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Pages:
77 pages/≈42350 words
Sources:
80 Sources
Level:
Harvard
Subject:
Accounting, Finance, SPSS
Type:
Dissertation
Language:
English (U.K.)
Document:
MS Word
Date:
Total cost:
$ 39.95
Topic:

Value Creation for Shareholder of the Acquirer in the Capital-intensive Industries (Dissertation Sample)

Instructions:

a masters level dissertation which focused on value creation for acquirer in an acquisition in capital-intensive industries. The reason behind selecting capital-intensive industries is that they are known to improve the living standard of an economy in the long run. For the study, five acquisitions each in metals, chemicals and oil & gas in 2014 were analyzed. The reason behind selecting deals in 2014, was to get relevant data- both in the short and long run.
The results were similar across the three industries and a value-destruction was observed both in short and long run.

source..
Content:


Is there a value creation for the shareholder of the acquirer in an acquisition in the capital-intensive industries?
Abstract
The capital-intensive industries are known to improve the living standard of an economy in the long run. This research is an attempt to understand both the short-term and long-term value creation as a result of an acquisition for the shareholders of the acquirer in three capital-intensive industries- chemicals, metals and oil & gas. For each of these three industries, the largest 5 deals (by value) undertaken in 2014 were analysed. It is known that the acquisition announcement leads to an abnormal short-term returns, which is attributed to the shareholder’s reaction to the acquisition announcement. Prior to conducting the analysis for the short-term value creation, the similarity in the returns across the three industries on a non-acquisition day was analysed, which paved the way for a common analysis for the three industries in short-run. By analysing the change in returns due to the announcements, it was found that on average the returns were negative i.e. value destruction. It is also expected that due to a successful integration after the acquisition, synergy is created which is reflected in the improvement in operating performance metrics. Prior to conducting the analysis for the long-term value creation, the similarity in the capital structure across the three industries prior to the acquisition was analysed, which paved the way for a common analysis for the three industries in long-run. By analysing the change in operating performance due to the acquisition, it was found that on average the performance detoriated i.e. value destruction. Thus, there is a value destruction for the shareholder of the acquirer in an acquisition in the capital-intensive industries.

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