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Impact of Merger & Acquisition On Stock Price
Impact of Merger & Acquisition On Stock Price
ACKNOWLEDGEMENT
A single flower cannot make a garland or a single star can not make the beautiful
shiny sky at the night, same way a research work can never be outcome of a
single individuals talent or efforts. It is just like climbing a high peak, step by step,
accompanied with bitterness, hardships, frustration, encouragement and trust
and with so many peoples kind help. When I found myself at the top enjoying
beautiful scenery, I realized that it was, in fact, teamwork that got me there.
Though it will not be enough to express my gratitude in words to all those people
who help me, I would still like to give my heartbound thanks to all these people.
First of all, I would like to give my sincere thanks to my guide, Professor Mr.
Divyesh Patel
Thank you is a small word to my Parents, , and my sister who not only supported
me, but also inspired me, during the course of my study. It was their blessings
that gave me courage to face the challenges and made my path easier.
Last, but not the at least, I would like to thank Dr. Manish Vyas , Director of my
institution - Indu Institute of Management, Vadodara where I am student.
STUDENT DECLARATION
I Piyush J. Vara is student of INDU INSTITUTE OF MANAGEMENT STUDIES Baroda,
hereby declare that this project report entitled IMPACT OF MERGER &
ACQUISITION ON STOCK PRICE.
I declare that this submitted work is done to the best of our knowledge. No such
work has been submitted by any other person or collages.
I also declare that all information collected from various secondary sources has
been duly acknowledged in this project report.
Place:
Signature
Date: . /. /
_____________
(Piyush J Vara)
PREFACE
As MBA students our main aim should not be only to learn theoretical concepts in
the classroom, but it becomes more as how we apply those concepts in practical.
We really know that there is no use of knowledge without getting the practical
knowledge that make the man perfect and understand
At the present, the world is running very fast. We are coming across many
modern theories and implementation of machineries, to start new business. We
must have the knowledge of theories and practical, through it, the student can
able know about how to apply their mind in the real business world.
We have tried our best to prepare this project but it there is any mistake, we
request you to overlook upon the fact as this is our sincere attempts to perceive
thing in proper way. In the subject identification of need of every person role,
functions, policy and all procedure of functions is input.
TABLE OF CONTENTS
SR. NO.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
PARTICULARS
DECLARATION
PREFACE
AKNOWLEDGEMENT
Executive Summary
GENERAL IMFORMATION
Introduction of Reliance
Reliance Industry
Reliance Petroliem
INTRODUCTION OF THE TOPIC
Introduction of Merger & Acquisition
Definition of M&A
Literature Review
Research Problem
Research Objective
Hypothesis
RESEARCH METHODOLOGY
Research Design
Population & Sample
Sampling Method
Collection of data
Scheme of Amalgamation under sec 391 to 394
of the Companies Act,1956
Testing of Hypotheses
Results & findings
Scope of the study
Limitation of the study
conclusion
References
PAGE NO.
6
11
13
15
18
19
21
26
27
27
28
28
29
29
30
41
49
52
54
56
58
EXCUTIVE SUMMARY
The executive summary is the most important part of the research work. Very often,
executives go through the executive summary only. Thus, it must be capable of
providing the information presented in the report is a summarised form. It is divided
into the 5 parts which are
The main objective of this research on impact of merger & acquisition on stock price
is to know the changes in prices of stocks due to merger and acquisition.
To know the involvement of various stakeholders into the merger decisions
.
To analyze if the company undergoes due diligence process during the
merger.
To study the management philosophy with respect to merger of all the 4
company under research.
To know which strategic decision in M&A affect the changes in stock prices
Studying the triggering factor leading to decision of M&A.
CONCISE STATEMENT:
As in this report the main purpose is to check the impact of merger & acquisition on
stock price.
For that purpose we have taken all Indian merger & acquisition as our population
and in which the merger of Reliance industries Ltd with Reliance Petroleum Ltd is
taken as our sample for the purpose of research methodology.
For conducting research methodology we have created two hypotheses. Which are
as follows.
