Game-theoretic aspects of international mergers: Theory and case studies

This paper studies the exclusion of potential competition as a motivating factor for international mergers. We propose a simple game-theoretic framework in order to discuss the conditions under which mergers that prevent reciprocal domestic competition will occur. Our analysis highlights the shortcomings of antitrust policies based on pre-merger/post-merger concentration comparisons. A review of several recent European cases suggests that actual merger policy often fails to consider potential competition.

Mergers and acquisitions: driving the growth of MNEs

This paper examines the effects of internationalization (international diversification) and diversification across industries (product diversification) through mergers and acquisitions (M&As) on the firm’s risk-return profile. Drawing on the theoretical work of Vachani (1991) and Rugman and Verbeke’s (2004) metrics, we classify firms according to their degree of product diversification and global reach. These two dimensions at the firm-level are moderators for the performance–expansion relationship. To account for the endogeneity of market entry decisions, we develop a panel vector autoregression. We show that global and host-triad multinational enterprises (MNEs) benefit from cross-border M&As, which reinforces their geographic footprint. In contrast to all other types of firms, home-triad firms exhibit higher firm value without a change in risk when conducting cross-industry M&As. This effect, however, depends on the degree of product diversification. For home-triad firms with a small product range engaging in cross- industry transactions is a value-enhancing growth strategy.

Why merger talks collapse: an exploratory study about contributing factors to ‘wedding cold feet' and deal making failure in mergers and acquisitions from the perspective of active deal making professionals in Brazil

Why merger talks collapse: an exploratory study about contributing factors behind ‘wedding cold feet' and deal making failure in Mergers and Acquisitions from the perspective of active deal making professionals in Brazil. One basic question encouraged this study: after all the effort, expectations and money usually invested in dealmaking, why are so many transactions simply abandoned, even when the benefits are clear for the business, shareholders, customers and employees?

Galaxy interactions I. Major and minor mergers

Aims. We study galaxy pair samples selected from the Sloan Digital Sky Survey (SDSS-DR7) and we perform an analysis of minor and major mergers with the aim of investigating the dependence of galaxy properties on interactions. Methods. We build a galaxy pair catalog requiring r(p) < 25 kpc h(-1) and Delta V < 350 km s(-1) within redshift z < 0.1. By visual inspection of SDSS images we remove false identifications and we classify the interactions into three categories: pairs undergoing merging, M; pairs with evident tidal features, T; and non disturbed, N. We also divide the pair sample into minor and major interactions according to the luminosity ratio of the galaxy members. We study star formation activity through colors, the 4000 angstrom break, and star formation rates. Results. We find that similar to 10% of the pairs are classified as M. These systems show an excess of young stellar populations as inferred from the D-n(4000) spectral index, colors, and star formation rates of the member galaxies, an effect which we argue is directly related to the ongoing merging process. We find similar to 30% of the pairs exhibiting tidal features (T pairs) with member galaxies showing evidence of old stellar populations. This can be associated either to the disruptive effect of some tidal interactions, or to the longer time-scale of morphological disturbance with respect to the bursts of the tidal induced star formation. Regardless of the color distribution, we find a prominent blue peak in the strongest mergers, while pairs with tidal signs under a minor merger show a strong red peak. Therefore, our results show that galaxy interactions are important in driving the evolution of galaxy bimodality. By adding stellar masses and star formation rates of the two members of the pairs, we explore the global efficiency of star formation of the pairs as a whole. We find that, at a given total stellar mass, major mergers are significantly more efficient (a factor approximate to 2) in forming new stars, with respect to both minor mergers or a control sample of non-interacting galaxies. We conclude that the characteristics of the interactions and the ratio of luminosity galaxy pair members involved in a merger are important parameters in setting galaxy properties.

Multiwavelenght study of cluster mergers and consequences for the radio emission properties of galaxy clusters

