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The Impact of Cross Border Mergers between the Other Countries and the UK - Dissertation Example
Author : jmurazik
Finance & Accounting
Pages 21 (5271 words)
A merger is a business process by means of which, two or additional number of companies can pool their business assets and form a single organization. In general the stocks of the parent companies’ are given up and instead the stock of the new company is issued. …
For instance, when the Daimler-Benz and Chrysler merged, both the companies stopped to exist and in their place DaimlerChrysler was formed. Cross border mergers are those mergers where the involved companies are set up in different countries. They comprise of a growing percentage of all the mergers. The cross border mergers are of two kinds, viz., the inward cross border mergers and the outward cross border mergers. In the inward cross border merger, the entire or parts of domestic companies are put up for sale to overseas investors, which result in inward movement of capital. In the case of an outward cross border merger, the domestic companies purchase the entire or segments of foreign companies resulting in outward flow of capital (Organisation for Economic Co-operation and Development. Economic Analysis and Statistics Division, 2003).
Cross-border mergers are a very significant occurrence in the global economy. They encompass greater than 50% of all the foreign direct investment taking place in the world (Gugler & Et. Al., 2003). Companies engage in cross border merger activities for various motives, such as intensification of their market position, growing their business, getting hold of the other company’s complementary resources, and to improve their efficiency by global business reorganization among others. During the period from 1995-2001, the United Kingdom was the second target nation after the United States for cross border inward mergers. ...