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Chapter Five
IMPACT OF MERGERS AND
ACQUISITIONS ON LONG TERM
OPERATING AND FINANCIAL
PERFORMANCE OF ACQUIRERS
IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 124 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
CHAPTER FIVE
IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
The analysis of trends in mergers and acquisitions in India given in
chapter three earlier provides a clear evidence of significant rise in quantum of
M&A activity in Indian corporate sector. Any such corporate strategy is supposed
to bring about significant operational advantages to the firms and subsequently
translate into positive net present value and thus create positive shareholder
wealth. The global evidence as on impact of M&As on operating and financial
performance however, does not provide much support to the theory of synergic
benefits and shareholder wealth creation through M&As. In the light of the
above, in this chapter we present the analysis of impact of M&As on Indian
corporate firms.
The implications of M&As on Indian companies have been studied by
applying the methodology of paired t-test (Pawaskar, 2001; Vanitha and Selvam,
2007; Ramakrishnan, 2008; Saboo and Gopi, 2009) on pre-merger and post-
merger financial ratios of 70 sample acquirers across various sectors of Indian
economy. One important objective of this analysis is to determine if there exist
any significant variations in the impact of mergers and acquisitions in different
sectors of Indian economy. This is done by analyzing sub-samples representing
various sectors, specifically, manufacturing, financial services, chemicals, textile,
drugs and pharmaceuticals- and food and beverage sectors. The trend analysis
has indicated that these sectors have collectively accounted for significant
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 125 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
proportion of aggregate mergers and acquisitions in India during the study period
1995-96 to 2006-07. The pre-merger (three years prior to merger) and post-
merger (three years after the merger) averages of financial ratios within the
categories of profitability, solvency and efficiency and asset utilization are
compared, and tested for differences, using paired "t" test for two samples. For
the purpose of examining post merger performance of acquirer firms, two sets of
information is analysed. Firstly we look at the changes (increase or decrease)
that have taken place in given ratio for sample of acquirer firms under a given
sector, alongwith the statistical significance of t test values for such change upto
10% level. Secondly, we also examine the paired samples coefficient of
correlations for pre merger and post merger financial ratios along with its
statistical significance upto 10% level. The coefficients of paired samples
correlations are useful in drawing conclusions on persistence of observed
increase or decline in given ratio across the sample firms. A significant paired
samples coefficient of correlation indicates that the mean difference in given ratio
during post merger period is observed across all or majority of acquirer firms in
given sample.
5.1 Long Term Pre-Merger and Post-Merger Operating and Financial Performance of Acquirers in Manufacturing Sector
Firstly, we undertake aggregate analysis of manufacturing sector in India
by analysing financial ratios of 50 sample acquirers. The results of paired t-test
for various pre-merger and post-merger financial ratios for these acquirers in
manufacturing sector are presented in Table 5.1 and Table 5.2.
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126 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Table 5.1: Mean Pre-Merger and Post-Merger Financial Ratios of Acquirers in Manufacturing Sector
Ratio Pre-Merger Average
Post-Merger Average
Mean Difference
t- statistics
p-value
Profitability PBDIT Margin (%) 15.87 15.32 -0.55 0.248 0.805 PBIT Margin (%) 12.51 11.62 -0.89 0.374 0.710 Net Profit Margin (%)
5.78 5.45 -0.33 0.146 0.885
ROCE (%) 16.90 16.61 -0.29 0.151 0.880 RONW (%) 13.70 13.10 -0.60 0.282 0.779 Solvency Debt Equity 1.25 1.78 0.53 0.984 0.330 Current Ratio 1.94 1.77 -0.17 1.123 0.267 Efficiency/Asset Utilization Fixed Asset Turnover
3.27 2.32 -0.95 1.874 0.067*
Inventory Turnover
7.60 7.70 0.10 0.156 0.877
Operating Return on Assets (%)
0.19 0.20 0.01 0.329 0.743
Note: * represents significance at 10% level.
Table 5.2: Paired Samples Correlations for Pre and Post Merger Financial Ratios of Acquirers in Manufacturing Sector
I Ratio Correlation Sig. Pair 1
Pair 2 Pair 3
Pair 4 Pair 5 Pair 6 Pair 7 Pair 8
Pair 9
Pair 10
PBDIT Margin (Pre and Post Merger) PBIT Margin (Pre and Post Merger) Net Profit Margin (Pre and Post Merger) ROCE (Pre and Post Merger) RONW (Pre and Post Merger) Debt Equity (Pre and Post Merger) Current Ratio (Pre and Post Merger) Fixed Asset Turnover (Pre and Post Merger) Inventory Turnover (Pre and Post Merger) Operating Return on Assets (Pre and Post Merger)
0.247 0.126
0.030
0.528 0.376 0.309 0.714
0.353
0.554
0.584
0.084* 0.383
0.835
0.000*** 0.008*** 0.029** 0.000***
0.012**
0.000***
0.000***
Note: * **, *** represents significance at 10%, 5% and 1% respectively
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 127 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
The following important observations can be made from Table 5.1 and
Table 5.2 above:
(a) Profitability analysis:
(i) Aggregate analysis of Manufacturing Sector given in Table 5.1
reveals that all the profitability ratios of acquirers have declined
during the post merger period. The average PBDIT margin has
declined by -0.55% (from 15.87% to 15.32%). Similarly, PBIT
margin has declined by -0.89% (from 12.51% to 11.62%). The
mean net profit margin of acquirers, however, has seen very
marginal decrease (-0.33%) in post-merger period (from 5.78% to
5.45%).
(ii) Return on capital employed (ROCE) and return on networth
(RONW), the two important parameters of profitability from
shareholders point of view have also seen a decline of -0.29% and
-0.60% during post merger period.
(iii) None of the declines observed in profitability ratios are found to be
statistically significant as indicated by low t-values for mean
differences. However, the absence of any positive change in the
post merger period clearly indicates that M&As have not
contributed in improving the profitability of acquiring firms in India
during the study period. The paired sample coefficient of
correlation for ROCE and RONW are low but significant at 1%
indicating decline in these ratios across large number of firms in
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128 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
the sample. The results are consistent with Beena (2004) who did
not find any evidence of improvement in financial performance of
corporate firms in India during the post merger period.
(b) Liquidity and Solvency
(i) The mean current ratio of sample acquirer firms in manufacturing
sector has marginally declined by -0.17 times from 1.94:1 to 1.77:1
during post merger period though this decline is not statistically
significant (t-statistic 1.123 with p-value of 0.267). The Pearson
paired sample correlation coefficient is however high (0.71) and
significant at 1% level for the current ratio indicating consistency in
fall in current ratio post-merger with respect to large number of
acquiring firms.
(ii) On the other hand the mean debt-equity ratio of acquirer firms in
manufacturing sector has increased marginally (by 0.53) from 1.25
to 1.78 post-merger. However, the increase is not statistically
significant (t-statistics 0.984 with p-value of 0.330).
(iii) Thus, for the acquirers in the manufacturing sector, the positive
ratio, i.e. current ratio has declined during post merger period while
the ratio that can have negative effect on the firm, i.e. debt — equity
ratio has actually increased. Although the decline is not statistically
significant, the direction of the effect of M&A on these ratios is not
encouraging.
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 129 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
(c) Operational Efficiency and Asset Utilization
(I)
The mean fixed asset turnover ratio for acquirers in manufacturing
sector has declined from 3.27 times to 2.32 times and the decline
is found to be statistically significant at 10% level (t-statistics of
1.874). The decline in this ratio indicates of low efficiency and
repudiates the argument of synergic benefits on account of
mergers and acquisitions.
(ii) The mean inventory turnover ratio has improved marginally from
7.60 times to 7/0. It is, however, not statistically significant
(significance value of 0.877).
(iii) The mean operating return on assets has marginally increased
from 0.19% to 0.20% and this increase is found to be statistically
insignificant (t-statistics of 0.329). The high coefficient of paired
sample correlation for this ratio (0.58) which is significant at 1%
level however indicates that increase is across large number of the
sample acquirer firms.
We further analysed yearwise post-merger operating and financial
performance of acquirers in manufacturing sector vis-a-vis the pre-merger
average of various financial ratios. The initial years of post-merger period may
pose integration issues to the acquirers and thus affect the average performance
during the three year post-merger period. Yearwise analysis would give a fair
evaluation of post-merger performance by identifying the year that might have
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130
negated the positive effect of merger during later part of post-merger period.
Such analysis is undertaken with the same methodology of paired sample t-test.
However, here the pre-merger mean performance parameters are compared
with post-merger performance parameters for each of the year in post-merger
period. The results of this analysis are presented in Table 5.3 below.
