Do mergers create value for the offeror and offeree Essay

Do mergers create value for the offeror and offeree - Essay ExampleFor example, most of the big organizations argon currently looking to expand their business to overseas countries in order to exploit the opportunities opened up by the globalization. Merger & Acquisition is one mien of business expansion adopted by big companies.Gaughan (2007) defined merger as the combination of two corporations in which only one corporation survives eon the merged corporation goes out of existence after the merger process (Gaughan, 2007, p.12). Theoretically mergers and acquisitions should be value creating for the shareholders of both the offeror and offeree companies. But in practice, it is non 100% true. This paper critically evaluates the pros and cons of merger and acquisition to the shareholders of both the offeror and offeree companiesIncreased market share, lower cost of production, higher competitiveness, exactd research and development make love how and patents, Financial leverage, I mproved profitability etc are some of the advantages or values for the offeror and the offeree through M & A (Helium, 2010). The offeror and the offeree can increase their client base through merger and acquisition. For example, consider the recent merger deal between two telecommunication giants, Indias Bharti Airtel and South Africas MTN. As per this deal, MTN and its shareholders would acquire around 36 per cent economic interest in Bharti Airtel, while Bharti Airtel would acquire 49 per cent stake in South African telecom giant MTN (Indias 11 largest M&A deals, 2009). The above deal helped both the companies to exploit the opportunities in India and South Africa more judiciously for the mutual benefits. Bharti Airtel will maintain the assistance from MTN for their operations in South Africa whereas the MTN would get assistance from Bharti Airtel for their operations in India. The understanding of business climate and formalities in these countries can be exchanged for the