In the present thesis a thourough multiwavelength analysis of a number of galaxy clusters known to be experiencing a merger event is presented. The bulk of the thesis consists in the analysis of deep radio observations of six merging clusters, which host extended radio emission on the cluster scale. A composite optical and X–ray analysis is performed in order to obtain a detailed and comprehensive picture of the cluster dynamics and possibly derive hints about the properties of the ongoing merger, such as the involved mass ratio, geometry and time scale. The combination of the high quality radio, optical and X–ray data allows us to investigate the implications of the ongoing merger for the cluster radio properties, focusing on the phenomenon of cluster scale diffuse radio sources, known as radio halos and relics. A total number of six merging clusters was selected for the present study: A3562, A697, A209, A521, RXCJ 1314.4–2515 and RXCJ 2003.5–2323. All of them were known, or suspected, to possess extended radio emission on the cluster scale, in the form of a radio halo and/or a relic. High sensitivity radio observations were carried out for all clusters using the Giant Metrewave Radio Telescope (GMRT) at low frequency (i.e. ≤ 610 MHz), in order to test the presence of a diffuse radio source and/or analyse in detail the properties of the hosted extended radio emission. For three clusters, the GMRT information was combined with higher frequency data from Very Large Array (VLA) observations. A re–analysis of the optical and X–ray data available in the public archives was carried out for all sources. Propriety deep XMM–Newton and Chandra observations were used to investigate the merger dynamics in A3562. Thanks to our multiwavelength analysis, we were able to confirm the existence of a radio halo and/or a relic in all clusters, and to connect their properties and origin to the reconstructed merging scenario for most of the investigated cases. • The existence of a small size and low power radio halo in A3562 was successfully explained in the theoretical framework of the particle re–acceleration model for the origin of radio halos, which invokes the re–acceleration of pre–existing relativistic electrons in the intracluster medium by merger–driven turbulence. • A giant radio halo was found in the massive galaxy cluster A209, which has likely undergone a past major merger and is currently experiencing a new merging process in a direction roughly orthogonal to the old merger axis. A giant radio halo was also detected in A697, whose optical and X–ray properties may be suggestive of a strong merger event along the line of sight. Given the cluster mass and the kind of merger, the existence of a giant radio halo in both clusters is expected in the framework of the re–acceleration scenario. • A radio relic was detected at the outskirts of A521, a highly dynamically disturbed cluster which is accreting a number of small mass concentrations. A possible explanation for its origin requires the presence of a merger–driven shock front at the location of the source. The spectral properties of the relic may support such interpretation and require a Mach number M < ∼ 3 for the shock. • The galaxy cluster RXCJ 1314.4–2515 is exceptional and unique in hosting two peripheral relic sources, extending on the Mpc scale, and a central small size radio halo. The existence of these sources requires the presence of an ongoing energetic merger. Our combined optical and X–ray investigation suggests that a strong merging process between two or more massive subclumps may be ongoing in this cluster. Thanks to forthcoming optical and X–ray observations, we will reconstruct in detail the merger dynamics and derive its energetics, to be related to the energy necessary for the particle re–acceleration in this cluster. • Finally, RXCJ 2003.5–2323 was found to possess a giant radio halo. This source is among the largest, most powerful and most distant (z=0.317) halos imaged so far. Unlike other radio halos, it shows a very peculiar morphology with bright clumps and filaments of emission, whose origin might be related to the relatively high redshift of the hosting cluster. Although very little optical and X–ray information is available about the cluster dynamical stage, the results of our optical analysis suggest the presence of two massive substructures which may be interacting with the cluster. Forthcoming observations in the optical and X–ray bands will allow us to confirm the expected high merging activity in this cluster. Throughout the present thesis a cosmology with H0 = 70 km s−1 Mpc−1, m=0.3 and =0.7 is assumed.

The special rights other than shares in cross-border mergers of limited liability companies within the European Union. A perspective from the Spanish Law

The present research aims to study the special rights other than shares in Spanish Law and the protection of their holders in cross-border mergers of limited liability companies within the European Union frame. Special rights other than shares are recognised as an independent legal category within legal systems of some EU Member States, such as Germany or Spain, through the implementation of the Third Directive 78/855/CEE concerning mergers of public limited liability companies. The above-cited Directive contains a special regime of protection for the holders of securities, other than shares, to which special rights are attached, consisting of being given rights in the acquiring company, at least equivalent to those they possessed in the company being acquired. This safeguard is to highlight the intimate connection between this type of rights and the company whose extinction determines the existence of those. Pursuant to the Directive 2005/56/CE on cross-border mergers of limited liability companies, each company taking part in these operations shall comply with the safeguards of members and third parties provided in their respective national law to which is subject. In this regard, the protection for holders of special rights other than shares shall be ruled by the domestic M&A regime. As far as Spanish Law are concerned, holders of these special rights are recognized a right of merger information, in the same terms as shareholders, as well as equal rights in the company resulting from the cross-border merger. However, these measures are not enough guarantee for a suitable protection, thus considering those holders of special rights as special creditors, sometimes it will be necessary to go to the general protection regime for creditors. In Spanish Law, it would involve the recognition of right to the merger opposition, whose exercise would prevent the operation was completed until ensuring equal rights.

Mergers, executive risk reduction and stockholder wealth

Among the possible consequences of agency problems between owners and managers is a tendency by managers to make investment decisions for their firms that are deliberately aimed at reducing firm risk, as a means to control managers' personal wealth risk. The literature has suggested that such behavior may occur to the detriment of shareholder wealth, and that mrgers may be a particular class of investment decisions for which the behavior would be observable. We test these hypotheses empirically, but find no evidence from our merger sample that risk reduction for the aqquiring firm is the typical outcome nor that, when it occurs, it is differentially costly for shareholders.

Technical Efficiency and Stock Market Reaction to Horizontal Mergers

This study examines the relationship between stock market reaction to horizontal merger announcements and technical efficiency levels of the participating firms. The analysis is based on data pertaining to eighty mergers between firms in the U.S. manufacturing industry during the 1990s. We employ Data Envelopment Analysis (DEA) to measure technical efficiency, which capture the firms. competence to produce the maximum output given certain productive resources. Abnormal returns related to the merger announcements provide the investor.s re-evaluation on the future performance of the participating firms. In order to avoid the problem of nonnormality, heteroskedasticity in the regression analysis, bootstrap method is employed for estimations and inferences. We found that there is a significant relationship between technical efficiency and market response. The market apparently welcomes the merger as an arrangement to improve resource utilizations.