Investigation into the Impact of Merger and Acquisition Activities on the Shareholders Wealth of Bidding and Acquired Companies in the Irish Service Industry.

Pascu, Alina Maria (2020) Investigation into the Impact of Merger and Acquisition Activities on the Shareholders Wealth of Bidding and Acquired Companies in the Irish Service Industry. Masters thesis, Griffith College.

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Abstract

Past researchers have found that the outcome of growth strategy through mergers and acquisition in terms of driving true shareholder wealth are mixed, for both parties (the bidder and the target). The objective of this dissertation was to test the impact of M&A’s on shareholder wealth using an event study methodology. Specifically, this study analyzed the underlying reasons that pushed two case study firms to adopt M&A’s as growth strategy and to see if they’ve achieved successful returns for their shareholders through this type of strategy. The primary data was done through four in-depth interviews with top tier management that have had various implications with both M&A’s case study. This data was combined with the secondary data presented on the subject in order to assess the hypothesis that M&A’s are profitable situations and lead to an increase in shareholder value. This data was evaluated in combination with other three hypothesis, the wealth creation for both the bidder and the acquirer, the size hypothesis and the relatedness hypothesis. The question that was considered best suited for this study was whether or not true that M&A’s improve shareholder wealth in short and long term. Combining the findings from both the primary and secondary data, researcher concluded that mergers and acquisition can improve shareholder wealth, especially when the acquirer and the target firms are in the same line of business. Although, firms that use acquisitions purely for to diversify, mainly into unrelated businesses are those that are unlikely to create values. A final insight from this research study is that M&A’s can create shareholder value for both parties if a defined implementation strategy and a strong integration plan are put in place.

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