Table 5.3: Yearwise Analysis of Impact of M&A on Operating and Financial Performance of Acquirers in Manufacturing Sector
Ratio Pre-Merger Average
1-Year Post- Merger Mean
Difference
2-Year Post- Merger Mean
Difference
3-Year Post- Merger Mean
Difference Profitability
PBDIT Margin (%) 15.87 -2.10 0.33 -0.84 (0.975) (-0.124) (0.366)
PBIT Margin (%) 12.51 -2.43 -0.04 -1.13 (1.034) (0.014) (0.465)
Net Profit Margin 5.78 -2.00 0.62 -0.26 (%) (0.892) (-0.240) (0.118) ROCE (%) 16.90 -0.24 -1.50 -0.30
(0.124) (0.875) (0.135) RONW (%) 13.70 -2.24 -70.16 -1.08
(0.824) (1.015) (0.510) Solvency
Debt Equity 1.25 0.40 0.64 0.11 (-0.783) (-1.111) (-0.535)
Current Ratio 1.94 -0.08 -0.22 -0.24 (0.508) (1.306) (1.436)
Efficiency/Asset Utilization Fixed Asset 3.27 -0.93 -1.05 -0.91 Turnover (1.716) (2.067) (1.827) Inventory 7.60 -0.10 -0.03 0.28 Turnover (0.151) (0.050) (-0.363)
ote: (i) *, **, *** represents significance at 10%, 5% and 1% level respectively. (ii) Figures in parenthesis are t-statistics
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 131 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Following observations can be made from Table 5.3 above:
(a) Profitability
(i) The mean PBIDT margin has shown a marginal increase of 0.33%
in year 2 following merger in comparison to pre-merger average of
15.87%. As can be seen from the above table, the decline in
PBIDT margin is of higher magnitude (2.10%) in year 1 following
the merger and has subsequently reduced to a decline of 0.84% in
the third year following merger. Thus in 2 out of 3 years of post-
merger period, the PBIDT margin has registered a decline. Though
in none of the years the decline is statistically significant, the
direction of movement in this profitability ratio is not favourable
towards the acquirers in manufacturing sector.
(ii) Similar observations can be made with respect to PBIT margin
where mean difference in the ratio in comparison to pre-merger
average of 12.51%, has decline by 2.43% in first year, 0.04% in
second year and - 1.13% in the third year following merger. Here
again it can be observed that the decline is of higher magnitude in
first year following the merger transaction. All the yearwise declines
are however not statistically significant. The net profit margin has
also shown a higher decline of 2.00% in the first year following the
merger and the third year has registered a decline of 0.26% in
comparison to pre-merger average.
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 132 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
(iii) The important profitability parameters of ROCE and RONW have
also shown a consistent decline during each of the 3 years,
although, here also the decline in none of the 3 years is found to be
statistically significant.
(b) Liquidity and Solvency
(i) It can be observed from Table 5.3 that the long term solvency
parameter of Debt-Equity ratio has shown consistent increase
during each of the 3 years of post-merger period. On the other
hand the short term solvency parameter of current ratio has shown
consistent decline over the 3 year period. In fact it can be observed
that the decline in current ratio was just 0.08 in first year following
the merger which rose to 0.22 in second year and subsequently to
0.24 in the third year.
(c) Operational Efficiency ad Asset Utilization
(i) An important observation that can be made from Table 5.3 above
is that the an important parameter of fixed asset turnover ratio has
declined by 0.93 in the first year which is statistically significant at
10% level. In the subsequent year again the ratio shows a decline
of 1.05 which again is statistically significant at 5% level and finally
in the third year the ratio registered a decline of 0.91 with statistical
significance at 10% level. The statistically significant decline in this
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 133 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
ratio indeed show that increased quantum of assets acquired
through merger transactions have not been of significant benefit to
the acquiring firm thus questioning the synergy benefit argument of
merger transactions.
(ii) The inventory turnover, however is found to register an increase of
0.28 in the third year after consistent decline for first two years
following merger; although, neither the increase nor the decline is
found to be significantly different from zero.
5.1.1 Long Term Pre-Merger and Post-Merger Operating and Financial Performance of Acquirers in Chemical Sector
Mergers and acquisitions in Chemical sector have focused on vertical
integrations in order to obtain the advantage of synergic benefits. The
companies have also focused on acquisition of established firms in the industry
with diverse portfolios to counter competition and earn revenues. The mergers
and acquisitions in this industry should thus ideally provide the benefits of
improvement in profitability due to cost reduction and control and also improve
asset utilization rates and provide economies of scale. We analyse the financial
ratios of 15 sample acquirer firms in the chemical industry, the results of which
are presented in Table 5.4 and Table 5.5 below.
Goa University
I Ratio Correlation Sig.
Pair 1 PBDIT Margin (Pre and Post Merger) Pair 2 PBIT Margin (Pre and Post Merger) Pair 3 Net Profit Margin (Pre and Post
Merger) Pair 4 ROCE (Pre and Post Merger) Pair 5 RONW (Pre and Post Merger) Pair 6 Debt Equity (Pre and Post Merger) Pair 7 Current Ratio (Pre and Post Merger) Pair 8 Fixed Asset Turnover (Pre and Post
Merger) Pair 9
Inventory Turnover (Pre and Post Merger)
Pair Operating Return on Assets (Pre and 10 Post Merger)
-0.151 -0.223
-0.065
0.736 0.633 0.555 0.988
0.213
0.065
0.777
0.591 0.424
0.817
0.002*** 0.011** 0.032** 0.000***
0.447
0.819
0.001***
IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM
134 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Table 5.4: Mean Pre-Merger and Post-Merger Financial Ratios of Acquirers in Chemical Sector
Ratio Pre-Merger Average
Post-Merger Average
Mean Difference
t- statistics
p-value
Profitability PBDIT Margin (%) 11.84 11.63 -0.21 -0.080 0.937 PBIT Margin (%) 8.68 8.72 0.04 0.013 0.989 Net Profit Margin (%)
2.95 3.39 0.42 0.182 0.858
ROCE (%) 17.23 15.03 -2.20 -0.841 0.415 RONW (%) 11.98 9.55 -2.43 -0.830 0.421 Solvency Debt Equity 0.96 0.93 -0.03 -0.150 0.883 Current Ratio 2.19 2.04 -0.15 -0.980 0.344 Efficiency/Asset Utilization Fixed Asset Turnover 4.60 2.36 -2.23 -1.476 0.162 Inventory Turnover
7.90 7.72 -0.18 -0.129 0.899 Operating Return on Assets (%) 0.22 0.20 -0.02 -0.892 0.388 Note: * **, *** represents significance at 10%, 5% and 1% level respectively.
Table 5.5: Paired Samples Correlations for Pre and Post Merger Financial Ratios of Acquirers in Chemical Sector
Note: *, ** ** * represents significance at 10%, 5% and 1% respectively
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135
Table 5.4 and Table 5.5 above provides the following insights into
implications of M&A on acquirers in chemical sector:
(a) Profitability
(i) The results of analysis of financial ratios of acquirers in chemical
sector presented in Table 5.4 above reveals that some of the
profitability ratios of acquirers have increased marginally during the
post merger period. Specifically, the average PBIT margin of
acquirers has increased by 0.04% (from 8.68% to 8.72%).
Similarly, the mean net profit margin of acquirers has seen
marginal increase of 0.44% in post-merger period (from 2.95% to
3.39%). This increase, however, is not statistically significant as
seen from very low value of t-statistics (0.013 and 0.182 for PBIT
margin and Net Profit margin respectively). The PBIDT margin has
seen a statistically insignificant decline of 0.21% during post
merger period from 11.84% to 11.63%.
(ii) Return on capital employed (ROCE) and return on networth
(RONW), have shown a mean decline of higher magnitude (-2.20%
and -2.43%) during post merger period although this decline is not
statistically significant. The paired sample coefficient of correlation
is found to be statistically significant for both ROCE and RONW at
1% and 5% level which is indicative of consistency in decline
across the sample firms.
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 136 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
(iii) Here again we did not find any statistically significant positive
change in the post merger period which indicates that M&As have
not contributed in improving the profitability of acquiring firms in
chemical sector in India during the study period.
(b) Liquidity and Solvency
(i) The mean current ratio of sample acquirer firms in chemical sector
has marginally declined by 0.15 times from 2.19:1 to 2.04:1 during
post merger period though this decline is not statistically significant
(t-statistic 0.980 with p-value of 0.344). The Pearson paired sample
correlation coefficient is however very high (0.99) and significant at
1% level for the current ratio indicating consistency in fall in current
ratio during post-merger period across the sample firms.
(ii) The leverage represented by way of mean debt-equity ratio of
acquirer firms in chemical sector seems to have remained almost
unchanged during post-merger period indicated by extremely
marginal decline of by 0.03 from 0.96 to 0.93 post-merger. The
decline is also not statistically significant (t-statistics 0.150 with p-
value of 0.883).
(c) Operational Efficiency ad Asset Utilization
(I )
The mean fixed asset turnover ratio for acquirers in chemical
sector has declined from 4.60 times to 2.36 times representing real
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
137
decline of 48.70% although statistically it is not found to be
significantly different from zero (t-statistics of 1.476). The decline in
this ratio indicates of low efficiency and repudiates the argument of
synergic benefits on account of mergers and acquisitions.
(ii) The mean inventory turnover ratio has declined from 7.90 times to
7.72. It is, however, not statistically significant (significance value of
0.129).
