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| |Table of content |
Table of content 2
1 3
Introduction 3
2. 4
Mergers and Aquisitions 4
2.1 4
Why it makes sense for companies to merge 4
2.2 5
The acquisition process theory 5
2.3 7
The pharmaceutical industry background and the market dynamics at the end of 1990 7
2.4 8
Glaxo Wellcome and SmithKline Beecham merger 8
2.5 9
The merger rationale 9
2.6 9
Merger benefits 9
3 11
Risk-return analysis 11
3.1 11
Risk-return analysis (Glaxo, before merging) 11
3.2 13
Risk-return analysis (SmithKline Beecham, before merging) 13
3.3 14
Risk-return analysis (GlaxoSmithKline, after merging) 14
4 16
Steps to gain synergy 16
4.1 16
Steps to gain synergy 16
5 20
Achieved synergy 20
6 25
Stock price performance 25
| 1 |Introduction |
In the business world, mergers and acquisitions are a common thing. You hear about it on television or read in the morning newspaper. But what are all those people talking about?
To give more insight in these terms, we will explain in this report different parts of the process of mergers and acquisitions (M&A). Mergers can be defined as a unification of two players into a single entity, acquisitions are situations where on player buys out the other to combine the bought entity with itself.
There are multiple reasons for M&A, all of them should have an positive influence on the companies itself. By combining companies, you could expect, obtaining quality staff or additional skills, knowledge of the particular industry or sector; accessing funds or valuable assets; accessing a wider customer base, thereby increasing your market share; diversification of products being offered; reducing costs and competition.
To make this project applicable towards a real-...