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Literature Review Example 文献综述范文参考

Literature review Example 文献综述范文参考

4.1 Introduction
This chapter will discuss about the mergers and acquisition (M&A). Including the motivation of M&A, Choice of payment, benefits of two sides and one case of Wolseley plc acquired DT group.

Wolseley plc’s main strategy of expend their business is through the acquisition way. During year 2007(July 2006- July 2007), the group completed 44 companies acquisitions including the largest ever acquisition, DT GROUP, total Spent reach to £1.7 bn. Merger and acquisition always used by the companies like WOLSELEY as their corporate strategy enhance the size and market weight in order to get a strong position in the competition.  

 4.2 Definition
The way by which some companies choose to grow involves getting together with another enterprise and is described using the following terms: merger; takeover, amalgamation, absorption, fusion, integration and agglomeration (uniting of interest). Analytically, it is possible to distinguish between two main ways that firms can get together. The two methods are: (1) acquisition: Also known as ‘takeover’, and where there is a dominant firm and where the owners of the subordinate enterprise give up their interest in exchange for a consideration given by the other enterprise. For example, Firm A takes over Firm B to create an enlarged Firm A. Conventionally, firm A would be the larger of the two. (2) Merger: technically known as a ‘uniting of interest’ or an ‘amalgamation’, where two or more companies, of roughly equal significance, agree to transfer their capital to another company newly formed for the purpose and the old company is dissolved. For example, Firm A merges with Firm B to form Firm C. This is the definition of M&A by Oxford Reference Online .

According to the International Accounting Standard (IAS 22) , merger was defined as a “business combination that results in a new reporting entity, formed from combining entities in which the shareholders come together in partnership for mutual sharing of risks and benefits of the combined entity .In such a transaction no party to the combination obtains control or is dominant whether by share ownership, directors control or otherwise” however the M&A was accounted for as business combination by IFSR 3 Appendix A- A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as ‘true mergers’ or ‘mergers of equals’ are also business combinations as that term is used in this IFRS . (IFSR 2008)
 
4.3 Motivation of mergers and acquisition
The overall goal is to ensure future stability and growth in the market. The most established effects of synergies are profit enhancement, lower taxes, cost reduction and cost of capital. However, on the other hand, it is clear that each company has its own goals which they all hope to get them. Due to mergers which include reduced competition and/or product diversification, the targets are intimately involved with the possible advantages of mergers and acquisitions. Many of the advantages have to do with forming unique research and development skills One of the mainly advantage is through the way of merger, a company could get an opportunities to expand by set up their position in another country. It leads the company to compete in other markets. And moreover, another advantage is that the company does not need waste time and money to develop themselves, because of they could adopt the technology from the other.



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