(iii) The mean operating return on assets has marginally declined from
pre-merger average of 0.22% to 0.20% with no statistical
significance. The Pearson coefficient of paired sample correlation
for this ratio is however high at 0.78 and is also statistically
significant at 1% level.
We further undertake year on year analysis of the above financial ratios
for acquirers in chemical industry to determine significant variations, if any,
during each of the year of post-merger period. The results of yearwise analysis
of ratios are presented in Table 5.6 below.
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OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM
138
Table 5.6: Yearwise Analysis of Impact of M&A on Operating and Financial Performance of Acquirers in Chemical Sector
Ratio Pre-Merger Average
1-Year Post- Merger Mean
Difference
2-Year Post- Merger Mean
Difference
3-Year Post- Merger Mean
Difference Profitability
PBDIT Margin (%) 11.84 -1.84 1.27 -1.60 (-0.649) (0.310) (-1.110)
PBIT Margin (%) 8.68 -0.71 1.55 -1.27 (-0.595) (3.66) (-0.920)
Net Profit Margin 2.95 -1.39 1.98 0.32 (%) (-0.449) (0.590) (0.237) ROCE (%) 17.23 -1.93 -3.33 -3.19
(-0.677) (-1.162) (-1.547) RONW (%) 11.98 -0.68 -4.67 -3.65
(-0.228) (-1.151) (-1.386) Solvency
Debt Equity 0.96 -0.11 0.07 0.03 (-0.844) (0.277) (0.170)
Current Ratio 2.19 0.10 -0.29 -0.41 (0.996) (-1.381) (-1.364)
Efficiency/Asset Utilization Fixed Asset -2.35 -2.32 • -2.09 Turnover 4.60 (-1.449) (-1.525) (-1.489) Inventory 7.90 -0.98 0.08 -0.26 Turnover (0.724) (0.048) (-0.175)
ote: (i) *, **, *** represents significance at 10%, 5% and 1% level respectively. (ii) Figures in parenthesis are t-statistics
Following important observations can be made from Table 5.6 above:
(a) Profitability
(i )
The acquirers in chemicals sector observed a high real but
statistically insignificant mean decline of 1.84% in PBDIT margin in
the first year following merger. In the second year following merger,
the acquirer did find a positive change in this ratio as depicted by
1.27% positive mean difference for post merger period. However,
this further declined to mean difference of negative 1.60% in
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
139
comparison to pre-merger average but again without any statistical
significance. Similar behaviour is observed in case of other
profitability ratios such as PBIT margin (mean difference of 1.55%)
and net profit margin (mean difference of 1.98%).
(ii) Importantly, it can be observed that the real mean difference
between crucial ratios of ROCE and RONW have shown consistent
decline of high magnitude. Mean difference in ROCE has
increased from -1.93% in first year following merger to -3.33% in
the second year representing an increase of 72.54% and
subsequently to 3.19% in the third year. Similarly, the mean decline
in RONW has been mere -0.68% in year 1, which increased to -
4.67% in year 2 and finally 3.65% in year 3 post merger.
(b) Liquidity and Solvency
(I) It can be observed from Table 5.6 that the long term solvency
measure of Debt — Equity ratio of acquirers in chemicals sector has
increased, though insignificantly, from pre and post merger mean
difference of -0.11 in the first year following merger to 0.07 in the
second year and 0.03 in the third year following merger.
(ii) The mean difference of pre and post merger short term liquidity
measure of current ratio, on the other hand, has declined to 0.29 in
the second and 0.41 in the third year after positive response in the
first year with an increase of 0.10.
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 140 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
(iii) Here again, neither the increase nor the decrease in the ratios are
found to be statistically different from zero, thus providing no clear
evidence of improvement following merger. Based on the real
increase and decrease in the above ratios, it can be concluded that
the measures of solvency and liquidity have improved only in the
first year following merger.
(c) Operational Efficiency ad Asset Utilization
(i) The mean fixed asset turnover ratio indicates a mean difference of
2.34 in comparison to pre-merger average ratio in the first year
following merger, 2.32 in year 2 and 2.09 in ye6r 3 following
merger.
(ii) The mean difference for inventory turnover has shown a marginal
and statistically insignificant increase of 0.08 in the second year
following merger. However, barring this increase, for the remaining
two years, the results for these ratios are negative growth.
5.1.2 Long Term Pre-Merger and Post-Merger Operating and Financial Performance of Acquirers in Textile Sector
Mergers and acquisitions in textile sector again have aimed at
consolidations to counter competition. One important objective has thus been to
ensure survival of units by way of consolidations. In such cases, financial gains
are of utmost importance for acquirers, particularly in the light of the fact that the
target companies may not be financially strong. The existence of outdated fixed
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 141 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
assets was one common feature among companies in textile sector with results
of low profitability. The implications on acquirers in such case could be of less or
no gains from acquisitions.
The results of statistical tests performed on financial ratios of acquirers in
textile sector are presented in Table 5.7 and Table 5.8 below.
Table 5.7: Mean Pre-Merger and Post-Merger Financial Ratios of Acquirers in Textile Sector
Ratio Pre-Merger Average
Post-Merger Average
Mean Difference
t- statistics
p-value
Profitability PBDIT Margin (%) 23.39 15.09 -8.30 -1.01 0.337 PBIT Margin (%) 18.99 9.13 -9.85 -1.07 0.313 Net Profit Margin (%)
11.63 2.07 -9.57 -1.13 0.289
ROCE (%) 11.73 9.26 -2.46 -2.55 0.031** RONW (%) 12.69 6.78 -5.91 -1.91 0.088* Solvency Debt Equity 2.25 1.62 -0.63 -0.76 0.466 Current Ratio 1.80 1.57 -0.23 -0.65 0.532 Efficiency/Asset Utilization Fixed Asset Turnover
2.79 1.64 -1.15 -1.37 0.204
Inventory Turnover
6.25 5.47 -0.78 -0.57 0.585
Operating Return on Assets (%) 0.15
0.14 -0.01 -0.65 0.533
Note: *, **, *** represents significance at 10%, 5% and 1% respectively
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM
142 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Table 5.8: Paired Samples Correlations for Pre and Post Merger Financial Ratios of Acquirers in Textile Sector
Ratio Correlation Sig. Pair 1 PBDIT Margin (Pre and Post Merger) Pair 2 PBIT Margin (Pre and Post Merger) Pair 3 Net Profit Margin (Pre and Post
Merger) Pair 4 ROCE (Pre and Post Merger) Pair 5 RONW (Pre and Post Merger) Pair 6 Debt Equity (Pre and Post Merger) Pair 7 Current Ratio (Pre and Post Merger) Pair 8 Fixed Asset Turnover (Pre and Post
Merger) Pair 9
Inventory Turnover (Pre and Post Merger)
Pair Operating Return on Assets (Pre and 10 Post Merger)
-0.107 -0.526
-0.648
0.839 0.121 0.607 -0.391
0.679
0.157
0.434
0.768 0.119
0.043**
0.002*** 0.738 0.062* 0.263
0.031 **
0.664
0.210
Note: *, ** *** represents significance at 10%, 5% and 1% respectively
The following observations can be made from Table 5.7 and Table 5.8
above:
(a) Profitability
(i)
The results of analysis of financial ratios of acquirers in textile
sector reveals that all the profitability ratios of acquirers have
declined during the post merger period. The average PBIDT
margin of acquirers has declined from 23.39% to 15.09%,
representing a real decline of 35.49%, although not statistically
significant. Similarly, the mean PBIT has reduced from 18.99% to
9.14%, a real decline of about 50% again without any statistical
significance (t-statistics 1.07). The net profit margin of acquirers
has seen substantial magnitude of real decline (82.20%) from
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11.63% to just 2.07%. The decline is however, statistically
insignificant. Out of all the sectors selected for the study, the real
decline observed in profitability ratios of acquirers is highest in
textile sector.
(ii) Another interesting thing observed in respect of acquirers in textile
sector are the statistically significant decline in Return on capital
employed (ROCE) and return on networth (RONW), the two
important ratios in profitability analysis. The mean ROCE has
decreased from 11.73% to 9.26% with decline being statistically
significant at 5% level. The mean RONW ratio has also declined
from 12.69% to 6.78% during post-merger period, a decline of
46.57% which is statistically significant at 10%. A high magnitude
statistically significant decline in these important ratios indicates
that textile sector is the worst performer in terms of post merger
profitability parameters.
(iii) The Pearson paired sample coefficient of correlation fro net profit
margin and ROCE are found to be significant at 5% and 1%
respectively confirming consistency in fall in these ratios across
larger number of acquirers in textile sector.
(b) Liquidity and Solvency
(i )
The mean current ratio of sample acquirer firms in textile sector
has marginally declined from 1.80:1 to 1.57:1 during post merger
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period though this decline is not statistically significant (t-statistic
0.65 with p-value of 0.532).
(ii) The leverage represented by way of mean debt-equity ratio of
acquirer firms in textile sector however, has declined during post-
merger period from 2.26 to 1.62. The decline is though is not
statistically significant (t-statistics 0.76 with p-value of 0.466).
