Post-Merger Performance of Acquiring Firms from Different Industries in India

International Research Journal of Finance and Economics, No. 22, 2008

13 Pages Posted: 18 Dec 2008

See all articles by Dr Pramod Mantravadi

Dr Pramod Mantravadi

Indian School of Business (ISB), Hyderabad

A. Vidyadhar Reddy

Osmania University

Date Written: 2008

Abstract

In today's globalised economy, mergers and acquisitions (M&A) are being increasingly used the world over, for improving competitiveness of companies through gaining greater market share, broadening the portfolio to reduce business risk, for entering new markets and geographies, and capitalising on economies of scale etc. This research study was aimed to study the impact of mergers on the operating performance of acquiring corporates in different industries, by examining some pre-merger and post-merger financial ratios, with the sample of firms chosen as all mergers involving public limited and traded companies in India between 1991 and 2003. The results suggest that there are minor variations in terms of impact on operating performance following mergers, in different industries in India. In particular, mergers seem to have had a slightly positive impact on profitability of firms in the banking and finance industry, the pharmaceuticals, textiles and electrical equipment sectors saw a marginal negative impact on operating performance (in terms of profitability and returns on investment). For the Chemicals and Agri-products sectors, mergers had caused a significant decline, both in terms of profitability margins and returns on investment and assets.

Suggested Citation

Mantravadi, Pramod and Reddy, Aileni Vidyadhar, Post-Merger Performance of Acquiring Firms from Different Industries in India (2008). International Research Journal of Finance and Economics, No. 22, 2008, Available at SSRN: https://ssrn.com/abstract=1317757

Pramod Mantravadi (Contact Author)

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

Aileni Vidyadhar Reddy

Osmania University ( email )

Hyderabad, Andhra Pradesh
India

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