MERGER AND ACQUISITION: A NEW TREND OF FINANCIAL MANAGEMENT IN NIGERIA

MERGER AND ACQUISITION: A NEW TREND OF FINANCIAL MANAGEMENT IN NIGERIA

CHAPTER ONE

1.0              INTRODUCTION

1.1       BACKGROUND OF THE SUBJECT MATTER

The subject matter of merger an acquisition first emerged in the Nigeria capital market in 1983 and it has become charged with controversies and conflicting view as a young and developing economy, the Nigerian economy environment was not prepared for the intricacies of merger and acquisition, which are generally considered the problem of mature countries.

The impact of global economic depression and in particular the glut in the international oil market, caught up with the Nigeria economy and its industries and corporation one of the industries survival strategies was merger and acquisition plans.

Merger imply combination or fusion of two or more formerly independence business units into one organization with a common ownership and management. Acquisition on the other hand includes all business and corporate organizational and operational devices and arrangement by which the ownership and management of independently operated properties in business are bought under the control of single management.

Accordingly therefore, this term is used n changeably with mergers and well know as the term mergers and acquisition is to lawyers, accountants and businessmen generally, it was never used neither was it defined in the company Act of 1968”

Speared on by tough Luck and the encircling whiplash of the economic situation Nigerian corporation skyline is fast undergoing a change.

Top company executive, who have suffered out of heart burns under the scouring heat of attempting to prop up sagging turn over figures and the flat ball own ballooning bank overdraft are now able to solve these problem which appear impossible one such solution being mergers and acquisition.

It is a word now gaining prominence and toping the agenda of company boardroom meeting a company’s team up to service the economic situation.

With these developments, there arose many unresolved problems in relation to the accounting, atomic, legal and regulatory aspects of any definite statement; with wide range view emanated according is the varying prospecting of those concerned. In this type of sceneries, it expedient that something must be done about it. This is the objective of this research in view of foreging discussion, this study shall also consider the commercial objective of merger and acquisition, among which is achieved cost technology or capture the market of the target company, or to affect the reorganization o group of associated company, or so as to achieve tax advantage to the same devise cold be resorted to merger and acquisition could also be used to gain control of company or to boil out an oiling business so as to avert redundancy.

1.2              PROBLEMS ASSOCIATED WITH THE SUBJECT MATTER

Mergers and acquisition scheme is a way of pulling out of oiling company from the woods, it is also away of making a growing fir even bigger. Unfortunately the mere existence of this term is the dictionary of firm is not enough for the fulfillment of their purpose.

Mergers and acquisition, scheme although used in the advance country of the world notably American and United Kingdom is virtually new in Nigeria. The number of firms that have engaged in land credence to this. What is the role of mergers and acquisition in the economic and corporate realization of firms?

Although most firms are not growing why have thy not resorted to mergers an acquisition?

There are certain reasons for this which sterm from the fact that the investor, managers and the general public are sufficiently experienced to appropriate are briefly as stated below.

To increase market power or share

  To build on economic empire.

To gain promotional projects

To expand production without price reduction

To acquire capacity at reduced price

To obtain real economic of scale.

To obtain monetary economic of scale. Etc.

MERGER AND ACQUISITION: A NEW TREND OF FINANCIAL MANAGEMENT IN NIGERIA