(c) Operational Efficiency ad Asset Utilization
(i) The mean fixed asset turnover ratio for acquirers in textile sector
has declined from 2.79 times to 1.64 times representing real
decline of 70.12% although statistically it is not found to be
significantly different from zero (t-statistics of 1.37). The Pearson
coefficient of correlation is found to be significant at 5% level for
fixed asset turnover ratio indicating decline across several firms in
the textile sector. The evidence of no improvement in this ratio
therefore indicates that the objectives of mergers and acquisition in
textile sector to make the best of acquired assets are not
accomplished. Existence of outdated assets among target firms
may be one reason for low profitability and operational efficiency in
this sector.
(ii) The mean inventory turnover ratio has declined from 6.25 times to
5.47. It is, however, not statistically significant (significance value of
0.57).
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(iii) The mean operating return on assets has marginally declined from
pre-merger average of 0.15% to 0.14% with no statistical
significance.
The yearwise analysis of movements in mean differences of various
financial ratios of acquirers in textile sector are disclosed in Table 5.9.
Table 5.9: Yearwise Analysis of Impact of M&A on Operating and Financial Performance of Acquirers in Textile Sector
Ratio Pre-Merger Average
1-Year Post- Merger Mean
Difference
2-Year Post- Merger Mean
Difference
3-Year Post- Merger Mean
Difference Profitability
PBDIT Margin (%) 23.39 -6.95 -8.11 -10.70 (-0.825) (-0.970) (-1.372)
PBIT Margin (%) 18.99 -8.64 -9.63 -12.24 (-0.892) (-1.020) (-1.437)
Net Profit Margin 11.63 -8.09 -9.58 -12.25 (%) (-0.876) (-1.089) (-1.611) ROCE (%) 11.73 -1.09 -3.08*** -3.90**
(-0.900) (-2.770) (-2.129) RONW (%) 12.69 -6.52 -5.15 -7.70**
(-1.102) (-1.629) (-2.386) Solvency
Debt Equity 2.25 -0.86 -0.56 -0.29 (-0.993) (-0.697) (-0.403)
Current Ratio 1.80 -0.23 -0.24 -0.24 (-0.640) (-0.664) (-0.699)
Efficiency/Asset Utilization Fixed Asset 2.79 -0.94 -1.24 -1.36 Turnover (-1.144) (-1.420) (-1.587) Inventory 6.25 -0.79 -0.82 -0.69 Turnover (-0.609) (-0.563) (-0.492) Note: (i) *, ** *** represents significance at 10%, 5% and 1% level respectively.
(ii) Figures in parenthesis are t-statistics
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Following are the analytical observations from Table 5.9:
(a) Profitability
(i) Mean PBIDT margin has declined on consistent basis during the
three year post merger period. The mean difference was -6.95% in
the first year following merger which increased to -8.12% in the
second year and subsequently more to -10.70% in the third year
following merger. Similarly, the decline in the mean PBITM margin
has increased from -8.64% in the first year to -12.24% in the
third year following merger. The decline, however, is not
statistically significant in any of the year.
(ii) On the other hand, we observe that the mean difference in pre and
post merger ROCE of acquirers in this sector has increased from
statistically insignificant -1.09% in the first year following merger to
-3.08% in the second year following merger which is also
statistically significant at 1% level. It has further increased on the
negative side to -3.89% in the third year following the mergers,
which is also statistically significant at 5% level. Another important
ratio, i.e. RONW has also seen an increase in mean difference on
negative side from statistically insignificant -6.52% in the first year
to statistically significant (at 5% level) -7.70% in the third year
following mergers. Thus, there is no contrary variations observed in
the direction of changes in profitability ratios during post merger
period. The have consistently decline and in some cases with
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statistical significance. The observations are thus not favourable for
acquirers in textile sector with respect to achievements of any
operational synergies from mergers and acquisitions.
(b) Liquidity and Solvency
(i) The mean difference of leverage ratio of debt — equity is negative
on consistent basis in all the three years following merger, though
in none of the year the effect is statistically significant. The mean
difference of pre and post merger Debt-equity ratio is changed from
-0.86 in the first year following merger to -0.56 and -0.29 in the
second and third year respectively. It may be observed that the
quantum of mean difference has decline over the years, thus
indicating that the advantage of low debt-equity ratio benefits
during post merger period is diminishing over the years.
(ii) The mean difference in the pre and post merger current ratio on
the other hand has remained almost unchanged over the 3 year
period of post merger at around 0.24 each year. Here, again the
mean difference observed is not statistically significant.
(c) Operational Efficiency ad Asset Utilization
(I )
The quantum of real change observed in fixed asset turnover ratio
shows a continuous increase in negative effect of merger. The
mean difference in this ratio has increased from -0.94 in the first
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year following merger to -1.24 in the second year and -1.36 in
the third year following merger. None of these increases is found to
be statistically significant. The general trend of mean difference in
this ratio, however, indicates that the acquirers have increasingly
found it difficult to put the fixed assets to profitable use.
(ii) The mean difference in inventory turnover ratio, however, has
declined from -0.79 in the first year to -0.69 in the second year
following merger.
5.1.3 Long Term Pre-Merger and Post-Merger Operating and Financial Performance of Acquirers in Drugs and Pharmaceuticals Sector
The M&As in drugs and pharmaceutical sector have focussed on vertical
integration and exploiting complimentary skill sets of acquirers and target
companies. There has been a lot of focus on supply chain integration. This
should essentially translate into healthy financial variables. The results of paired
t-test on financial ratios of acquirers in drugs and pharmaceuticals sector are
presented in Table 5.10 and Table 5.11.
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Table 5.10: Mean Pre-Merger and Post-Merger Financial Ratios of Acquirers in Drugs and Pharmaceuticals Sector
Ratio Pre-Merger Average
Post-Merger Average
Mean Difference
t- statistics
p-value
Profitability PBDIT Margin (%) 21.48 21.16 -0.32 -0.239 0.817 PBIT Margin (%) 18.69 18.25 -0.44 -0.426 0.680 Net Profit Margin (%)
11.05 11.82 0.77 0.671 0.519
ROCE (%) 24.93 23.65 -1.28 -0.602 0.562 RONW (%) 21.39 21.71 0.32 0.095 0.926 Solvency Debt Equity 0.57 0.57 0.00 0.068 0.948 Current Ratio 2.60 1.99 -0.61 -2.199 0.055** Efficiency/Asset Utilization Fixed Asset Turnover
3.31 2.75 -0.56 -1.639 0.136
Inventory Turnover
5.91 6.27 0.36 0.449 0.664
Operating Return on Assets (%)
0.25 0.26 0.01 0.099 0.923
Note: *, ** ' represents significance at 10%, 5% and 1% level respectively.
Table 5.11: Paired Samples Correlations for Pre and Post Merger Financial Ratios of Acquirers in Drugs and Pharmaceuticals Sector
I Ratio Correlation Sig. Pair 1 Pair 2 Pair 3
Pair 4 Pair 5 Pair 6 Pair 7 Pair 8
Pair 9
Pair 10
PBDIT Margin (Pre and Post Merger) PBIT Margin (Pre and Post Merger) Net Profit Margin (Pre and Post Merger) ROCE (Pre and Post Merger) RONW (Pre and Post Merger) Debt Equity (Pre and Post Merger) Current Ratio (Pre and Post Merger) Fixed Asset Turnover (Pre and Post Merger) Inventory Turnover (Pre and Post Merger) Operating Return on Assets (Pre and Post Merger)
0.575 0.623
0.573
0.790 0.057 0.826 0.612
0.854
0.144
0.808
0.082* 0.055*
0.084*
0.007*** 0.876
0.003*** 0.060*
0.002***
0.691
0.005***
Note: *, **, *** represents significance at 10%, 5% and 1% respectively
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Following are the analytical observations that can be made from Table
5.10 and Table 5.11:
(a) Profitability
(i) The results of analysis of financial ratios of acquirers in drugs and
pharmaceuticals sector provides a mixed evidence of impact of
mergers and acquisitions on the profitability of acquirers. The
average PBIDT margin of acquirers has marginally declined from
21.48% to 21.16%, which is also not statistically significant.
Similarly, the mean PBIT has also marginally reduced from 18.69%
to 18.25%, again without any statistical significance (t-statistics
0.426). The mean net profit margin, however, has shown a real
increase of 0.77% from pre merger average of 11.05% to post
merger average of 11.82%. The increase is however, statistically
insignificant.
(ii) The mean ROCE has decreased from pre merger average of
24.93% to 23.65% in post merger period, with decline being
statistically insignificant. The mean RONW ratio on the other hand
has increased from pre-merger average of 21.39% to 23.65%
during post-merger period, an increase of 10.57% which is
however, not statistically significant. The Pearson paired sample
coefficient of correlation for ROCE is 0.79 which is significant at 1%
level implying that the decrease in ROCE is consistent across
larger firms in the sector. On the other hand increase in mean
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RONW observed is not so consistent across acquirer firms as is
indicated by a very weak paired sample coefficient of correlation
which is statistically insignificant
(b) Liquidity and Solvency
(i) The mean current ratio of sample acquirer firms in drugs and
pharmaceuticals sector has declined from pre merger average of
2.60:1 to 1.99:1 during post merger period. This mean decline of
0.61 is also found to be statistically significant at 10% level. The
Pearson paired sample coefficient of correlation for this ratio
(0.612) is also significant at 10% level. Thus the decline is more
widespread across the acquirer firms in this sector.
