The long run impact of mergers and acquisitions on performance – empirical study in the pulp and paper industry

Mergers and acquisitions (M&A) have played very important role in restructuring the pulp and paper industry (PPI). The poor performance and fragmented nature of the industry, overcapacity problems, and globalisation have driven companies to consolidate. The objective of this thesis was to examine how PPI acquirers’ have performed subsequent M&As and whether the deal characteristics have had any impact on performance. Based on the results it seems that PPI companies have not been able to enhance their performance in the long run after M&As although the per-formance of acquiring firms has remained above the industry median, and deal characteristics or the amount of premiums paid do not seem to have had any effect. The statistical significance of the results was tested with change model and regression analysis. Performance was assessed with accrual, cash flow, and market based indicators. Results are congruent with behavioural theory: managers and investors seem to be overoptimistic in determining the synergies from M&As.

Clustering and International Competitiveness of Information Technology Industry in the Saint Petersburg Area

The main objective of this study is to assess the potential of the information technology industry in the Saint Petersburg area to become one of the new key industries in the Russian economy. To achieve this objective, the study analyzes especially the international competitiveness of the industry and the conditions for clustering. Russia is currently heavily dependent on its natural resources, which are the main source of its recent economic growth. In order to achieve good long-term economic performance, Russia needs diversification in its well-performing industries in addition to the ones operating in the field of natural resources. The Russian government has acknowledged this and started special initiatives to promote such other industries as information technology and nanotechnology. An interesting industry that is basically less than 20 years old and fast growing in Russia, is information technology. Information technology activities and markets are mainly concentrated in Russia’s two biggest cities, Moscow and Saint Petersburg, and areas around them. The information technology industry in the Saint Petersburg area, although smaller than Moscow, is especially dynamic and is gaining increasing foreign company presence. However, the industry is not yet internationally competitive as it lacks substantial and sustainable competitive advantages. The industry is also merely a potential global information technology cluster, as it lacks the competitive edge and a wide supplier and manufacturing base and other related parts of the whole information technology value system. Alone, the industry will not become a key industry in Russia, but it will, on the other hand, have an important supporting role for the development of other industries. The information technology market in the Saint Petersburg area is already large and if more tightly integrated to Moscow, they will together form a huge and still growing market sufficient for most companies operating in Russia currently and in the future. Therefore, the potential of information technology inside Russia is immense.

Diversification and its reflections on profitability - strategic change in pulp and paper industry in the years 1996 and 2006

The purpose of the thesis was to analyze diversification in pulp and paper industry (PPI), which is an industry facing enormous strategic challenges as many of the basic parameters of its operational environment are rapidly changing. The objective was to explore, how PPI companies have reacted to these changes by adjusting their strategies in terms of diversification and how the adjustments have affected their profitability. The study was statistical in nature. The results indicate that PPI companies in deed had reduced the degree of unrelated and related diversification , but the positive performance implications of the changes were debatable. In light of the data used in the study lower level of diversification did not lead to better profitability, in fact, the companies with the highest level of diversification had the best profitability. By contrast, reducing the level of unrelated diversification improved the profitability development; whereas reducing the level of related diversification deteriorated the profitability of the company. The results were not statistically significant and they cannot be generalized outside the data of the study.

Pharmacy Industry in Russia and in the Baltic States

The aim of this study is to describe the structure of the pharmacy industry in four post-Soviet states on the Baltic Sea: Russia, Estonia, Latvia, and Lithuania. In addition to this, the opportunities that these markets have to offer for international pharmaceutical companies are explored. After the Soviet Union collapsed at the beginning of 1990s, the pharmacy sector has gone through tremendous changes. The pharmacy market shifted from a centrally controlled, one supplier system to an industry in which multiple distributors are competing in importing, wholesaling, and retailing of medicinal products. In the Baltic States, the number of pharmacies has not increased during the last years and companies have been growing mainly by acquisitions. Especially in Estonia the market is saturated and price competition is fierce. Similarly, in Latvia and Lithuania, markets are consolidating and wholesalers are growingly taking part in retailing by acquiring smaller chains. In Russia, the market is still fragmented and only one national pharmacy chain can be named, pharmacy chain “36.6”. Pharmacy chains are growing mostly through organic growth and competition between the biggest players is relatively low. The Russian market clearly offers many opportunities for international pharmaceutical operators. The ageing population, growing level of income, and changing living habits are creating new and growing needs for modern healthcare services and products.

Impact of Investment Strategies on Performance in Pulp and Paper Industry

The main objective of this study was to examine, what kind of investment strategies the leading European and North American pulp and paper industry companies (PPI) used in 1991-2003, and how the selected strategies affected their performance. The investment strategies were categorised in three classes including mergers and acquisitions, investments in new capacity and investments in existing capacity. The results showed that mergers and acquisitions represented the largest share of total investments in 1991-2003 followed by investments in existing capacity. PPI companies changed investment strategies over time by increasing the share of mergers and acquisitions, which decreased investments in new capacity especially among North American companies. According to the results, good asset quality and investments in new and existing capacity provided better profitability than often expensive acquisitions. Also the capacity decreases had a positive impact on profitability. Average asset quality and profitability were higher among European companies. The study concluded that in the long term the available value creating investment opportunities should limit capital expenditure levels, not the relation of capital expenditure to depreciation.

