:

The aim of this research is to investigate the factors which can contribute towards the success of merger and acquisition. In order to investigate the underlying phenomenon, multiple case studies method has been proposed and in depth exploration of the notion will be carried out with respect to three cases including; FedEx, Vodafone and CNOOC. The primary data will be obtained through semi structured interviews and secondary data sources will also be explored to gain broader view of the notion. In order to analyse the data, transcription of interviews will be carried out and word frequency method in NviVo will also be implied.

Key Words: Merger and acquisition, FedEx, Vodafone and CNOOC.

 

 

Table of Contents

1.    Introduction: 4

2.    Literature Review: 5

2.1 Research Questions: 8

3.    Proposed Method: 8

3.1 Research Strategy: 8

3.2 Research Design: 9

3.3 Access to Respondents: 10

3.4 Proposed Work plan: 10

3.5 Ethical Issues: 10

3.6 Limitations: 11

3.7 Proposed Data Handling and Analysis: 11

3.7.1 Word Frequency methods in NVivo: 11

References: 13

 

 

 

 

1.Introduction:

The concept of merger and acquisition (M&A) has gained enormous attention for practitioners and academicians. The M&A is a significant mean of reallocation resources to most crucial business activities with an aim of expanding beyond the level of organic growth (Vaara and Tienari, 2011; Harbison and Pekar, 1997). Cross border M&A has received first push in the era of 1990 and an instance is of Vodafone which acquired Mannesmann in 1999 for $180 billon (Uddin and Boateng, 2011; Goulet and Schweiger, 2006). It has been witnessed that later half of 1990s and early years of 2000s viewed number of mega deals which took place between multinational companies and has contributed to modify the competitive position in globalized business environment. Until 2007, the volume of M&A has touched the high bars of US$ 1.045 trillion but it reduced substantially due to global crisis initiated in 2008 (Rui and Yip, 2008). However, the expansionary monetary and fiscal policies has contributed to stimulate the volume of M&A again and it has become 36% of cross border activities during 2014 (Cooper and Finkelstein, 2014). It has been predicted that the volume of global M&A will increase further in future due to increasing trend of cross border activities and competition at global level.

In the light of increasing trend of M&A, the current proposal will accompany the investigation of three cases of M&A in; Vodafone. FedEx and China National Offshore Oil Corporation (CNOOC). The FedEx Corporation has acquired the TNT under merger regulations of EU with an aim of strengthening its competitive position in European Economic Area (EEA) delivery services. The lower influence of merger on European consumers has contributed to easy approval by EU. According to in depth investigation of M&A of FedEx, the TNT was not a close competitor of the FedEx and it has lead them to gain moderate competitive position (Brady, Davies and Gann, 2005).

The M&A of Vodafone was one of the significant global deal between the two leading companies in telecommunication sector of the Germany, Vodafone and Mannesmann (Ferreira et al., 2009; Aguilera and Dencker, 2004). The bid to carry out a hostile takeover was placed by Vodafone when the Mannesmann was indulged in reformulating its strategy to hold competitive position in European market. The deal was carried out by offering 47.2% shares of Vodafone to shareholders of Mannesmann and it was termed as a high stake gamble by Vodafone (Gassot, Pouillot and Balcon, 2000). Furthermore, the M&A of CNOOC, a state owned company of China has initiated controversial debate among the North American industry and politics due to owning Canadian company Nexen. This is the most recent merger which was carried out in 2012, and it is the most significant due to targeting the energy sector (Duncan and Mtar, 2006). The Nexen Incorporation was formed in 1969 under the name CanOxy which was renamed to Nexen. The 80% shares of the company were owned by an American firm and at the time of acquisition only 11% of the cash flow of Nexen was coming from Canada. In contrast the CNOOC was found in 1999 and it is among the three leading oil and gas companies of China. It has been considered as the most profitable company in oil and gas industry of China which showed profit margin of 34% in 2008 (DePamphilis, 2009).

The present study is aimed at investigating the key elements behind merger and acquisition in Fedex, Vodafone and CNOOC. The study will analyze both the pre post acquisition stages by carrying out multiple case studies and will highlight differences in performance of three M&As.

2.Literature Review:

The M&A comes under the category of Brownfield investment, which offers an opportunity to enter into foreign market by combining resources of two companies with an aim of creating synergy (Schuler, Jackson and Luo, 2004). Merger can be defined as a balance effort of two firms to combine their assets, management and operations to gain competitive advantage (Piekkari at al., 2005). Merger strengthen the resulting legal entity and allows expansion of products, lucrative market opportunity and enhanced customer segment through adoption of new technology. Therefore, merger assists in innovation and help to meet the requirement of drastically changing environment. On the other hand, acquisition is an activity of the firm in which it makes attempt to acquire other company to gain access to wider market, resources and technology of the firm. In the acquisition, target firm becomes the unit of acquiring firm (Rosenbloom, 2010). Both the merger and acquisition offers an effective way of making alliance at cross country levels.