(ii) The leverage represented by way of mean debt-equity ratio of
acquirer firms in the sector however, has virtually remained
unchanged during post-merger period. The decline of meagre 0.01
is observed for this ratio.
(c) Operational Efficiency ad Asset Utilization
(i)
The mean fixed asset turnover ratio for acquirers in drugs and
pharmaceuticals sector has declined from pre merger average of
3.31 times to average of 2.75 times during post merger period
representing decline in real terms of 20.36% although statistically it
is not found to be significantly different from zero (t-statistics of
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1.64). The Pearson coefficient of correlation is however found to be
significant at 1% level for fixed asset turnover ratio indicating
decline across several firms in the sector.
(ii) The mean inventory turnover ratio on the other hand has increased
from pre merger average of 5.91 times to 6.27 during post merger
period. It is, however, not statistically significant (a high
significance value of 0.664). Besides the paired s ample coefficient
of correlation is very weak and also not statistically significant
indicating that the increase is not observed across majority of the
sample acquirer firms in the sector.
(iii) The mean operating return on assets has remained almost
unchanged during the post merger period.
Thus, there is very weak evidence of some improvement in select
parameters of profitability among acquirers in drugs and pharmaceuticals sector.
A further analysis of year on year changes in mean performance parameters
during post merger period is given in Table 5.12.
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Table 5.12: Yearwise Analysis of Impact of M&A on Operating and Financial Performance of Acquirers in Drugs and Pharmaceuticals Sector
Ratio Pre-Merger Average
1-Year Post- Merger Mean
Difference
2-Year Post- Merger Mean
Difference
3-Year Post- Merger Mean
Difference Profitability
PBDIT Margin (%) 21.48 -2.10 -0.69 1.53 (-1.192) (-0.493) (0.927)
PBIT Margin (%) 18.69 -2.19 -0.68 1.56 (-1.414) (-0.621) (1.173)
Net Profit Margin 11.05 -0.79 -0.02 3.28** (%) (-0.518) (-0.018) (2.163) ROCE (%) 24.93 -3.02*** -2.15 1.16
(-2.581) (-0.758) (0.350) RONW (%) 21.39 -1.71 -0.82 3.34
(-0.622) (-0.218) (0.716) Solvency
Debt Equity 0.57 0.03 0.04 -0.12 (0.260) (0.430) (-1.698)
Current Ratio 2.60 -0.55* -0.69*** 0.45 (-1.750) (-2.708) (1.543)
Efficiency/Asset Utilization Fixed Asset 3.31 -0.59* -0.59 -0.44 Turnover (-1.834) (-1.635) (-1.122) Inventory 5.91 -0.32 0.64 0.66 Turnover (-0.518) (0.670) (0.696) Note: (i) *, **, *** represents significance at 10%, 5% and 1% level respectively.
(ii) Figures in parenthesis are t-statistics
Following are the important observations from Table 5.12:
(a) Profitability
(i)
The analysis of yearwise mean difference in pre and post merger
profitability ratios indicate a distinct pattern. All the profitability
ratios have shown a higher magnitude of real mean difference in
the first year following merger, which is also negative. This
negative effect has subsequently declined in the following years
and turned positive in the third year following merger. The mean
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PBIDT margin has declined with pre and post merger mean
difference of -2.10% in first year following merger, which reduced
to 0.70% in second year and subsequently turned positive to
1.53% in the third year. Similarly, mean PBIT margin has declined
with pre and post merger mean difference of -2.19% in first year
following merger, which reduced to 0.68% in second year and
subsequently turned positive to 1.56% in the third year. The mean
net profit margin has declined with pre and post merger mean
difference of -0.79% in first year following merger, which
reduced to 0.02% in second year and subsequently turned positive
to 3.28% in the third year. In fact, this positive change in mean
difference of net profit margin in the third year is statistically
significant at 5%. The behaviour observed in average pre and post
merger profitability ratios in Table 5.10 is thus explained by year on
year changes in the same ratios. In the first year following merger,
the operating and gross profitability has reduced with higher
magnitude while the second and third year has seen improvement
which has translated in high magnitude and statistically significant
increase in mean net profit margin in the third year following
merger. The first years impact has resulted in overall decline in
PBIDT and PBIT margins as given in Table 5.10.
(ii) The negative effect of merger observed in mean ROCE has also
reduced over the years during post merger period. The first year
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following merger has seen a high negative effect with mean
difference of pre and post merger ROCE being -3.02% which is
also statistically significant at 1% level. This negative effect
however, reduced to -2.15% in the second year. In the third year
there is positive mean difference observed in the ratio of 1.16%
although not statistically significant. Similarly, the real mean
difference in pre and post merger RONW ratio is -1.71% in the first
year of merger which improved to 3.34% in the third year of
merger. None of these improvements observed are statistically
significant, and therefore provides extremely weak evidence of
comparative improvement in profitability of acquirers in drugs and
pharmaceutical sector over the years during post merger period.
(b) Liquidity and Solvency
(i) The mean difference of leverage ratio of debt — equity is 0.03 and
0.04 in the first and second year of merger respectively implying
increase in the ratio during these two years of post merger period.
In the third year however, the mean difference in the ratio declined
to 0.12, though not statistically significant.
(ii) The mean difference in the pre and post merger current ratio on
the other hand has remained negative through out the three year
period of post merger. In fact the decline in post merger current
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ratio during second year of merger (0.69) is also statistically
significant at 1%.
(c) Operational Efficiency ad Asset Utilization
(i) The real change observed in fixed asset turnover ratio shows a
continuous negative effect of merger. The mean difference in this
ratio has been -0.59 in the first year following merger which is
significant at 10% level. In the third year it has marginally declined
to -0.45% but not statistically significant.
(ii) The mean difference in inventory turnover ratio, however, has
shown some improvement in real term though not statistically. In
the first year of merger the mean inventory turnover ratio declined
by a difference of 0.32% and subsequently improved with positive
mean difference of 0.64% in second year and 0.66% in the third
year. The difference between pre merger average ratio and post
merger average ratio has been thus marginal during these two
years but positive.
The results for drugs and pharmaceuticals sector thus provide a weak
evidence of improved operating and financial performance over the years during
post merger period.
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5.1.4 Long Term Pre-Merger and Post-Merger Operating and Financial Performance of Acquirers in Food and Beverage Sector
Food and beverage sector has seen mergers and acquisitions to establish
bigger Organizations to counter competition from foreign food chains and
companies that entered India post economic reforms. Creating financially strong
enterprises has thus been an important objective for consolidations in this sector.
We study the financial health of acquirers in food and beverage sector during pre
and post merger. The results of paired t-test on financial ratios of acquirers in
this sector are presented in Table 5.13 and Table 5.14.
Table 5.13: Mean Pre-Merger and Post-Merger Financial Ratios of Acquirers in Food and Beverage Sector
Ratio Pre-Merger Average
Post-Merger Average
Mean Difference
t- statistics
p-value
Profitability PBDIT Margin (%) 8.82 7.97 -0.85 -0.197 0.848 PBIT Margin (%) 6.17 5.37 -0.80 -0.193 0.851 Net Profit Margin (%)
-0.54 0.46 1.00 0.230 0.822
ROCE (%) 14.51 10.34 -4.17 -2.048 0.068** RONW (%) 9.40 7.59 -1.81 -0.358 .0.729 Solvency Debt Equity 1.36 4.68 3.32 1.515 0.161 Current Ratio 1.29 1.05 -0.25 -3.271 0.008*** Efficiency/Asset Utilization Fixed Asset Turnover
2.48 2.59 0.11 0.230 0.823
Inventory Turnover
9.45 10.09 0.64 0.358 0.728
Operating Return on Assets (%) 0.14 0.12 -0.02 -0.591 0.568 Note: *, **, * represents significance at 10%, 5% and 1% level respectively.
