International Financial Management Report

This report delves into the intricacies of international mergers and acquisitions (M&A), focusing on their significance in national development and the global economy. It examines various types of mergers, including congeneric (horizontal and vertical), and conglomerate mergers, highlighting the synergies and challenges involved. The report further analyzes the impact of harmonization, cross-cultural exchanges, and capital market dynamics on M&A activities, using examples from the UK, US, Germany, and Japan. The conclusion emphasizes the strategic importance of M&A in competitive landscapes, particularly for achieving economies of scale and price differentiation. The report is supported by a comprehensive list of academic references and online resources.

INTERNATIONAL
FINANCIAL MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
A). ...............................................................................................................................................3
B).................................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
Merger & Acquisition are the way through which one company is merge with the other
company for their own benefits. With the help of this technique, the merge entity is getting large
and able to have more productive and efficient(Zhang, J., Zhou, and Ebbers, 2011). Through
merger, the new entity which is formed after merging is able to produce more products through
economies of scale and that is by they would to make the huge product with the same fixed
assets and this impacts to reduce the cost price of the product. Due to reduction in the cost price.
Company would able to earn more revenue through maximum selling. Merger and Acquisition
assist the firm to protect the from the hostile takeover bids. The present research depends on the
international merger and Acquisitions in the four noteworthy nations which contributes in the
international economy(Weber, Tarba and Reichel, 2011).
TASK
A).
Nowadays mergers and acquisition are the main contributor for the development of the
nation and country(Tarique and Schuler, 2010). The nations like- UK and USA are the inventor
of mergers and acquisition as more and more companies are thinking to merge in order to get
synergy in the firm. It has been analysed that the company could able to make their operations
effective and smooth with the help of mergers. However, mergers is needed in the firm where the
company is thinking to diversify their business. There are mainly two types of mergers are there.
CONGNERIC MERGER
CONGLOMERATE MERGER
Congeneric merger: This is happen within the same industry. The company form the
same sector are merged so that they could make synergy in operations(Sinha, Kaushik and
Chaudhary, 2010). Through this merger technique, company would able to produce more
products and this will helps the company to reduce the cost of the product and that is why,
company could able to get the sustainable development. Under this merger, company which are
from the same industry are merged but both the merging company and the merged company does
not produce the same products. Under this merger technique, organisations are connected to the
technology,market and manufacturing processes. Under this technique, there are two parts which

have been used within the industry. These are horizontal and vertical mergers(Shi, Sun and
Prescott, 2012).
Horizontal mergers: this is the mergers which is used by the firm which are from the same
market segments. In fact, they are the competitors in the industry. They are the firms which
produce the same products within the market(Vaara and Tienari, 2011).
Vertical merger: vertical merger are those which have been used between customer and
organisation or with the supplies and the company(Saunders and Cornett, 2014). These are
further bifurcated such as,
Market extension merger: under this merger, two companies which offer the similar
product but the market they offer their product are different.
Product extension merger: this is the merger, which have been used when there are two
company form the same industry but produce the different but related product in the similar
market.
Conglomerate merger: This is the technique where two companies from different industry
merged. And this is happen when they wants to diverse their business into the new market
segment(Sarala and Vaara, 2010). Conglomerate mergers will be mergers of two business firms
occupied with different business exercises. These merge firms are not competitors to each other.
They are not a purchaser and dealer converging as in vertical mergers. Practically, the
organizations in conglomerate merger does not have overlapping components, however by and
by there is as perspective that they see as essential that has drawn them together.
They might view overlap in innovations, manufacturing, promoting, money related
administration, innovative work or some other variable that makes them think they would be a
solid match for each other(Marks and Mirvis, 2011).
Now, the assorted qualities of national corporate governance frameworks has changed
that is why the Merger and Acquisition movement has expanded comprehensively. In numerous
nations, bank-firm connections and cross-shareholding courses of action have disintegrated, and
lawful changes also encouraged mergers and acquisition(Mahesh and Prasad, 2012). However,
developing number of spontaneous hostile takeover activities happened in Japan and Germany
with expansive typical significance. The unfriendly takeover of Mannesmann by Vodafone
speaks to a watershed change toward to developing global market for corporate control(Holburn
and Vanden Bergh, 2014). In Japan, specifically, this development in M&A is new and brings up

many issues about the causes and results for the Japanese economy. It should be possible inside a
similar nature of organizations, two distinctive nature organizations. More fund is required for
this procedure since two associations now maintaining their business. So they both need to
consider about every single one intrigue(Halkos and Tzeremes, 2013).