Challenges in Supplier-Buyer Relationships in Electronics Industry

This thesis examines the supplier-buyer relationships in the Finnish electronics industry. The aim of the study was to increase understanding on the challenges that suppliers face in their relationship with the buyer. The research was conducted using qualitative methods because they allow more perspective for the research problem than quantitative methods would have. Choosing qualitative method also affected the selection of a research technique. Analysis of secondary data from written documents was chosen to give more perspective to a broad problem. The main findings of this research are that the relationships between supplier and buyer in electronics industry are challenging because supplier must understand and face three types of challenges. The challenges are: understanding the environment, choosing and implementing correct strategy and managing relationships. For the supplier it is important to understand the environment so it can adjust own strategy to fit to the environment. The supplier should also be careful not to be too dependent on the buyer.

Fiber flows in global paper and pulp industry. A panel data approach.

The purpose of this thesis is to study factors that explain the bilateral fiber trade flows. This is done by analyzing bilateral trade flows during 1990-2006. It will be studied also, whether there are differences between fiber types. This thesis uses a gravity model approach to study the trade flows. Gravity model is mostly used to study the aggregate data between trading countries. In this thesis the gravity model is applied to single fibers. This model is then applied to panel data set. Results from the regression show clearly that there are benefits in studying different fibers in separate. The effects differ considerably from each other. Furthermore, this thesis speaks for the existence of Linder’s effect in certain fiber types.

Growth Strategies in Pulp and Paper Industry: An Empirical Investigation on Profitability Effects

This study investigates whether there are differences in profitability of PPI companies based on the growth strategy they have chosen to follow. It is examined whether those companies following organic growth strategy are more profitable than those companies following acquisitive growth strategy. It is also investigated are ones larger than the others, or are ones growing faster than the others. Also, the factors affecting the profitability of acquisitive companies are further examined. The results showed that there actually are differences between the two groups. Organically grown companies were found to be more profitable, smaller and growing slower than acquisitive companies. When it comes to examining only acquisitive companies there could be found factors that better or worsen the profitability of companies. For example targets that the company has bought in developing markets were making them more profitable.

Clustering and international competitiveness of information technology industry in the Saint Petersburg area

The main objective of this study is to assess the potential of the information technology industry in the Saint Petersburg area to become one of the new key industries in the Russian economy. To achieve this objective, the study analyzes especially the international competitiveness of the industry and the conditions for clustering. Russia is currently heavily dependent on its natural resources, which are the main source of its recent economic growth. In order to achieve good long-term economic performance, Russia needs diversification in its well-performing industries in addition to the ones operating in the field of natural resources. The Russian government has acknowledged this and started special initiatives to promote such other industries as information technology and nanotechnology. An interesting industry that is basically less than 20 years old and fast growing in Russia, is information technology. Information technology activities and markets are mainly concentrated in Russia’s two biggest cities, Moscow and Saint Petersburg, and areas around them. The information technology industry in the Saint Petersburg area, although smaller than Moscow, is especially dynamic and is gaining increasing foreign company presence. However, the industry is not yet internationally competitive as it lacks substantial and sustainable competitive advantages. The industry is also merely a potential global information technology cluster, as it lacks the competitive edge and a wide supplier and manufacturing base and other related parts of the whole information technology value system. Alone, the industry will not become a key industry in Russia, but it will, on the other hand, have an important supporting role for the development of other industries. The information technology market in the Saint Petersburg area is already large and if more tightly integrated to Moscow, they will together form a huge and still growing market sufficient for most companies operating in Russia currently and in the future. Therefore, the potential of information technology inside Russia is immense.

Omistusrakenne ja kannattavuus – empiirinen tutkimus neljällä toimialalla

Metsäteollisuudessa on aika ajoin esitetty ajatus, että perheyritykset menestyvät alalla paremmin kuin muut toimijat. Tämän tutkimuksen tavoitteena oli selvittää, onko omistusrakenteen ja kannattavuuden välillä yhteyttä. Omistusrakennetta tarkasteltiin kahdesta näkökulmasta: omistuksen keskittyneisyys ts. omistajan valvonta operatiiviseen johtoon nähden ja omistajatyyppi (perhe, rahoitusyhtiö, ei-rahoitusyhtiö, valtio). Näiden molempien suhdetta kannattavuuteen (ROA tai EBITDA) analysoitiin kvantitatiivisesti kovarianssianalyysilla. Teoreettisena lähtökohtana käytettiin agenttiteoriaa. Tutkimuskohteeksi valittiin pääomavaltaiset alat: metsäteollisuus, kemianteollisuus, konepajateollisuus ja energiateollisuus. Aineisto koottiin eurooppalaisten yritysten tilinpäätöstiedoista Amadeus-tietokannasta. Tutkimuksen tuloksena todettiin, ettei omistuksen keskittyneisyydellä eikä omistajatyypillä ts. omistusrakenteella ole tilastollisesti merkitsevää yhteyttä kannattavuuteen millään tutkituista toimialoista.