There are several elements which can fuel the success of cross border merger and acquisition. The notion of economic liberalization and industry consolidation is listed among these factors (Lorentz, Häkkinen and Hilmola, 2006; Pekar and Allio, 1994). Under the view of efficiency theory of merger and acquisition, the execution of M&A can lead path towards synergy which is of three types; financial, operational and managerial (Marks and Mirvis, 2011). Among the cases incorporated in present study, the Vodafone and CNOOC has successfully gained synergy in terms of increasing its operations at international market, which has contributed to increasing profits and competitive position in the telecom and oil and gas industry respectively (Garrett, 2001; Chen, 2013). Therefore, these mergers are aligned with view provided by efficiency theory of M&A. FedEx, on the other hand has not successfully gained synergy and it is still considered to be as moderate competitive in industry.

Moreover, the M&A deal of CNOOC and Nexen has gained prominence among both the Chinese and Canadian market due to improved relationship between two nations and expansion of Chinese goods in Canadian market (Burton, 2015). It is in line with the view of Chapman, (2003) which provided that cross border M&A are mainly affected by the level of acceptance by government and political authorities of two countries. The countries which have healthy association are likely to support the M&A initiative and help in successful emergence within lucrative markets by attracting huge customer base. The CNOOC has made efforts to satisfy the conditions of Canada’s Foreign Investment Review Act and has presented an advantage that being the state owned company of China the acquisition by CNOOC will offer the same status to Nexen and it will offer benefits to Canadian economy (Chen, 2013).  Similarly, the merger of FedEx is also providing an evidence that engagement of government is crucial for success of cross border M&A (Kummer and Steger, 2008). The European Union has carried out extensive investigation of the M&A bid carried out by FedEx to acquire TNT, and approved the offer by considering that it will not harm the values of customer in delivery services (Garrett, 2001). Likewise, the factor behind success of Vodafone and Mannesmann deal is the favorable response form regulatory authorities which is providing that it is the significant which can contribute to or impede with the success of cross border M&A deals.

It has been provided by Lodorfos and Boateng, (2006) that success of cross border M&A depends upon the fulfillment of liability of foreign customers in terms of compatibility with foreign culture and knowledge sharing patterns. It is evident that information asymmetry and lack of support from local people and government can hinder the success of M&A and make the realization of strategy difficult. It is notable that FedEx and TNT merger has gained success due to their placement in EU and sharing of same cultural and social values (Chapman, 2003). Similarly, the culture of Canada is supportive to diversity and international values, which has helped the CNOOC to operate effectively after acquiring Nexen. As argued by Jing (2014), the acquisition of Nexen has offered improved public image to the CNOOC and contributed to increasing customer base. Likewise, the agreement of CNOOC to retain the corporate social responsibility policy of Canada has also contributed to the success of M&A due to high priority of CSR in Canada as compared to China. Finally, the Vodafone and Mannesmann were operating in the telecommunication sector of Germany and by joining their hands to the way of success, they have embraced the provision of increased value to the customers (Pryor, 2001; Chatterjee, 2009). They gained positive response in German market which allowed them to operate efficiently. Therefore, support from local customers is a crucial factor for the success of M&A at global level.

Along with this, two important perspectives which have been identified to contribute towards the success of M&A at international level are the Transaction Cost Economics (TCE) and Ownership Location Internationalization (OLI) (Kummer and Steger, 2008). Both of these theoretical perspective have viewed the cross border M&A with perspective of foreign direct investment and considered it as an appropriate entry mode which should take the foreign market trends and cost of acquisition into account. This view has offered that minimization of associated risk and inefficiencies are important factor behind success in foreign market and cost of transaction plays as important role (Irrman, 2005). All of the companies including; FedEx, Vodafone and CNOOC have depicted high growth margin and they had substantial amount of revenues which enabled them to make acquisition deal. Specifically, the CNOOC has huge amount of capital available in China and the Nexen was requiring cash inflows to support its projects. Therefore, the situations were viable for the company under the view of TCE and OLI.

Moreover, the economic factors and financial conditions of the firm are significant contributors which define the success of M&A (Hitt, Harrison and Ireland, 2001; Chan-Olmsted, 1998). The successful merger of the Vodafone is relying on the fact that both the Vodafone and Mannesmann were holding strength in terms of financial performance (Cartwright and Cooper, 2012; Bleeke and Ernst, 1992). The former has witnessed huge levels of sales and later has depicted growth in terms of high return on a market segment, such as mobile phone. In addition to this, the stock market valuation of the Vodafone was also substantial and it allowed both the firms to swap their shares with an aim of increasing their efficiency further, as aligned with theory of efficiency (Hale, 2014). Similarly, the CNOOC has huge capital and it contributed positively in increasing to the financial incentives of shareholders (Rizvi, 2011). Likewise, the changes in Chinese currency has also contributed positively in the success of M&A of CNOOC and Nexen (Roy, 2013). FedEx, on the other hand has not shown any substantial strength in terms of economic factors and it offered the lower level of efficiency to M&A.