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Table 5.14: Paired Samples Correlations for Pre and Post Merger Financial Ratios of Acquirers in Food and Beverage Sector
Ratio Correlation Sig. Pair 1 PBDIT Margin (Pre and Post Merger) 0.538 0.088* Pair 2 PBIT Margin (Pre and Post Merger) 0.559 0.074* Pair 3 Net Profit Margin (Pre and Post
Merger) 0.415 0.204
Pair 4 ROCE (Pre and Post Merger) 0.637 0.035** Pair 5 RONW (Pre and Post Merger) 0.306 0.390 Pair 6 Debt Equity (Pre and Post Merger) 0.687 0.019** Pair 7 Current Ratio (Pre and Post Merger) 0.757 0.007*** Pair 8 Fixed Asset Turnover (Pre and Post
Merger) 0.720 0.012**
Pair 9 Inventory Turnover (Pre and Post Merger) 0.758 0.007***
Pair Operating Return on Assets (Pre and 10 Post Merger)
0.404 0.218
Note: *, ** *** represents significance at 10%, 5% and 1% respectively
Following are the analytical observations that can be made from Table
5.13 and Table 5.14:
(a) Profitability
(i)
The mean PBIDT margin has declined from pre merger average of
8.82% to 7.97% during post merger period. Similarly, the PBIT
margin reduced from 6.17% to 5.37%. Both the declines are
however, statistically insignificant. The net profit margin however,
was found to be increasing from pre merger average of -0.54% to
0.46% in post merger period indicating marginal increase in real
short term profitability; though the increase is not found to be
statistically significant. Besides, low coefficient of paired correlation
(0.415) for this ratio which is also statistically insignificant (sig.
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value 0.204) indicate's that the increase is very arbitrary and not
across the firms.
(ii) The mean ROCE has decreased considerably from pre merger
average of 14.51% to 10.34% (mean difference of 4.17%) in post
merger period, with decline also being statistically 5% level.
Besides, the Pearson coefficient of paired sample correlation is
also significant at 5% level indicating that decline is suffered by
many acquirers in the sample. The mean RONW ratio has also
declined from pre-merger average of 9.40% to 7.59% during post-
merger period, a decrease of 19.26% which is however, statistically
insignificant.
(b) Liquidity and Solvency
(i) The mean current ratio of sample acquirer firms in food and
beverage sector has declined from pre merger average of 1.29:1 to
1.05:1 during post merger period. This mean decline of 0.25 is also
found to be statistically significant at 1% level. The Pearson paired
sample coefficient of correlation for this ratio (0.757) is also
significant at 5% level. Thus the decline is more widespread across
the sample acquirer firms in this sector.
(ii) The leverage represented by way of mean debt-equity ratio of
acquirer firms in the sector has increased from pre merger average
of 1.36 to 4.68 during the post merger period, which registers an
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increase by 3.44 times the pre merger average, though the
increase is statistically not different from zero.
(c) Operational Efficiency ad Asset Utilization
(I)
The mean fixed asset turnover ratio for acquirers in food and
beverage sector has marginally increased from pre merger
average of 2.48 times to average of 2.59 times during post merger
period.
(ii) The mean inventory turnover ratio on the other hand has increased
from pre merger average of 9.45 to 10.09 during post merger
period. It is, however, not statistically significant (a high
significance value of 0.728). However, the paired sample
coefficient of correlation is high at 0.758 and also statistically
significant at 1% indicating that the increase is observed across
several of the sample acquirer firms in the sector.
(iii) No significant changes are observed in mean operating return on
assets for acquirers in food and beverage sector.
A further analysis of year on year changes in mean performance
parameters of acquirers in food and beverage sector during post merger period
is given in Table 5.15.
IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM
161 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Table 5.15: Yearwise Analysis of Impact of M&A on Operating and Financial Performance of Acquirers in Food and Beverage Sector
Ratio Pre-Merger Average
1-Year Post- Merger. Mean
Difference
2-Year Post- Merger Mean
Difference
3-Year Post- Merger Mean
Difference Profitability
PBDIT Margin (%) 8.82 -5.08* 1.63 -0.01 (-1.865) (0.247) (-0.002)
PBIT Margin (%) 6.17 -5.09** 1.63 0.27 (-2.094) (0.251) (0.049)
Net Profit Margin -0.54 -4.39* 4.25 2.87 (%) (-1.956) (0.636) (0.513) ROCE (%) 14.51 -5.26** -4.66** -3.93
(-2.236) (-2.378) (-1.299) RONW (%) 9.19 -10.95 1.91 -1.86
(-1.448) (0.527) (-0.471) Solvency
Debt Equity 1.36 2.96 3.60 1.26*** (1.452) (1.512) (2.818)
Current Ratio 1.29 -0.18** -0.27*** -0.28' (-2.395) (-3.591) (-3.058)
Efficiency/Asset Utilization Fixed Asset 2.48 0.23 -0.03 0.22 Turnover (0.378) (-0.079) (0.430) Inventory 9.45 1.24 -0.17 1.23 Turnover (0.620) (-0.137) (0.495)
Note: (i) *, **, *** represents significance at 10%, 5% and 1% level respectively. (ii) Figures in parenthesis are t-statistics
Following are the important observations from Table 5.15:
(a) Profitability
(I)
The analysis of yearwise mean difference in pre and post merger
profitability ratios indicate that all the profitability ratios have shown
a higher magnitude of real mean difference in the first year
following merger, which is also negative. And as in case of drugs
and pharmaceuticals sector, this negative effect has subsequently
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declined in the following years although not essentially turned
positive in the third year following merger. The mean PBIDT margin
has declined with pre and post merger mean difference of -5.08%
in first year following merger, which improved to 1.63% in second
year and subsequently turned negative to -0.01% in the third year.
In the first year, the decline is also found to be statistically
significant at 10% level. Similarly, mean PBIT margin has declined
with pre and post merger mean difference of -5.09% in first year
following merger with statistical significance at 5% level, and
improved to 1.63% in second year and subsequently again
declining to (though positive) to 0.23% in the third year. However,
the improvements observed are not statistically significant. The
mean net profit margin has declined with pre and post merger
mean difference of -4.39% in first year following merger and this
decline is statistically significant at 10% level. The mean difference
improved in real terms in the second year to 4.25% and 2.87% in
the third year. The improvements again in this ratio are not
statistically significant. In the first year following merger, therefore,
a significant drop in profitability ratios is observed and
improvements thereafter do not have strong evidence.
(ii) The negative effect of merger observed in mean ROCE has
reduced marginally each year during post merger period. The first
year following merger has seen a high negative effect with mean
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 163 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
difference of pre and post merger ROCE being -5.26% which is
also statistically significant at 5% level. This negative effect
however, reduced to -4.65% in the second year again statistically
significant at 5% level. In the third year again the real mean
difference observed in the ratio is 3.93% although not statistically
significant. Similarly, the real mean difference in pre and post
merger RONW ratio is -10.95% in the first year of merger which
improved to -1.86% in the third year of merger. The improvements
observed in RONW are not statistically significant.
(b) Liquidity and Solvency
(i) The mean difference of debt — equity is consistently negative over
the post merger period. It was -2.96 in the first year following
merger and subsequently reduced to -1.26 in the third year which
is also statistically significant at 1%. However, it may be observed
that the negative effect on debt — equity ratio has reduced over the
three year period in real terms.
(ii) The mean difference in the pre and post merger current ratio also
has remained negative through out the three year period of post
merger. The quantum of negative effect has shown marginal
increase in each of the three years and is also statistically
significant in all the years. While decline in mean current ratio
(0.18) is significant at 5% in first year of merger, it is significant at
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 164 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
1% level in second (0.27) and third (0.28) year following the
merger.
(c) Operational Efficiency ad Asset Utilization
(i) The real change observed in fixed asset turnover ratio shows
volatile behaviour with mean increase of 0.23% in first year, mean
decline of 0.03% in second year and again increase in mean post
merger ratio of 0.22%. None of the increase or decrease is
hoWever, found to be statistically significant.
(ii) Exactly similar behaviour is observed in the mean difference in
inventory turnover ratio of acquirers in this sector. The mean
inventory turnover ratio registered improvement of 1.24 in first year,
then decline of 0.17 in second year and improvement of 1.23 in the
third year. Again no statistical significance is observed for decline
or improvement in the ratio.
5.2 Evaluation of Significant Financial Variables of Acquirers During Post Merger Period
Besides the above discussed ratios we examine some of the significant
financial variables from the financial statements of acquires in Chemicals,
Textile, Drugs and Pharmaceuticals and Food and Beverage sectors. This
examination of financial variables will provide further robustness to the analysis
and results obtained using financial ratios. Given the fact that some of the
important business motives of mergers and acquisitions are to improve sales,
reduce costs, improve working capital and cash flow position as well as improve
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 165 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
the pace of profit growth, it is necessary to identify whether such an
improvement has taken place on account of mergers or not. Besides, the
interplay observed between various financial variables will provide an insight into
causes for evidence of no or minimal post merger operating performance
improvement observed using ratio analysis.
The important financial variables analysed are: Net sales along with the
rate of growth of net sales (ROG Net Sales), Cost of Production, Net working
capital, Profit after tax along with the rate of growth (ROG PAT) of profit after tax,
Cash flow from operating activities, asset size, operating profits and market
capitalization. The results and analysis of these variables for various sectors
under study are presented below:
(a) Chemicals sector
The results of changes in various financial variable for acquirers in
chemicals sector are given in Table 5.16.
Table 5.16: Pre-Merger and Post-Merger Changes in Select Financial Variables of Acquirers in Chemicals Sector
Financial Variable Pre-Merger Average (Cr.)
Post-Merger Average
(Cr.)
Increase / (Decrease)
(Cr.)
