According to Huang and Kleiner (2004) mergers and acquisitions have become the principal means by which companies have the opportunity to grow revenues due to factors such as gloabalisation, rapid technological changes, a long-term bull market and strategic barriers to growth.
The virtual disappearance of liner shipping conferences from US markets and their elimination in European trades create a significant risk that in place of these collusive price-setting groups, the industry could become increasingly consolidated. The absence of the conference pricing cushion could end up giving an advantage to large, cost-efficient carriers who will drive smaller players from the market. During this competitive process, shippers could see lower freight rates and better service but as the industry consolidates towards oligopoly, there is the risk that shippers will be faced with fewer alternatives to move their goods, lower service quality and significantly higher prices. The impact on merchandise trade could be substantial. This paper is intended to reveal basic structural characteristics of the liner shipping industry that could point to more accurate predictions of future consolidation activity. In particular, a series of mergers and acquisitions in the industry will be examined against the backdrop of industry structure and regulatory constraints. Ultimately, a Poisson model is formulated and estimated to extract and quantify the structural factors that increase the likelihood of horizontal merger and acquisition activity.
This paper provides a review of the recent financial institution mergers and acquisition (M&A) literature covering over 150 studies. Several robust themes emerge in the post-2000 literature. North American bank mergers are (or can be) efficiency improving, although the event-study literature presents a mixed picture regarding stockholder wealth creation. In contrast, European bank mergers appear to have resulted in both efficiency gains and stockholder value enhancement. There is robust evidence linking high CEO compensation to merger activity and strong implications that deals can be motivated by the desire to obtain ‘too-big-to-fail’ status and reap the associated subsidies. Evidence on the impact of both geographic and product diversification via merger is mixed. There is growing evidence that financial institution M&As can adversely impact certain types of borrowers, depositors, and other external stakeholders.
Each year sets a new record for the total value of mergers and acquisitions and nearly every day new announcements are made in the business newspapers.