The winner's curse in the merger game
Article Abstract:
The acquisition activities of four firms are highlighted to demonstrate that although acquired companies' stockholders tend to earn significant premiums, gains to the acquiring entities are much more doubtful. The four acquiring companies are: Exxon, Midland Bank PLC, General Host, and Millipore, which respectively acquired Reliance Electric Co, Crocker National Bank, Cudahy, and Chemetrics. The typical merger attempts to develop corporate synergy, but the cost of obtaining the synergy is often higher than the synergy gained; hence the 'winner's curse'. Cases of 'pure' and 'zero gain' winner's curses are provided. Winner's curse is unlikely to occur when mergers are horizontal, when targets are privately held, when the acquiring firm has information advantages, when the takeover target is an 'ugly duckling', when tax loss is carried forward, or when there is diversification.
Publication Name: Journal of General Management
Subject: Business, general
ISSN: 0306-3070
Year: 1987
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The strategic advantages of the factory of the future
Article Abstract:
In spite of the significant potential competitive advantages of the automated manufacturing technologies generally known as "the factory of the future," American managers have been hesitant to adopt them. This article reviews a number of applications of such technologies and describes how they were successfully applied to achieve competitive advantage. It then reviews the types of technologies included in the concept of the factory of the future and identifies the costs, benefits, and problems associated with them. The author then outlines the implications of these technologies for business strategy. (Reprinted by permission of the publisher.)
Publication Name: California Management Review
Subject: Business, general
ISSN: 0008-1256
Year: 1987
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