HYPOTHESIS-1
H0: There is no significance difference on the stock price of the company before
and after the merger
H1: There is significance difference on the stock price of the company before and
after the merger
To prove this hypothesis we have applied paired t-test.
For that purpose we have taken stock prices of Reliance Industries Ltd.
before 20 days of merger and after 20 days of merger.
And the result arrived in this hypothesis is.
P(T<=t) one-tail
0.24640719
t Critical one-tail
1.729132792
P(T<=t) two-tail
0.49281438
t Critical two-tail
2.09302405
HYPOTHESIS-2
Column 1
Column 1
Column 2
0.930483
Column 2
In this project work whole research methodology is done for the purpose of
analysing that impact of merger and acquisition on stock prices are arrived
or not.
For that in first hypotheses t cal > t tab so, null hypothesis is rejected. So we
can say that there is a significance change into the stock price of the
company because of merger and acquisition.
In second hypothesis correlation coefficient between the EPS of the
Reliance Industry before and after merger is +0.093. This indicates that
merger and acquisition are strongly correlated with the EPS of the company.
It means that merger and acquisition decision effects on the EPS of the
company.
RIL among top 10 private sector refining companies globally
Will own 2 of the worlds 3 largest, most complex modern refine
Will be the worlds largest producer of ultra-clean fuels at a sing location
CONCLUSION
10
GENERAL IMFORMATION
11
INTRODUCTION OF RELIANCE
Backward vertical integration has been the cornerstone of the evolution and
growth of Reliance. Starting with textiles in the late seventies, Reliance
pursued a strategy of backward vertical integration - in polyester, fibre
intermediates, plastics, petrochemicals, petroleum refining and oil and gas
exploration and production - to be fully integrated along the materials and
energy value chain.
The Group's activities span exploration and production of oil and gas,
petroleum refining and marketing, petrochemicals (polyester, fibre
intermediates, plastics and chemicals), textiles, retail, infotel and special
economic zones.
Reliance enjoys global leadership in its businesses, being the largest po lyester
yarn and fibre producer in the world and among the top five to ten producers
in the world in major petrochemical products.
12
RELIANCE INDUSTRIES
Type:-
Public
Traded as:-
BSE: 500325,
NSE: RELIANCE,
LSE: RIGD
BSE SENSEX Constituent
CNX Nifty Constituent
Industry:-
Conglomerate
Predecessor(s):-
Founded:-
1966
Founder(s):-
Dhirubhai Ambani
Headquarters:-
Area served:-
Worldwide
Mukesh Ambani
Products:-
Revenue:-
Operating income:-
Net income:-
Total assets:-
Total equity:-
Employees:-
23,519 (2013)
Website:-
www.ril.com
13
The company's equity shares are listed on the National Stock Exchange of India
Limited (NSE) and the BSE Limited. The Global Depository Receipts (GDRs)
issued by the Company are listed on Luxembourg Stock Exchange. It has issued
approx. 56 million GDRs wherein each GDR is equivalent to 2 equity shares of
the company. Approx. 3.46% of its total shares are listed on Luxembourg Stock
Exchange. Its debt securities are listed at the Wholesale Debt Market (WDM)
Segment of the National Stock Exchange of India Limited (NSE).
It has received domestic credit ratings of AAA from CRISIL (S&P subsidiary) and
Fitch. Moodys and S&P have provided investment grade ratings for
international debt of the Company, as Baa2 positive outlook (local currency
issuer rating) and BBB+ outlook respectively.
14
RELIANCE PETROLEUM
Type:-
Industry:-
Founded:-
2008
Headquarters:-
Ahmedabad, India
Key people:-
Mukesh Ambani
Products:-
Petroleum
Revenue:-
Parent:-
Reliance Industries
Website:-
www.reliancepetroleum.com
The refinery is able to process a wide variety of crudes- from very light to very
heavy (from 18 to 45-degree API) and from sweet to very sour (with sulphur
content from 0 to 4.5%).
15
With an annual crude processing capacity of 580,000 barrels (92,000 m3) per
stream day (BPSD), RPL will be the sixth largest refinery in the world. It will
have a complexity of 14.0, using the Nelson Complexity Index, ranking it one of
the highest in the sector. The polypropylene plant will have a capacity to
produce 0.9 million metric tonnes per annum.
