T.H. (2005) A hybrid knowledge-based decision support
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Newspapers
New York Times

Financial Times

The Washington Post

The Williston Herald

LA Times

Websites
http://www.unitedcontinentalholdings.com/

money.cnn.com

http://www.kenexa.com/getattachment/ad1a1e2b-f469-47c6-948c-
322faf40ada7/Mergers-and-Acquisitions-Typically-Disengage-Emplo.aspx

http://imaa-institute.org/statistics-mergers-
acquisitions.html#MergersAcquisitions_Worldwide

ec.europa.eu

www.ftc.gov

www.worldoil.com

www.pwc.com

finance.yahoo.com

www.reuters.com

news.cnet.com

30
Reports
GE Annual Report 2000

Energy Policy Research Foundation Inc. (2011) The Bakken Boom: An introduction to
North Dakota’s shale oil. p. 10

Price Waterhouse Coopers (2010) How synergies drive successful acquisitions. p. 4-6

Accenture (2012) by Herd, Thomas J. and McManus, Ryan; Who says M&A doesn’t
create value? Published in Outlook Magazine.

31
Appendix 1

I used the data from www.thomsonone.com (as shown below) and made a table in
excel.

The table in excel with the data I thought was relevant to show how many deals are not
completed within the same year.

Worldwide M&A Deals

Target region/nation M&A deals announced M&A deals completed Value announced M&A Value completed M&A
Americas 12365 9789 1255044.4 1097590.4
Africa/Middle East 1091 680 48146.2 32467.1
Europe 14985 12204 710623.4 731393.6
Asia- Pacific 10037 5761 445393.9 383458.3
Japan 1836 1244 104920.6 88284.9

32
 Appendix 2

Target company Acquiror Reason of whitdraw Value (mil $)

36
Sprint Corp MCI Worldcom Regulation 125,474.7
37
Warner- Lambert Co American Home Products Corp Price 75,476.9
38
Walt Disney Co Comcast Corp Price 66,551.9
39
MediaOne Group Inc Comcast Corp Price 58,631.7
40
Honeywell International Inc GE Regulation 50,133.7
41
Yahoo Inc Microsoft Corp Price 41,860.1
42
Monsanto Co American Home Products Corp Shareholders 39,753.7
43
T- mobile USA Inc AT&T Inc Regulation 39,000.0
44
Equity Office Properties Trust Investor Group Price 38,104.4
45
MCI Communications Corp GTE Corp Regulation 34,374.5
46
Tele- Communications Inc Bell Atlantic Corp Regulation 29,407.0
47
General Growth Properties Inc Simon Property Grp Inc Price 27,497.9
48
Public Svc Enterprise Grp Inc Exelon Corp Regulation 27,356.6
49
Chrysler Corp Tracinda Corp Shareholders 27,215.9
50
Harrah's Entertainment Inc Penn National Gaming Inc Regulation 27,031.8
51
Hughes Electronics Corp EchoStar Communications Corp Regulation 26,643.2
52
SLM Corp Investor Group Price 25,537.4

Reason Value Number of times

Regulation 359,421.50 8
Price 333,660.30 7
Shareholders 66,969.60 2

36
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/00/668
37
http://articles.latimes.com/2000/feb/07/business/fi-61839
38
http://news.cnet.com/Comcast-walks-away-from-Disney-bid/2100-1035_3-5201532.html
39
http://news.cnet.com/MediaOne-ATT-deal-pushes-Comcast-aside/2100-1033_3-225264.html
40
Patterson, Donna E. and Shapiro, Carl (2001); Transatlantic Divergence in GE/Honeywell: Causes and Lessions.
Published by Antitrust, fall 2001 p. 18-23
41
http://www.ft.com/intl/indepth/microsoftyahoo
42
http://www.nytimes.com/1998/10/14/business/american-home-products-deal-with-monsanto-
collapses.html?pagewanted=all&src=pm
43
http://online.wsj.com/article/SB10001424052970204791104577108900032431264.html
44
http://articles.marketwatch.com/2007-02-07/news/30882191_1_vornado-realty-trust-equity-office-properties-trust-
breakup-fee
45
Shughart II, William F. (1998) The Government’s war on mergers; the fatal conceit of Antitrust Policy. Published by:
Policy Analysis no 323
46
http://articles.latimes.com/1994-02-24/news/mn-26797_1_bell-atlantic
47
http://dealbook.nytimes.com/2010/05/07/general-growth-picks-brookfield-plan-over-simons/
48
http://articles.chicagotribune.com/keyword/public-service-enterprise-group/featured/2
49
http://aaahq.org/southeast/2003/cases/SubID_260.pdf p. 9 en 10
50
http://dealbook.nytimes.com/2006/11/28/casino-and-hedge-fund-said-to-consider-harrahs-bid/
51
http://www.antitrustinstitute.org/node/10572
52
http://www.reuters.com/article/2007/10/15/idUSIN20071015114939SLM20071015

33