Why merge ?

The pure market economy is theoritically superior to any other kind of economic structure (state intervention, monopolies, oligopolies…) thanks to decreasing returns of scale. What we observe is the contrary: BP+Amoco, Deutsche Bank-Citycorp, Exxon-Mobil, Hoescht-Rhone-PoulencGain when 2 firms are worth more than 1+1:
- to diversify: but in finance we learn that it does not increase the value of a business, knowing that individual investors can diversify.
- lower financing costs: (cheaper when we are big, easier access to financial markets)
- economies of scale (horizontal mergers ; eg. French firms don’t have yet a European size),
- vertical integration (but it is questionable. M. Porter recommands firms to specialize and sub-contract ),
- improved efficiency (then the consequence is more likely to be a take-over than a merger, e.g. Bernard Tapie’s way),
- fuller use of tax shields, combination of complementary resources (ie. R&D),
- redeployment of surplus funds (growth can be internal but also external/strategic investments).

Acquisition >>

Corporate finance

PART ONE: CAPITAL EXPENDITURE
The present value
Investment decisions
Practical problems in capital budgeting
Firms evaluation

PART TWO. BASICS OF FINANCE
The financial markets
Options
The market efficiency
Risk
Mergers, Acquisitions, and Corporate Control
International Financial Management

PART THREE FINANCING DECISIONS
Corporate financing
Dividend policy and capital structure

PART FOUR FINANCIAL MANAGEMENT
Financial planning
Short-term financial management

Course created and updated by Dr David Chelly, PhD in Management sciences from the University of Tours.