Percentage Increase/
(Decrease) Net Sales 200.68 282.27 81.59 40.66 Cost of Production 151.15 218.20 67.05 44.36 Net Working Capital 48.10 62.28 14.18 29.48 Profit After Tax 16.84 17.10 0.26 1.54 Cash Flow from Operating Activities
15.81 27.86 12.05 76.22
Total Assets 163.81 242.73 78.92 48.18 Operating Profit 28.31 31.89 3.58 12.65 Market Capitalization 334.72 324.68 (10.04) (3.00) ROG Net Sales (%) 9.36 14.23 4.87 52.03 ROG PAT (%) 6.76 -7.26 (14.02) (207.40)
Source: Own calculations using acquirers' financial statements from Capitaline Database
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It can be observed from Table 5.16 that the average net sales of acquirers
in chemicals sector have increased by 40.66% from Rs.200.68 Cr. to Rs.282.27
Cr. during post merger period. The ROG of net sales has also increased from
9.36% to 14.23% during the same period. However, on the other hand, the
increase in mean cost of production during post merger period is more than the
increase in mean net sales during the same period. The mean cost of production
for acquirers in this sector has increased by 44.36% from pre merger average of
Rs.151.15 Cr. to Rs.218.20 Cr. in post merger period. Thus the scope for
exploiting profit opportunities from increased net sales is nullified due to rising
cost of production in post merger period. The net working capital position as well
as asset size have increased during post merger period but the ROG of profit
after tax has declined considerable by -207.40% during the post merger period.
There is average of 3% decline observed in market capitalization of acquirers in
chemicals sector. On the positive side, the cash flow position has shown
improvement of average of 76.22% during the post merger period.
Thus, cost of production seems to be a major reason for no strong
performance of acquirers in chemical sector. Given the fact that mergers and
acquisitions in this sector focus on vertical integration to manage cost of
production, the benefits of these transactions do not seem to have materialized
for acquirers.
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(b) Textile Sector
The results of changes in various financial variable for acquirers in textile
sector are given in Table 5.17.
Table 5.17: Pre-Merger and Post-Merger Changes in Select Financial Variables of Acquirers in Textile Sector
Financial Variable Pre-Merger Average
(Cr.)
Post-Merger Average
(Cr.)
Increase / (Decrease)
(Cr.)
Percentage Increase/
(Decrease) Net Sales 200.76 556.80 356.04 177.35 Cost of Production 171.04 491.49 320.45 187.35 Net Working Capital 76.93 239.28 162.35 211.04 Profit After Tax 11.16 14.43 3.27 29.30 Cash Flow from Operating Activities
22.22 35.69 13.47 60.62
Total Assets 251.85 848.11 596.26 236.75 Operating Profit 24.26 55.24 30.98 127.70 Market Capitalization 104.83 224.44 119.61 114.10 ROG Net Sales (%) 41.68 25.24 (16.44) (39.44) ROG PAT (%) 81.91 1.44 (80.47) (98.24)
ource: Own calculations using acquirers' financial statements from Capitalise Database
The acquirers in textile sector have seen a real increase in net sale of
average of 177.35% during post merger period. However, the ROG of net sales
has declined considerably by average of 39.44% during the post merger period.
Here again we observe that the cost of production has increased (by 187.35%)
more than the increase in net sales indicating that the even after merger
transactions, the control on this factors is limited. Profit after tax has shown an
absolute increase of average of Rs.3.27 Cr. during post merger period. But the
ROG of profit after tax has declined considerably by 98.24% during post merger
period. The cash flow position has shown a positive change of 60.62%. The
market capitalization of acquirers has also seen a positive change from average
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of Rs.104.83 cr. in pre merger period to Rs.224.44 cr. in post merger period
representing a mean increase of 114.10% during the period. This is contradictory
given the fact that the important ratios of ROCE and RONW have declined
significantly for the acquirers in textile sector during post merger period. The
finding thus points to existing market inefficiency with respect to textile sector.
One explanation could also be that the market expects merger transactions in
textile sector to bring about positive changes as the sector suffers from inherent
problems.
(c) Drugs and Pharmaceuticals Sector
The results of changes in various financial variable for acquirers in drugs
and pharmaceuticals sector are given in Table 5.18.
Table 5.18: Pre-Merger and Post-Merger Changes in Select Financial Variables of Acquirers in Drugs and Pharmaceuticals Sector
Financial Variable Pre-Merger Average
(Cr.)
Post-Merger Average
(Cr.)
Increase/ (Decrease)
(Cr.)
Percentage Increase/
(Decrease) 124.09 Net Sales 326.79 732.30 405.51
Cost of Production 205.58 441.90 236.32 114.95 Net Working Capital 116.35 257.60 141.25 121.40 Profit After Tax 31.22 83.72 52.5 168.16 Cash Flow from Operating Activities
15.82 89.08 73.26 463.08
Total Assets 397.75 886.14 488.39 122.79 Operating Profit 63.66 144.71 81.05 127.32 Market Capitalization 554.30 1749.38 1195.08 215.60 ROG Net Sales (%) 21.83 12.95 (8.88)
4.51 (40.68) 12.00 ROG PAT (%) 37.58 42.09
ource: Own calculations using acquirers' financial statements from Capitalise Database
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 169 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
With reference to drugs and pharmaceuticals sector it can be observed
that the net sales of the acquirers have increase from Rs.326.79 cr. in pre
merger period to Rs.732.30 in post merger period, representing an absolute
increase of Rs.405.51 cr. and percentage increase of 124.09%. More
importantly, though the cost of production of acquirers in this sector has
increased during the post merger period by Rs.236.32 cr., this increase is less
than the increase in net sales during the same period. It can also be observed
that the rate of growth of profit after tax of acquirers in this sector has registered
a positive 12% increase during post merger period. The average percentage
increase in absolute profit after tax and cash flow position is also considerably
higher. These positive changes are possibly the reasons for relatively better post
merger performance of acquirers in drugs and pharmaceuticals sector. The
market capitalization of acquirers in drugs and pharmaceuticals sector has
increased considerably from mean of Rs.554.30 cr. in pre merger period to
Rs.1749.38 cr. during post merger period registering mean growth of 215.60%.
(d) Food and Beverage Sector
The results of changes in various financial variable for acquirers in food
and beverage sector are given in Table 5.19.
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170 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Table 5.19: Pre-Merger and Post-Merger Changes in Select Financial Variables of Acquirers in Food and Beverage Sector
Financial Variable Pre-Merger Average
Post-Merger Average
Increase / (Decrease)
Percentage Increase/
(Decrease) Net Sales 201.88 492.48 290.06 143.95
Cost of Production 165.98 409.84 243.86 146.92
Net Working Capital 69.15 106.28 37.13 53.69
Profit After Tax 9.88 3.68 -6.2 -62.75
Cash Flow from Operating Activities
-0.64 26.05 26.69 4170.31
Total Assets 213.58 489.22 275.64 129.06
Operating Profit 26.76 34.53 7.77 29.04
Market Capitalization
163.79 171.72 7.93 4.84
ROG Net Sales (%) 22.08 33.81 11.73 53.13
ROG PAT (%) 32.22 -99.54 -131.76 -408.94
Source: Own calculations using acquirers' financial statements from Capitaline Database
The acquirers in food and beverage sector have witnessed increase in net
sales of 143.95% from pre merger average of Rs.201.88 cr. to Rs.492.48 cr. in
post merger period. The increase in cost of production is also close but
marginally higher at 146.92% during the post merger period. While the rate of
growth of net sales has increased during the post merger period by 53.13%, it is
not translated into profit growth as indicated by a fall in mean net profits from
mean of Rs.9.88 cr. in pre merger period to mean of Rs.3.68 cr. in post merger
period. The rate of growth of profit after tax of acquirers has fallen drastically by
408.94% during the post merger period. The cash flow position however, has
registered an impressive growth during post merger period.
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 171 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Thus, the overall observation for manufacturing sector indicates that the
mergers and acquisitions have not brought about significant changes for the
acquirers in the sector. The observations do not deviate significantly for any of
the sub sectors, except in case of drugs and pharmaceuticals sector where weak
evidence of relatively better performance is visible in terms of profitability.
Comparatively, the textile sector is found to be the worst performer among all the
sectors under study.
5.3 Long Term Pre-Merger and Post-Merger Operating and Financial Performance of Acquirers in Financial Services Sector
The mergers and acquisitions in Indian financial services sector have
involved transaction between varied parties including bank to bank mergers,
banking companies acquiring NBFCs, mergers between NBFCs, and other
financial services firms. In our sample we have excluded the cases of bank to
bank mergers for it can constitute a separate study in itself focussing on several
macroeconomic variables. The analysis presented here therefore pertains to
banking companies acquiring financial services firms other than other banking
companies. These we refer to as "Banking Acquirers" and deals between other
financial services firms which we refer to as "Non-Banking Acquirers".
5.3.1 Operating Performance of Banking Acquirers:
Table 5.20 provides presents results of paired t-test on various financial
ratios of banking companies for pre and post merger.