16
17
INTRODUCTION OF TOPIC
MERGER & ACQUISITION:
New patterns of globalization are accelerating the internationalization of
industry and reshaping industrial structure at global level.
The international activities of firms now extend far beyond traditional
forms of trade and investment.
Cross border mergers and acquisitions (M&as) and strategic alliances are
common paths to internationalizing operations, research and markets.
Whereas firms previously expanded geographically through foreign trade
and investment, they now pursue innovative international strategies for
complete restructuring of their operations.
And, more than before, their exports and imports, mergers, alliances and
other investments are interlinked.
It is the intensity and multiplicity of these international transactions that
are creating a new worldwide economic system.
Declining computing, communications and transport costs, coupled with
regulatory reform and trade and investment liberalization, have prompted
firms to adopt global strategies.
Information and communications technologies (ICTs) have greatly lowered
transaction costs within and between firms.
At the same time, governments have deregulated and privatized vast
sections of industry and opened up their borders to foreign entities.
Changes in the structure of industry, from manufacturing to services and
from lower to higher value-added activities, have led to overcapacity in
some sectors and intense competition in others.
18
19
DEFINITION:
According to Samuels and Wikes,
If two companies amalgamate, they both surrender their separate identity and a
new company is formed, it is a merger
According to Hunt,
The term merger implies a combination of two or more formerly independent
business units into one organization with a common management and ownership
According to Robert N. Anthony,
An acquisition can be defined as series of transactions where by a person or
group of individuals or company acquires control over the assets of a company,
either directly or indirectly by obtaining control of the management of the
company.
A company purchases a sufficient number of shares of another company so as to
acquire controlling interest in another company, it is known as acquisition.
20
LITERATURE REVIEW
Beitel and Schiereck (2001) examined the value implications of 98 large
M&as of publicly traded European banks that occurred between 1985 and
2000. They found that for the entire sample the shareholders of targets
earned significant positive cumulated abnormal returns in all intervals
studied, while the shareholders of the bidding banks did not earn significant
cumulated abnormal returns. From a combined view of the target and the
bidder, European bank M&As were found to significantly create value on a
net basis.
The study of Beitel, Schiereck and Wahrengoug (2002) builds on and
extends the study of Beitel and Schiereck (2001) by examining the same
data set but with a different objective. They analysed the impact of 13
factors that include relative size, profitability, stock efficiency, market-tobook ratio, prior target stock performance, stock correlation, M&Aexperience of bidders and the method of payment on M&A-success of
European bank mergers and acquisitions, in an attempt to identify those
factors that lead to abnormal returns to target shareholders, bidders
shareholders, and the combined entity of the bidder and the target around
the announcement date of M&A. Results showed that many of these factors
have significant explanatory power, leading the authors to the conclusion
that the stock market reaction to M&A-announcements can be at least
partly forecasted.
Acharya and Malik (2008) examined the Indian market and tested stock
price reaction of both the target and the acquiring companies which may
have been caused by information related to a merger activity using a
traditional event-study residual analysis. Their study indicated that there
were abnormal returns which are stimulated by activities that are
concerned with business combinations. The result was supported by Wong
and Cheung (2009) wherein it was concluded that the acquiring companies
would experience positive effects on stock price.
21
Andrade, Mitchell and Stafford (2001) state that two of the main objectives
in corporate finance research are the measurement of value creation or
destruction through mergers and acquisitions, and how this value creation
or destruction is distributed between the acquiring company and the target
company.
De Franco et al. (2008) explain that If this information uncertainty cannot
be eliminated at a minimal cost through additional information acquisition
as part of the due diligence process, then acquirers will require a higher rate
of return .This higher required rate of return will reduce the target rms
valuation.
A survey for evidence for decision maker by Bruner (2002), a published
meta study on post acquisition performance research that included 44
acquiring firm abnormal share price return event studies for the period
from 1978 to 2001, concluded that on average acquiring firms earned no
abnormal price returns post acquisition.
