The Effect Of Merger And Acquisition On The Growth Of An Organization

The Effect Of Merger And Acquisition On The Growth Of An Organization

Chapter One

Preface

Background Of The Study

The increase in oil painting smash in the 70’s was an period of huge and precious prospect of doubtful mileage and viability. still, the heavy dependence on oil painting and imported input rendered the Nigerian frugality to be sensitive to external shocks with the collapse of the world oil painting request in the mids 1981, an profitable extremity surfaced in Nigeria, colorful control measures were put in place in order to correct the disturbing situation between 1982 – 1985 but these measures failed to deal effectively with the abecedarian profitable and fiscal problems defying the frugality which was deteriorating.

The nation began to face a situation of continuity and deteriorating balance of payment problem, the external debt continually rise, the emotion of transnational credit worthiness and the acute deficit of raw accoutrements and consumer goods, as husbandry suffered and oppressively, neglected, the country( Nigeria) was at the point of collapsing.

Considering the below circumstances, there’s need for public profitable reform which the civil government ultimately came up with Structural Adjustment Programme( SAP) in 1988 as a strategy to end the distortion of the nation frugality and achieve a turn around in the fortunes.

The current global profitable depression facing the world has been described by the world profitable and fiscal experts as the longest and deepest depression in the post war period. Major artificial developed countries partake in this performance characterized by declining growth rate, high inflationary pressure, increase in number of severance and this trend had serious adverse effect on the profitable of developing countries of which Nigeria is included.

The present development is relatively affecting a substantial number of Nigeria contemporary business utmost of them are on the path of decline, leading to folding up of some companies and numerous others laying off their staff and outfit as a result of functional difficulty with lack of capability to expand and decline in deals volume as well as profit.

With the present delicate situation in the Nigeria businss terrain. There’s need for businesses to bere-structured for survival in response to changes that’s being in the profitable terrain either a company decide whether to acquire, combine or vend part or total of its being business therefore, given birth to a stronger, bigger and further profitable outfit that’s able of surviving amidst strong competition.

Literal Background Of Oando Nigeria Plc

Oando Plc commence its business operation as a petroleum marketing company in Nigeria in 1956 under the name “ ESSO West Africa Incorporated ” a attachment of Export Corporation of the USA. In 1969, the company was incorporated under Nigeria laws as “ ESSO standard Nigeria Limited. In 1976, the Nigeria Government brought ESSO interest and therefore, came the 100 proprietor of the company. The company was also brand “ Unipetrol Nigeria Limited ”.

On 1st March, 1991 the company came a public limited company and was known as Unipetrol Nigeria Plc in the same time, 60 of the company’s shares was vended to the Nigeria public under the first phase the also privatization exercise and the company was quoted on the Nigeria stock exchange in February 1992.

In 2000, under the 2nd phase of the Federal Government of Nigeria’s privatization programme, ocean and soil services limited came a core investor by acquiring 305 of the Federal Government’s 40 equity stock in the company, the remaining 10 was vended to the Nigeria public. The investment in the also Unipetrol Nigeria Plc by Ocean Oil Services Limited was with support of its International Technical Partners Compania Espanola De Petroleos( CESPSA) who are presently 2nd largest oil painting group in Spain and ranks among the top 10 oil painting group in Europe. CEPSA is a completely Integrated Petroleum Company involved in disquisition and product, petrochemicals natural gas, trading, refining, distributing and selling.

In August 2002, the company acquired Agip Petrol’s 60 stake of Agip Nigeria Plc, the trade of the 60 interest of Agip Petrol International was the result of an transnational shot conducted by Agip petrol transnationalB.V with the backing of an transnational counsel during which Agip Petroleum International named to them Unipetrol Nigeria Plc following the accession of Agip Nigeria Plc the company was again i.e. ingrained to Oando Plc in 2003 and surfaced as Nigeria 2nd largest company in the downstream sector of the oil painting assiduity with15.64 request share.

Statement Of The General Problem

Due to the present profitable situation of the country( Nigeria), report indicated that numerous Nigeria businesses and commercial associations have closed up while numerous further may soon close up, indeed those that have survived, it has been a mergical survival and they’re operating far below installed and optimum productive capacities leaving none in mistrustfulness that the situation is bad enough, the following problems are notice.

There’s need to note the fact that numerous of this association that are depressed situation can either still be acquired or intermingled with further prosperous and strong enterprise. In other word, an volition to this unattractive profitable woe in the country should have been for companies to come together and continue through junction or accession.

There’s overextension which tend to make the association fuzzy and ungovernable. There’s director’s hubris, overconfidence about solidarity form junction and accession which results in remittance for the target company.

There’s negative responses from company’s workers, bankers, suppliers, guests and other which make the process by which a company is bought or vended prove delicate, slow and precious. therefore, they aren’t vended as frequently as they might or should be.

Multiple table service conception has not been applicable to junction and accession due to the need for confidentiality.

There’s lack of proper system, outfit and ways for efficiently executing junction and accession deals without compromising the confidentiality of thee parties involved without unauthorized release of information.

Lack of good recording keeping of inflows from business undertakings, substantially attributed to ignorance and in other cases, a deliberate attempt to shirk duty is also a problem.

