COMPLETE SCHOOL PROJECT TOPICS & MATERIALS :
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Mergers and Acquisitions (M & A) continue to be a highly popular form of corporate development. However, in a paradox to their popularity, acquisitions appear to provide at best a mixed performance to the broad range of stakeholders involved. While target firm shareholders generally enjoy positive short-term returns investors in bidding firms frequently experience share price underperformance in the months following acquisition, with negligible overall wealth gains for portfolio holders (Agrawal and Jaffe, 2000).
The complex phenomenon which mergers and acquisitions represent has attracted the interest and research attention of a broad range of management disciplines encompassing the financial, strategic, behavioural, operational and cross-cultural aspects of this challenging and high risk activity. While in recent years research into the human and psychological aspects of M&A have increased in prominence, the M&A literature continues to be dominated by financial and market studies (Cartwright, 2005).
M&A research has tended to develop along discipline-based lines and this has brought detailed insights into a number of important aspects. However, it is arguable that this specialization has been at the cost of developing a more holistic understanding of what determines their performance and what consequences they bring.
For the purpose of this research work, focus will be made on merger and acquisition that has taken place in the Nigeria telecommunication companies. The challenges will be identified and viable solutions will be suggested.
1.2 STATEMENT OF PROBLEM
Despite the goal of performance improvement, results from mergers and acquisitions (M&A) are often disappointing. Numerous empirical studies show high failure rates of M&A deals. Studies are mostly focused on individual determinants. A book by Thomas Straub (2007) “Reasons for frequent failure in Mergers and Acquisitions” develops a comprehensive research framework that bridges rival perspectives and promotes a modern understanding of factors underlying M&A performance.
Merger and Acquisition in the Nigerian telecommunication industry has not really made wave in the industry unlike the banking industry. Most of the merger and acquisition deal of the telecommunication industry end at the pre-merger stage, those being acquired still perform below expectation. Econet has been acquired six times since inception, and lately acquired by Airtel yet still on the bottom list of the performance chart of GSM in Nigeria. The merger and acquisition of Multilinks (a CDMA operator) by Starcomms, Visafone, and other bidders also failed several times, not until recently it was acquired by Visafone. For the past seven months after the deal, Visafone has not synchronized the two network. Subscribers of multilinks still recharge with multilinks card.
It is obvious that there is a great challenge with merger and acquisition in the Nigeria Telecommunication industry. It is on this note, the researcher sees the need to investigate on the challenges faced by this sector in term of merger and acquisition.
1.3 OBJECTIVE OF THE STUDY
The aim of this research work is to investigate the challenges of merger and acquisition with special reference to the telecommunication industry. Objectives of the research work includes:
1.Examine the performance and underperformance of telecommunication industries after merger or acquisition.
2.Examine the merger and acquisition deals that has been transacted in the Nigeria telecommunication industry.
3.Identify the benefits of merger and acquisition in the telecommunication industry.
4.Investigate the functions of the performance / underperformance after merger and acquisition in the telecommunication industry.
Proffer suggestions/solutions to challenges of merger and acquisition in the Nigeria telecommunication sector.
1.4 RESEARCH QUESTIONS
Research questions are meant to generate possible answers to different aspects of the research problem and they should be clearly stated such that they act as guides in identification, collection and analysis of relevant data. In order to achieve the purpose of this research study, the study will attempt to provide answers to the following research questions.
1.Does merger and acquisition improve the operating performance of the acquirer companies?
2.Is the net earnings at the post merger and acquisition period significantly different from the pre merger and acquisition period?
- Do Merger and Acquisition techniques have any impact on the performance in the telecommunication industry?
- Does Merger and Acquisition improve the quality of service of telecommunication companies in Nigeria?
- Does Merger and Acquisition transactions facilitate the consolidation of asset management and provide better means and reputation in the telecommunication industry?
1.5 STATEMENT OF RESEARCH HYPOTHESES
The objective of this research work is to investigate and identify the challenges of merger and acquisition in the Nigeria Telecommunication industry. To provide answer to the research questions the following two-sided hypotheses are formulated.
HYPOTHESIS ONE
H0: There is no significant change in the operating performance of the acquirer following merger and acquisition deals.
H1: There is a significant change in the operating performance of the acquirer following merger and acquisition deals.
HYPOTHESIS TWO
H0: Merger and Acquisition will not improve the contribution of the telecommunication sector to Nigeria GDP.-
H1: Merger and Acquisition will improve the contribution of the telecommunication sector to Nigeria GDP.