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Table 5.20 : Mean Pre-Merger and Post-Merger Financial Ratios of Acquirers in Financial Services Sector (Banking Acquirers)
Ratio Pre-Merger Average
Post-Merger Average
Mean Difference
t- statistics
p-value
OETI (%) 23.58 22.58 -1.00 -0.743 0.482
IITF (%) 11.70 10.95 -0.75 -1.283 0.240
NITF (%) 2.83 2.73 -0.10 -0.444 0.671
OETF (%) 2.53 2.34 -0.19 -0.822 0.438
NPTF (%) 0.84 0.95 0.12 0.413 0.692
RONW (%) 18.78 19.69 0.91 0.140 0.892
Following important observations can be made from Table 5.20 :
(i) The mean operating expenses to total income ratio has declined
from pre merger average of 23.58% to 22.58% during post merger
period. A marginal decline in operating expenses to total funds is
also observed, where the mean ratio has declined from pre merger
average of 2.53% to 2.34% during post merger period. While it is
good that the expense ratio has declined, none of these declines
are found to be statistically significant.
(ii) The mean interest income to total funds ratio as well as mean net
income to total funds ratio have declined by 6.41% and 3.53%
during the post merger period, the declines again being only in real
terms and statistically insignificant. However, the direction of
change observed in these positively influencing ratios is against the
fulfilment of merger objectives of increasing interest income
through diverse product portfolios of target firms.
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173 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
(iii) The profitability parameters have, however, registered a marginal
increase in real terms during post merger period. The mean net
profit to total funds ratio has increased from 0.84% to 0.95% (mean
increase of 0.12%); while RONW has improved from pre merger
average of 18.78% to 19.69% (mean increase of 0.91%) during
post merger period. But even this increase is not found to be
significantly different from zero statistically.
5.3.2 Operating Performance of Non-Banking Acquirers:
The results of paired t-test on various financial ratios of non-banking
acquirers are presented in Table 5.21 below.
Table 5.21 : Mean Pre-Merger and Post-Merger Financial Ratios of Acquirers in Financial Services Sector (Non-Banking Acquirers)
Ratio Pre-Merger Average
Post-Merger Average
Mean Difference
t- statistics
p-value
PAT (%) -9.87 16.38 26.25 1.363 0.203 DE 1.75 1.70 -0.05 -0.139 0.892 CR 5.22 6.37 1.15 0.750 0.469
ASTO 24.89 14.37 -10.52 -1.164 0.269 RONW (%) 4.72 9.43 4.71 0.899 0.388
Following important analytical observations can be made from the Table 5.21:
(i) The mean profitability parameters have shown increase only in real
terms. The net profit margin has increased from pre merger
average of -9.87% to average of 16.38% during post merger period
that represents a mean difference of 26.25%. The t-statistics
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174
(1.363) however, entails it statistically insignificant. Likewise, the
return on networth increased from pre merger average of 4.72% to
average of 9.43% during post merger period, an increase of 4.71%
but again statistically insignificant (t-statistics of 0.899).
(ii) The liquidity and solvency parameters also show marginal positive
change but only in real terms. The debt — equity ratio of non-
banking acquirers has declined from pre merger average of 1.75 to
1.70 which is found to be statistically insignificant. Similarly, the
current ratio has improved from pre merger average of 5.22 to 6.37
during post merger period which again is statistically insignificant.
(iii) The asset turnover has however shown a substantial decline in real
term from 24.89% in pre merger period to 14.37% in post merger
period, a mean difference of 10.52% though statistically
insignificant (t-statistics 1.164).
With reference to Financial Services Sector, the acquirers in banking
business have thus, seen a very marginal increase in profitability ratios (mean
increase of Net Profit to Total Funds of 0.12% and mean increase of RONW
0.91%). Acquirers in other Financial Services business have seen visible gains
in profitability ratios (mean increase of 26.25% in Profit After Tax and mean
increase of 4.71% in RONW post merger). However, in both cases the mean
difference in various ratios for pre and post merger period is found to be
statistically insignificant.
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 175 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
5.4 Long Term Performance of Share Prices of Acquirers
The effect of mergers and acquisitions on shareholder wealth has been
studied in the literature using buy and hold abnormal returns (BHAR) which is yet
another important tool within the event study methodology. BHAR essentially
indicates the excess returns over the industry average that an investor buying
the shares of the acquiring firm will be enjoying if he made the purchases those
shares after merger. Barber and Lyon (1997) and Mitchell and Stafford (2000)
argue that the BHAR is the appropriate estimator because it "precisely measures
investor experience" and capture the risk preferences and the investment goals
of the investors. They believed this was an important feature of the model as the
investors' views towards the acquirer and the benchmark companies depended
crucially on such goals and their preferences. We therefore compute the long
term buy and hold abnormal returns (BHAR) by applying the computational
methodology for the same as discussed in chapter two. The results of
computations of buy and hold returns for various sector are presented in Table
5.22 below:
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Table 5.22: Percentage Long Term Buy and Hold Abnormal Returns to Shareholders of Acquirers During Post Merger Period
(Aggregate Analysis)
1 Yr BHAR 2 Yr BHAR 3 Yr BHAR
Chemicals Sector
Mean -3.51 14.62 -7.47
Median 6.01 12.02 -41.02
Textile Sector
Mean 61.42** 66.01* 42.36
Median 55.75** 31.52 16.27
Drugs and Pharmaceuticals Sector
Mean 10.45 3.43 54.83
Median -9.09 -5.52 -18.70
Food and Beverage Sector
Mean -3.98 45.14 352.38
Median -17.77 -3.03 21.37
Manufacturing Sector
Mean 17.95 30.33 35.64
Median 6.19 7.61 -25.65
Financial Services Sector
Mean 19.63 73.33 -16.05
Median 9.11 41.64 -53.29
Source: Own computations with share price data from CMIE Prowess Note: A, **, *** represents significance at 10%, 5% and 1% level respectively
Following analytical observations can be made from the Table 5.23
above:
(i) In the chemical sector, the mean BHAR for 1 year period was found to be
-3.51% which improved to 14.62% for 2 year holding period but not
statistically significant. However, this further declined to -7.47% for 3 year
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holding period. The percentage of acquirers with negative mean BHAR
increase from 41.67% for 1 year holding period to 83.33% for 3 year
holding period.
(ii) In case of Textile sector the mean BHAR is 61.42% and 66.01% for 1 and
2 year holding period respectively which is also statistically significant.
This however is reduced to 42.36% for 3 year holding period which is not
statistically different from zero.
(iii) For Drugs and Pharmaceuticals Sector, the mean BHAR is found to be
positive for all the holding periods whereas the median BHAR is negative
and ranges between -9.09% for 1 year holding period to -18.70% for 3
year period. However, none of the mean/median return observations is
statistically significant.
(iv) The mean BHAR in Food and Beverage sector for 1 year holding period is
-3.98% which has shown substantial real gain in the 3 year holding period
with 352.28%. However, the high percentage mean BHAR in third year is
on account of exceptional observation of sample acquirer Rajshree
Sugars and Chemicals that has registered an remarkable growth in buy
and hold returns. If we exclude this observation from the sample, then the
actual mean BHAR for 1 year, 2 year and 3 year holding period (not
reported) is -23.92%, -13.10% and 106.65% respectively. None of the
mean return observations are however, statistically significant. Besides,
the median BHAR for 1 year holding period for acquirers in this sector is
17.77%, which improved to -3.03% for 2 year holding period and
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM 178 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
subsequently to 21.37% for 3 year holding period. But here again the
statistical significance could not be established and therefore, the real
increase provides only extremely weak evidence of improvement in long
term returns to shareholders of acquirer firms.
(v) The mean and median returns for manufacturing sector as a whole as
well as for financial services sector are positive for 1 year and 2 year
holding period. However, in both the cases the median buy and hold
returns become negative for 3 year holding period. Again, there is no
evidence of statistically significant positive returns for shareholders of
acquirer firms in these two broad sectors.
The movements in buy and hold abnormal returns in shares of acquirers
in select sectors under study are presented graphically in stacked chart formats
from Fig.5.1 to Fig.5.4. It may be observed that the positive movements in BHAR
are prominently recorded in shares of acquirers in drugs and pharmaceuticals
sector for 3 year holding period (although none of the changes in BHAR are
found to be statistically significant). For other sectors the absolute BHAR returns
for 3 year holding period is skewed negatively.
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1 2
800.00
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Fig.5.1 BHAR Movements in Shares of Acquirers in Chemicals Sector (I year, 2 Year and 3 Year Holding Period)
Fig.5.2 BHAR Movements in Shares of Acquirers in Textile Sector (I year, 2 Year and 3 Year Holding Period)
179
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IMPACT OF MERGERS AND ACQUISITIONS ON LONG TERM
180 OPERATING AND FINANCIAL PERFORMANCE OF ACQUIRERS
Fig.5.3 BHAR Movements in Shares of Acquirers in Drugs and Pharmaceuticals Sector (I year, 2 Year and 3 Year Holding Period)
Fig.5.4 BHAR Movements in Shares of Acquirers in Financial Services Sector
(I year, 2 Year and 3 Year Holding Period)
1200.00
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