Chapter 27 MERGER AND ACQUISITION: DEFINITIONS, MOTIVES, AND MARKET RESPONSES. Abstract Along with globalization, merger and acquisition has become not only a method of external corporate growth, but also a strategic choice of the firm enabling further strengthening of core competence. | Chapter 27 MERGER AND ACQUISITION DEFINITIONS MOTIVES AND MARKET RESPONSES JENIFER PIESSE University of London UK and University of Stellenbosch South Africa CHENG-FEW LEE National Chiao Tung University Taiwan and Rutgers University USA LIN LIN National Chi-Nan University Taiwan HSIEN-CHANG KUO National Chi-Nan University and Takming College Taiwan Abstract Along with globalization merger and acquisition has become not only a method of external corporate growth but also a strategic choice of the firm enabling further strengthening of core competence. The megamergers in the last decades have also brought about structural changes in some industries and attracted international attention. A number of motivations for merger and acquisition are proposed in the literature mostly drawn directly from finance theory but with some inconsistencies. Interestingly distressed firms are found to be predators and the market reaction to these is not always predictable. Several financing options are associated with takeover activity and are generally specific to the acquiring firm. Given the interest in the academic and business literature merger and acquisition will continue to be an interesting but challenging strategy in the search for expanding corporate influence and profitability. Keywords merger acquisition takeover LBO synergy efficiency takeover regulations takeover financing market reaction wealth effect . Introduction Merger and acquisition M A plays an important role in external corporate expansion acting as a strategy for corporate restructuring and control. It is a different activity from internal expansion decisions such as those determined by investment appraisal techniques. M A can facilitate fast growth for firms and is also a mechanism for capital market discipline which improves management efficiency and maximises private profits and public welfare. . Definition of Takeover Merger and Acquisition Takeover merger and acquisition are frequently used .