Ideal Of The Study

No business is embarked upon without a set of objects to be fulfilled. junction and accession are common features of ultramodern marketable sense. Hence, the intended objects of conducting this study are as follows

To examine the profitable reasons behind above miracle and in particular to look into how association in both private and public sectors of Nigeria frugality have been surviving under junction and accession.

To dissect the profitable and social profitable of scale associated with operations, costs of company related to propositions and profit sluice. therefore, adding profit, request share etc by absorbing a major contender and adding its power to set prices.

To determine the effectiveness of junction and accession as a strategy for organizational survival in Nigeria cooperate bodies.

Designed to smooth the earning results of a company which over the long term smoothes the stock price of a company, giving conservative investors more confidence in investing in the company.

To assay the social, political, profitable and financial problems encountered by business association with respects to the policy of junction and accession in Nigeria.

To develop ways or means by which some of the problems which are encountered in the consummation of the proceeds from the use of the proceeds bettered.

Te study attempt to probe its strategic functions for enhancement in productivity and profitability of Oando NigeriaPlc.

It’s also hope that the recommendation made if well studied and applied, could help business association particularly Oando Nigeria Plc, in attaining her fiscal pretensions efficiently.

Significance Of The Study

The experimenter stopgap that at the completion of this study, it’ll contribute immensely to the being literature on business association and Oando Nigeria Plc in particular towards advancement of knowledge in thee area of business coupling, other commercial bodies in Nigeria will also find the findings and recommendations useful especially those that are hit by the present profitable woe and are considering closing down a the only option.

Government and its agencies that arte establish to regulate and authorize junction and accession offer will also find this exploration work veritably salutary especially in enhancing their operations.

This exploration work also intends to serve as a good reference material for literacy among scholars of colorful institution of advanced literacy, and other experimenters in the area of junction and accession in field of business administration and operation which is the bane of profitable development of the country.

Exploration Question

For this exploration work to be successful certain question has to be answer in request to the benefactions of junction and accession to organizational survival in Nigeria.

What’s the impact of junction and accession to Nigeria frugality?

How can private and public associations survived under the junction and accession?

Would junction and accession give social profitable of scale?

Does junction and accession break the depressed situation of profitable woe in Nigeria?

Can junction and accession add significant value of the establishment’s shares?

Statement Of Thesis

“ According to Egejule and Ogwo( 1990). thesis is a conditional and testable explanation generally in a declarative form of the relationship between variables either specific or general.

Ho That junction and accession doesn’t bring about enhancement in request performance.

Hi That junction and accession bring about enhancement in request performance.

Ho That junction and accession doesn’t lead to increase in profitability of the combined enterprises.

H2 Tat junction and accession lead to increase in profitability of the combined enterprises.

Compass And Limitation Of The Study

To understand a exploration design of this nature, the compass is typically defined with respect to geographical and time dimension. This exploration work is concerned with the he general effect of junction and accession as strategy for organizational survival with respect to Oando in NigeriaPlc. 2007-2008.

It’s a common knowledge that empirical studies in business association yielded results which have to be taken with the proverbial “ pinch of swab ” as a result of poor data base. In this respects, the difficulties gests is ranging from.

Some of the associations that perfected junction and accession aren’t willing to release similar information saying that similar information are classified document.

The exploration is limited to the nature of te content itself, it’s so broad.

The exploration is constraints ofnon-availability of all applicable data andnon-possibility of studying all perfected combinations and accession in Nigeria.

Financial constraint, due to nature and age, the experimenter faced with the high cost of transport to move from one place to another where data and applicable information related to this content could be attained.

Eventually, the reticent and incorporate station of repliers to questions is yet another. Limiting factor to this exploration work.

Despite the below mentioned limitations and numerous other unmentioned, the information were nonpublic and the study has been totally carried out devoid of any bias and in line with the before stated objects.

Description Of Terms

1. Merger and Acquisition( M & A) A junction is an arrangement by which all the means and coffers of two or further companies are brought together under the control of one company which is possessed concertedly by stockholders of the original companies.

Acquisition is the whole transfer and control of means, arrears, workers, operation specialized relationship and expert etc of one pot to another.

2. Economic of Scale This refers to the fact that the combined company can frequently reduce indistinguishable functional costs relative to theoretically, the same profit strum, therefore adding profit.

3. Community This refers to better use of reciprocal coffers.( i.e. 2 2 = 5).

4. threat Diversification This is the situation where a company which is in a strong position within its own request either in terms of cash overflows or request share, decides to extends its influence by acquiring another company generally in a different line of business, affect to a wider product range.

5. WOE A long trouble defying business terrain.

6. Cross Selling A company buying a stock broker could also vend its products to the broker’s guests, while the broker can subscribe up the company’s guests for brokerage accounts.

7. Manager’s Hbris This refers to director’s overconfidence about anticipated solidarity from M & A which results in remittance for the target company.

8. Anti-Trust Cycle Is a nonsupervisory device that dissect the impact of junction on request and to control monopolistic situation and other trade restriction conditioning that lead to adverse recrimination for an frugality.

9.( NEPD) National Economic Policy and Development

10. CAMA Company and Allied Matter Act.