Marina Marty nova, Sjoerd Oosting and Luc Renneboog (2007) studied the
long-term profitability of corporate takeovers in Europe, and found that
both acquiring and target companies significantly outperformed the median
peers in their industry prior to the takeovers, but the profitability of the
combined firm decreased significantly following the International Journal of
Innovations in Engineering and Technology (IJIET) takeover. However, the
decrease became insignificant after controlling for the performance of the
control sample of peer companies.
Though the theoretical assumption says that mergers improve the overall
performance of the company due to increased market power and synergy
impacts, Tambi uses his paper to evaluate the same in the scenario of
Indian economy. He has tested three parameters PBITDA, PAT and ROCE for any change in their before and after values by comparison of means
using t-test. The results of his study indicate that mergers have failed to
contribute positively to the set of companies chosen by him.
22
RESEARCH PROBLEM
To know the impact of merger and acquisition on stock prices that is
prior the merger and acquisition and post the merger and acquisition.
23
RESEARCH OBJECTIVE
PRIMARY OBJECTIVE:
The main objective of this research on impact of merger & acquisition on stock
price is to know the changes in prices of stocks due to merger and acquisition.
SECONDARY OBJECTIVES:
To know the involvement of various stakeholders into the merger decisions.
To analyze if the company undergoes due diligence process during the
merger.
To study the management philosophy with respect to merger of all the 4
company under research.
To know which strategic decision in M&A affect the changes in stock prices
Studying the triggering factor leading to decision of M&A.
24
HYPOTHESIS
HYPOTHESIS-1
H0: There is no significance difference on the stock price of the company before
and after the merger
H1: There is significance difference on the stock price of the company before and
after the merger
HYPOTHESIS-2
25
RESEARCH METHODOLOGY
26
RESEARCH METHODOLOGY
The business environment is always uncertain and there is a need to handle this
uncertainty by developing a pool of information in a scientific manner. For that
research work is most important. In which business researcher systematically
collect, compile, analyze, and interpret the data to provide quality information.
RESEARCH DESIGN
In this research secondary data which is collected from..
BSE
NSE
CHARTS
EXCEL SHEET
BALANCE SHEETS
ANNUAL REPORTS
27
POPULATION
To calculate the hypothesis we have taken all merger and acquisitions of India as
our population.
SAMPLE
Our samples are
Merger of Reliance Industries Ltd and Reliance Petroleum Ltd
SAMPLING METHOD
For this research work we have used Paired t-test and Correlation methods of
sampling.
28
COLLECTION OF DATA
After the research design, research method and Sampling procedure is decided,
the next main step is Collection of Data for related study with the help of
Research Method decided.
Data can be collected in two ways.
1) Primary data collection
2) Secondary data collection
Secondary Data play major role in any report. In this report the data is collected
from different sources of secondary data like:
Journals
Books
Magazine
Internet
Brochures
Research papers
29
SCHEME OF AMALGAMATION
UNDER SECTIONS 391 TO 394 OF THE COMPANIES ACT, 1956
OF
Reliance Petroleum Limited (the Transferor Company)
WITH
Reliance Industries Limited (the Transferee Company)
A.
Description of Companies
I.
Reliance Petroleum Limited (RPL or the Transferor Company) is a
company incorporated under the Companies Act, 1956 having its Registered
Office at Motikhavdi, P.O. Digvijaygram, District Jamnagar, Gujarat 361140,
India. RPL was formed with the objective of harnessing the emerging
opportunities in the global energy sector by setting up a 5,80,000 barrels of crude
oil per stream day Greenfield petroleum refinery and a 0.9 million tonnes per
annum polypropylene plant in a Special Economic Zone in Jamnagar, Gujarat and
has commenced refining of crude.
II.
Reliance Industries Limited (RIL or the Transferee Company), is a
company incorporated under the Companies Act, 1956 having its Registered
Office at 3rd Floor, Maker Chambers IV, 222, Nariman Point, Mumbai - 400 021.
The Transferee Company is one of Indias largest private sectors industrial
enterprises in terms of net turnover, total assets, net worth and net profit and is a
Fortune 500 company. RIL ranks amongst the worlds top 10 producers for almost
all its products and also operates a 6, 60,000 barrels of crude oil per stream day
refinery in Jamnagar, Gujarat which is one of the largest complex refineries
globally.