B).
Harmonization is the moral way of working in setting to the business. The way toward
institutionalizing laws, directions and practices to encourage the extension, decency and
proficiency of contending in a globalized economy as in incorporated money related market,
worldwide bookkeeping standard, blended exchanging practices and sharing of innovation for
data dissemination. Harmonization assist in creating the reasonable business activities which
leads in getting the confidence of each other while consolidating and procurement(Gugler,
Mueller and Weichselbaumer, 2012). Many firms need to receive reasonable way in this
procedure since it advance the goodwill of an association. While extending the business at the
worldwide level, a universal market have distinctive bookkeeping standard. This leads in
creating large number of issues which confines many firms in smooth working way. This is a
noteworthy issue while directing business everywhere scale.
Cross culture: This exchanges are another imperative potential supporter of the
development in M&A. This perspective is analysed by partitioning bargains into three groups:
household, remote acquirer, and outside target(Ferris, Jayaraman and Sabherwal, 2013). The
three European economies have considerably larger amounts of universal M&A action than the
US or, on the other hand Japan. In Germany and the UK, cross culture exchanges speak to
roughly 40-half of arrangements contrasted with 20-25% in the US. cross culture bargains in
Germany and the UK are to a great extent inside Europe, and indicate significance of the normal
European market and opening of new markets in Eastern Europe as a driver of M&A in these
nations(Cooper and Finkelstein, 2014). The improvement of the single European market and the
presentation of the Euro in the early 90s set extraordinary weight on locally situated European
organizations to diminish abundance limit and utilize M&A as a way to unite to confront
provincial rivalry. The Euro has disposed of all money hazards inside the Eurozone and made a
most of the liquid European capital market offering new wellsprings of financing.
The extent of arrangement incentive regarding household bargains, outside acquirers, and outside
targets. These information affirm the higher significance of cross-fringe bargains in Europe than
in the USA or Japan(Changqi and Ningling, 2010). The commitment of cross border
arrangements to the development of M&A—while about 80% of emergence of M&A incentive
in Germany and the UK was because of developing cross culture deals, just around 20% of

development in the US or Japan was global. The UK market is the most globally open both as
far as remote acquisitions and takeovers of outside targets. While cross-fringe exchanges help
clarify the expansion of M&A in and Germany, the expansion in Japanese M&A is to a great
extent because of colossal increment in number of local arrangements.
Capital: macro economic elements have assumed a part in the development in M&A,
especially in the US and Europe. Two techniques for a gaining firm to pay for acquisitions are
money and shares. Firms may utilize money if their shares are underestimated, however utilize
value. If their stock is exaggerated(Calvani and Alderman, 2010). The rates of arrangement
incentive regarding being money just, offers just or blended financing utilizing money, offers or
potentially obligation. In all nations, money just arrangements represent about half or a greater
amount of all arrangement esteem.
These are the tools or activities which are needed to consider while applying practical
application.
CONCLUSION
From the above report, it has been find that, in the world of cut throat competition, most
of the companies are adopting merger and acquisitions activity in order to get the synergy.
Through synergy, company could able to have large economies of scale and due to this, they
would able to attain the price differentiation amongst the competitors so that the company could
able to attain the objective. UK, US, GERMENY and JAPAN are the countries which are so
famous of opting most of the M&A activities. As, M&A activities firstly emerged in these
countries.

REFERENCES
Books and journals
Calvani, T and Alderman, K., 2010. BRIC in the international merger review edifice. Cornell
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Changqi, W and Ningling, X., 2010. Determinants of cross-border merger & acquisition
performance of Chinese enterprises. Procedia-Social and Behavioral Sciences. 2(5). pp.6896-
6905.
Cooper, C.L and Finkelstein, S. eds., 2014. Advances in mergers and acquisitions. Emerald
Group Publishing.
Ferris, S.P., Jayaraman, N and Sabherwal, S., 2013. CEO overconfidence and international
merger and acquisition activity. Journal of Financial and Quantitative Analysis. 48(01). pp.137-
164.
Gugler, K., Mueller, D.C and Weichselbaumer, M., 2012. The determinants of merger waves: An
international perspective. International Journal of Industrial Organization. 30(1). pp.1-15.
Halkos, G.E and Tzeremes, N.G., 2013. Estimating the degree of operating efficiency gains from
a potential bank merger and acquisition: A DEA bootstrapped approach. Journal of Banking &
Finance. 37(5). pp.1658-1668.
Holburn, G.L and Vanden Bergh, R.G., 2014. Integrated market and nonmarket strategies:
Political campaign contributions around merger and acquisition events in the energy sector.
Strategic Management Journal. 35(3). pp.450-460.
Mahesh, R and Prasad, D., 2012. Post merger and acquisition financial performance analysis: A
case study of select Indian airline companies. International Journal of Engineering, Management
& Sciences. 3(3). pp.362-369.
Marks, M.L and Mirvis, P.H., 2011. Merge ahead: A research agenda to increase merger and
acquisition success. Journal of business and psychology. 26(2). pp.161-168.
Phillips, G.M and Zhdanov, A., 2013. R&D and the Incentives from Merger and Acquisition
Activity. Review of Financial Studies. 26(1). pp.34-78.
Sarala, R.M and Vaara, E., 2010. Cultural differences, convergence, and crossvergence as
explanations of knowledge transfer in international acquisitions. Journal of International
Business Studies. 41(8). pp.1365-1390.

Saunders, A and Cornett, M.M., 2014. Financial institutions management. McGraw-Hill
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strategic alliance initiatives: Review and future direction. Journal of Management. 38(1).
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Sinha, N., Kaushik, K.P and Chaudhary, T., 2010. Measuring post merger and acquisition
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Tarique, I and Schuler, R.S., 2010. Global talent management: Literature review, integrative
framework, and suggestions for further research. Journal of world business. 45(2). pp.122-133.
Vaara, E and Tienari, J., 2011. On the narrative construction of multinational corporations: An
antenarrative analysis of legitimation and resistance in a cross-border merger. Organization
Science. 22(2). pp.370-390.
Weber, Y., Tarba, S.Y and Reichel, A., 2011. A model of the influence of culture on integration
approaches and international mergers and acquisitions performance. International Studies of
Management & Organization. 41(3). pp.9-24.
Zhang, J., Zhou, C and Ebbers, H., 2011. Completion of Chinese overseas acquisitions:
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Online
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