Warranty Practices and Costs in the Industry of Welding Machines Manufacturing

The objective of the master’s thesis is to define the warranty practices and costs in the welding machines manufacturing company and do a proposal for a warranty policy based on the practices and costs. The study include a disquisition of the warranty practices in the subsidiaries and distributor sales. The disquisition of the warranty practices introduces the information relates to warranty period, warranty costs, including repair, spare part and other costs, the practices with the replaced parts, the utilization rate of the eWarranty system and information relates to special arrangements in the warranties. The warranty costs are defined besides the group level also separately per regions and product families. From some product families the disquisition is done per products. In this study is also done a proposal for a warranty policy for the company. The proposal speaks out the length of warranty period, the compensation of the warranty costs, the practices with replaced parts and usage of eWarranty system.

Stabilization of the ionic form of weak acid cation exchange resins

Weak acid cation exchange (WAC) resins are used in the chromatographic separation of betaine from vinasse, a by-product of sugar industry. The ionic form of the resin determines the elution time of betaine. When a WAC-resin is in hydrogen form, the retention time of betaine is the longest and betaine elutes as the last component of vi-nasse from the chromatographic column. If the feed solution contains salts and its pH is not acidic enough to keep the resin undissociated, the ionic form of the hydrogen form resin starts to alter. Vinasse contains salts and its pH is around 5, it also contains weak acids. To keep the metal ion content (Na/H ratio) of the resin low enough to ensure successful separation of betaine, acid has to be added to either eluent (water) or vinasse. The aim of the present work was to examine by laboratory experiments which option requires less acid. Also the retention mechanism of betaine was investigated by measuring retention volumes of acetic acid and choline in different Na/H ratios of the resin. It was found that the resulting ionic form of the resin is the same regardless of whether the regeneration acid is added to the eluent or the feed solution (vinasse). Be-sides the salt concentration and the pH of vinasse, also the concentration of weak acids in the feed affects the resulting ionic form of the resin. The more buffering capacity vinasse has, the more acid is required to keep the ionic form of the resin desired. Vinasse was found to be quite strong buffer solution, which means relatively high amounts of acid are required to prevent the Na/H ratio from increasing too much. It is known that the retention volume of betaine decreases significantly, when the Na/H ratio increases. This is assumed to occur, because the amount of hydrogen bonds between the carboxylic groups of betaine and the resin decreases. Same behavior was not found with acetic acid. Choline has the same molecular structure as betaine, but instead of carboxylic group it has hydroxide group. The retention volume of choline increased as the Na/H ratio of the resin increased, because of the ion exchange reaction between choline cation and dissociated carboxylic group of the resin. Since the retention behavior of choline on the resin is opposite to the behavior of be-taine, the strong affinity of betaine towards hydrogen form WAC-resin has to be based on its carboxylic group. It is probable that the quaternary ammonium groups also affect the behavior of the carboxylic groups of betaine, causing them to form hydrogen bonds with the carboxylic groups of the resin.

Catalytic Wet Oxidation of Paper Mill Debarking Water

The objective of the research was to study the influence of temperature, oxygen pressure, catalysts loading and initial COD concentration of debarking wastewater on the pollutants during the catalytic oxidation. More importantly, how the addition of catalyst affects the wet oxidation process. The whole work was divided into two main sections, theoretical and experimental parts. The theoretical part reviews the pulp and paper industry from wood processing to paper production as well as operations that generate wastes. Treatment methods applicable for industrial pulp and paper mill effluents were also discussed. Wet oxidation and catalytic wet oxidation processes including mechanism, reactions, kinetics and industrial applications were previewed. In the experimental part, catalytic wet oxidation process were studied at 120-180°C, 0-10 bar oxygen pressure, 0-1 g/L catalyst concentration and 1000-3000 mg/L initial COD concentration. Responses, such as Chemical oxygen demand (COD), Total organic carbon (TOC), colour, lignin/tannin, Biochemical oxygen demand (BOD) and pH were measured. In the experiment, the best conditions occurred at 180°C, 10 bar, l g/L catalyst concentration and 3000mg/L initial COD. At these conditions; 74% COD, 97% lignin/tannin, 54% TOC, 90% colour were removed from the wastewater. pH was greatly reduced from 7 to 4.6. Lignin/tannin was removed most. Lignin/tannin showed linear dependency with colour during oxidation. Temperature made the most impact in reducing contaminants in debarked wastewater.