III.
B.
31
In view of the aforesaid, the Board of Directors of RPL as well as the Board of
Directors of RIL have considered and proposed the amalgamation of the entire
undertaking and business of RPL with RIL in order to benefit the stakeholders of
both companies. Accordingly, the Board of Directors of both the companies have
formulated this Scheme of Amalgamation for the transfer and vesting of the
entire undertaking and business of RPL with and into RIL pursuant to the
provisions of Section 391 to Section 394 and other relevant provisions of the Act.
C.
Part I deals with definitions of the terms used in this Scheme of Amalgamation
and sets out the share capital of the Transferor Company and the Transferee
Company;
Part II deals with the transfer and vesting of the Undertaking (as hereinafter
defined) of the Transferor Company to and in the Transferee Company;
Part III deals with the issue of new equity shares by the Transferee Company to
the equity shareholders of the Transferor Company;
Part IV deals with the accounting treatment for the amalgamation in the books of
the Transferee Company and dividends;
Part V deals with the dissolution of the Transferor Company and the general
terms and conditions applicable to this Scheme of Amalgamation and other
matters consequential and integrally connected thereto.
32
PART I
DEFINITIONS AND SHARE CAPITAL
1. DEFINITIONS
In short it includes
Act
: Companys Act,1956
Appointed Date
BOD
Effective Date
Government authority
High Court
2. SHARE CAPITAL
Transferor Company:
The authorized, issued, subscribed and paid-up share capital of the Transferor
Company as on 31 December, 2008 was as under:
33
RS.
95,250
Total
Transferee Company:
The authorized, issued, subscribed and paid-up share capital of the Transferee
Company as on 31 December, 2008 was as under:
Rs.
Authorized Share Capital:
250, 00, 00,000 Equity Shares of Rs. 10/- each
25, 59,419
Total
34
PART II
TRANSFER AND VESTING OF UNDERTAKING
TRANSFER OF UNDERTAKING
Generally:
Upon the coming into effect of this Scheme and with effect from the Appointed
Date, the Undertaking of the Transferor Company shall, pursuant to the sanction
of this Scheme by the High Courts and pursuant to the provisions of Sections 391
to 394 and other applicable provisions, if any, of the Act, be and stand transferred
to and vested in or be deemed to have been transferred to and vested in the
Transferee Company, as a going concern without any further act, instrument,
deed, matter or thing to be made, done or executed so as to become, as and from
the Appointed Date, the undertaking of the Transferee Company by virtue of and
in the manner provided in this Scheme.
Transfer of Assets:
Without prejudice to the generality of Clause above, upon the coming into effect
of this Scheme and with effect from the Appointed Date:
a) All the assets and properties comprised in the Undertaking of whatsoever
nature and wheresoevers situate, shall, under the provisions of Sections
391 to 394 and all other applicable provisions, if any, of the Act, without any
further act or deed, be and stand transferred to and vested in the
Transferee Company or be deemed to be transferred to and vested in the
Transferee Company as a going concern so as to become, as and from the
Appointed Date, the assets and properties of the Transferee Company.
35
Upon the coming into effect of this Scheme and with effect from the Appointed
Date all liabilities relating to and comprised in the Undertaking including all
secured and unsecured debts (whether in Indian rupees or foreign currency),
sundry creditors, liabilities (including contingent liabilities), duties and obligations
and undertakings of the Transferor Company of every kind, nature and
description whatsoever and howsoever arising, raised or incurred or utilised for
its business activities and operations (herein referred to as the Liabilities), shall,
pursuant to the sanction of this Scheme by the High Courts and under the
provisions of Sections 391 to 394 and other applicable provisions, if any, of the
Act, without any further act, instrument, deed, matter or thing, be transferred to
and vested in or be deemed to have been transferred to and vested in the
Transferee Company, along with, save and except as provided in Clause
36
PART III
ISSUE OF EQUITY SHARES BY TRANSFEREE COMPANY
37
GENERAL PROVISIONS
In the event of there being any pending share transfers, whether lodged or
outstanding, of any Shareholder of the Transferor Company, the Board of
Directors of the Transferee Company shall be empowered in appropriate cases,
prior to or even subsequent to the Record Date, to effectuate such a transfer as if
such changes in the registered holder were operative as on the Record Date, in
order to remove any difficulties arising to the transferor or transferee of equity
shares in the Transferor Company, after the effectiveness of this Scheme;
The new equity shares to be issued by the Transferee Company pursuant to this
Scheme in respect of any equity shares of the Transferor Company which are held
in abeyance under the provisions of Section 206A of the Act or otherwise shall
pending allotment or settlement of dispute by order of Court or otherwise, be
held in abeyance by the Transferee Company.
In respect of equity shares of the Transferor Company where calls are in arrears,
without prejudice to any remedies that the Transferor Company or the Transferee
Company as the case may be, shall have in this behalf, the Transferee Company
shall not be bound to issue any shares of the Transferee Company (whether partly
paid or otherwise) nor to confer any entitlement to such holder until such time as
the calls in arrears are paid in full.
38
PART IV
ACCOUNTING TREATMENT AND DIVIDENDS
ACCOUNTING TREATMENT
Upon the coming into effect of this Scheme and with effect from the Appointed
Date, for the purpose of accounting for and dealing with the value of the assets
and liabilities in the books of the Transferee Company, the fair value of the assets
and Liabilities shall be determined as of the Appointed Date.
As considered appropriate for the purpose of reflecting the fair value of assets
and liabilities of the Transferor Company and the Transferee Company in the
books of the Transferee Company on the Appointed Date, suitable effect may be
given including, but not restricted to, application of uniform accounting policies
and methods.
DECLARATION OF DIVIDEND
For the avoidance of doubt it is hereby clarified that nothing in this Scheme shall
prevent the Transferee Company from declaring and paying dividends, whether
interim or final, to its equity shareholders as on the respective record date for the
purpose of dividend.
39
PART V
DISSOLUTION OF TRANSFEROR COMPANY
On the coming into effect of this Scheme, the Transferor Company shall stand
dissolved without winding-up, and the Board of Directors and any committees
thereof of the Transferor Company shall without any further act, instrument or
deed be and stand dissolved.
40
TESTING OF HYPOTHESIS
A hypothesis is a statement about population parameter. Testing is procedure
that helps us to decide whether the hypnotized population parameter value is
accepted or rejected by making use of the information obtained from the sample.
HYPOTHESIS-1
STEP 1 Set Null hypothesis & Alternative Hypothesis
Null hypothesis (Ho): There is no significance difference on the stock price of the
company before and after the merger
Alternative hypothesis (H1): There is significance difference on the stock price of
the company before and after the merger
STEP 2 Determine the appropriate test
The appropriate test statistic is paired t-test.
STEP 3 Set the level of significance
Alpha has been specified as 0.05
STEP 4 Set the decision rule
For the given level of significance 0.05, rules for acceptance or rejection of null
hypothesis are as below:
If tcal > tcritical, reject the null hypothesis, otherwise accept the null hypothesis.
41
Date
2-Mar-09
3-Mar-09
4-Mar-09
5-Mar-09
6-Mar-09
9-Mar-09
12-Mar-09
13-Mar-09
16-Mar-09
17-Mar-09
18-Mar-09
19-Mar-09
20-Mar-09
23-Mar-09
24-Mar-09
25-Mar-09
26-Mar-09
27-Mar-09
30-Mar-09
31-Mar-09
Before
price
612.83
598.43
605.55
574.9
584.95
576.68
601
642.13
663.8
650.1
665.7
672.85
669.6
719.23
726.23
766.1
782.75
774.38
758.23
762.38
Date
27-Feb-09
26-Feb-09
25-Feb-09
24-Feb-09
20-Feb-09
19-Feb-09
18-Feb-09
17-Feb-09
16-Feb-09
13-Feb-09
12-Feb-09
11-Feb-09
10-Feb-09
9-Feb-09
6-Feb-09
5-Feb-09
4-Feb-09
3-Feb-09
2-Feb-09
30-Jan-09
42
After price
633.03
645.4
633.28
626.63
626.7
646.88
647.58
633.65
660.1
696.2
675.78
690.63
700.98
694.85
672.43
644.4
653.75
653.1
640
661.8
Variable 2
Mean
670.391
656.8585
Variance
5172.288052
577.8734029
Observations
20
20
Pearson Correlation
-0.502829222
Hypothesized Mean
Difference
Df
19
t Stat
0.699337867
P(T<=t) one-tail
0.24640719
t Critical one-tail
1.729132792
P(T<=t) two-tail
0.49281438
t Critical two-tail
2.09302405
INTERPRETATION:
From the above chart we can see that we have used t- test, and from the
calculation we can say that t cal > t tab so null hypothesis is rejected. So we can
conclude that there is a significance change into the stock price of the company
because of merger and acquisition. And in whole deal of the company there is no
any specification regarding mal practices or any insider trading. So we can say
that the impacts on share prices are due to merger of both the company.
43
CHARTS
44
45
HYPOTHESIS-2
H0: M&A decision does not impact on company
H1: M&A decision does impact on company
STEP 1 Set Null hypothesis & Alternative Hypothesis
46
Year
Turnover
PBDIT
Net Profit
EPS (`)
2013-2014
2012-2013
2011-2012
2010-2011
2009-2010
2008-2009
2007-2008
2006-2007
2005-2006
2004-2005
2003-2004
2002-2003
401,302
371,119
339,792
258,651
200,400
146,328
139,269
118,354
89,124
73,164
56,247
50,096
39,813
38,785
39,811
41,178
33,041
25,374
28,935
20,525
14,982
14,261
10,983
9,366
21,984
21,003
20,040
20,286
16,236
15,309
19,458
11,943
9,069
7,572
5,160
4,104
68
64.8
61.2
62
49.7
49.7
105.3
82.2
65.1
54.2
36.8
29.3
EPS (`)
120
105.3
100
80
60
40
68
82.2
64.8 61.2 62
65.1
49.7
49.7
20
0
47
54.2
36.8
29.3
EPS (`)
Year
2013-2014
2012-2013
2011-2012
2010-2011
2009-2010
2008-2009
2007-2008
2006-2007
2005-2006
2004-2005
2003-2004
2002-2003
Column 1
After
105.3
82.2
65.1
54.2
36.8
29.3
Column 2
Column 1
Column 2
0.930483
INTERPRETATION:
From the above calculation, we can say that correlation coefficient between the
EPS of the Reliance Industry before and after merger is +0.093. This indicates that
m&a are strongly correlated with the EPS of the company. It means that merger
and acquisition decision effects on the EPS of the company. That also we can see
in above chart.
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RIL will own 2 of the worlds 3 largest, most complex modern refine.
After the merger with RPL, RIL will in among 50 most profitable companies
globally.
And also if we think about the growth of the company after the merger
then it will be a time consuming process. Because it takes time to adjust in a
new environment and also in fulfilling the all legal obligations. This impact
we can see in the second hypothesis of research report. In which we can
see the EPS of the company which increases after the merger.
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53
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In this research work researchers have just use secondary data and it is not
sufficient for the research work.
There is absence of practical study in the company or industry.
This research work only limited to merger and acquisition of India.
The entire existence of the companies under research is not studies, making
it limited to the timeframe.
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CONCLUSION
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CONCLUSION
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REFERENCES
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REFERENCES
http://abd.teikav.edu.gr/articles_th/mergers.pdf
http://ijiet.com/wp-content/uploads/2012/08/1.pdf
http://mpra.ub.uni-muenchen.de/19274/
http://umu.diva-portal.org/smash/get/diva2:141248/FULLTEXT01.pdf
http://library.imtdubai.ac.ae/Faculty%20Publication/Dr.rajesh/Mergers,%20Acquis
itions%20and.pdf
https://helda.helsinki.fi/bitstream/handle/10227/289/186-978-952-232-0063.pdf?sequence=1
http://www.ril.com/rportal/jsp/eportal/ListDownloadLibrary.jsp
http://www.ril.com/html/aboutus/aboutus.html
http://mpra.ub.uni-muenchen.de/32685/1/MPRA_paper_32685.pdf
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