2.1 Research Questions:

The current study is aimed at answering the following research questions:

• Which factors are contributing towards success of merger and acquisition in general?
• How the merger and acquisition of FedEx, Vodafone and CNOOC has become successful?
• What are the key benefits which has been offered by merger and acquisition to FedEx, Vodafone and CNOOC in long run?
• What are the critical factors which offered more success to M&A of CNOOC and Vodafone in comparison to FedEx?

3.Proposed Method:

Interpretive philosophy relies on qualitative methods (Blaxter et al., 2010). This method is selected because it provides a more detailed analysis and in-depth understanding of the research issue (Creswell, 2009). Among the qualitative methods, case study will be implied in the present study with an aim of exploring multiple facets of the phenomenon. The current study will adopt the interpretivist philosophy and it will help to assess the likely benefits of merger and acquisition as an emerging trend.

3.1 Research Strategy:

The identification of key elements in cross border M&A is a wide phenomenon and case study will help to investigate the notion with greater detail. Similarly, the contextual factors are unknown due to incorporation of M&A at global level and case study is the most sensible research strategy in current situation. Furthermore, in line with the view of Belcher and Nail, (2000), under the resource constrained condition, case study is most appropriate as it helps to save time and money. The study is relying its focus on multiple case studies and it has been considered as most effective way of gaining holistic view and to carry out a comparison at broader level (Cooper and Schindler, 2007). The multiple case studies will be carried out on M&A patterns of FedEx, Vodafone and CNOOC. It has been asserted by scholars that multiple case studies can help the researcher to investigate and identify differences between and within cases and to make a comparison of results (Creswell, 2009). Therefore, the multiple case studies design will allow the replication of findings across three cases and it will enable the generalization of findings making it more valid and reliable.

3.2 Research Design:

In order to successfully carry out investigation of three cases to analyze key elements in success of cross border mergers both primary and secondary data sources will be used. Firstly, the secondary sources will be explored including; books, journal data bases, websites, archive data files of the underlying companies, record of respective governments and authorities of merger and acquisition will be carry out. The selection of secondary sources will be made depending upon the relevance with M&A of FedEx, Vodafone and CNOOC. The investigation of secondary data sources has been considered as authentic and it allows in depth investigation (Sleuwaegen, 1998). This method will assist the researcher to save time and money and will help in gaining broader view by utilizing fewer resources.

Similarly, the primary data will be obtained by conducting interviews which will help to identify contemporary situations of the companies which have carried out merger and acquisition. The incorporated companies have gone through M&A at different times and it will allow the researcher to look at long term impact of M&A and factors which affected the success of companies. The semi structured interviews will be carried out from professionals who are listed among advisory members of merger and acquisition and who have enough knowledge of the key aspects of M&A (Sebenius, 1998). The interviews will be carried out from 10 experts. The incorporation of semi structure interviews will enable the collection of data from the smaller number of respondents and therefore, it takes relatively less time for collection of data (Sinkovics, Zagelmeyer and Kusstatscher, 2011). In semi structured interviews, the questions are pre-decided up to some extent, so they are standardized across the whole sample (Shimizu et al., 2004). Along with this, the main theme of questions remain exactly same for all of the respondents. Therefore, there is minimum chance of bias in the data collection. Moreover, while collecting data, the researcher is in the position to note that whether the question is understandable to respondents or not. Similarly, the semi structured interviews offer the benefit of considering verbal and non-verbal cues with greater accuracy and can provide an in depth view of phenomenon through personal opinions of interviewees.

3.3 Access to Respondents:

Due to broader nature of study and involvement of cross border phenomenon of merger and acquisition, it is difficult to approach the executives or top managerial members of FedEx, Vodafone and CNOOC. To overcome this issue of access interviews of professionals from international strategic management will be carried out who are well aware of the M&A of underlying companies, who are the most relevant sample for the present study. The interviewees will be contacted through email and they will be invited to participate in the study. The interviews will be conducted through telephone or personal visit, depending upon the feasibility of researcher. Therefore, reaching the target sample is not an issue and data can be obtained with ease.

3.4 Proposed Work plan:

Time Scale: 2016	Mar	Apr	May	June	July	Aug	Sep
Activities
Creation of semi structured interviews Make Contact with Interviewees
Conduction of interviews and Analysis of primary data
Literature Review
Write up of findings and results of study
Write up of Introduction and Discussion
Dissertation Submission

3.5 Ethical Issues:

As per suggestions of Ramamurthy (2011), the present research will be conducted in an ethical manner where all necessary ethical standards will be carefully considered. The research process and results are not aimed to harm anyone physically or psychologically. Every interviewee will be provided with the surety of confidentiality of their identity, hence, their personal information will not be shared with anyone and anonymity will be maintained (Creswell, 2009). Moreover, the brand name or brand image of FedEx, Vodafone and CNOOC will not be affected in any manner through this research. Every participant will be given the right to withdraw from the interview, at any time during the interview. None of the selected participants will be forced to be the part of this research and their consent will be obtained without coercing them in any manner. Furthermore, the absence of deception will be assured by communicating the purpose and objective of research to the respondents in detailed manner. Therefore, the cautions will be incorporated to avoid ethical issues in current research.

3.6 Limitations:

Undoubtedly, there are some limitations associated with the qualitative research in terms of validity and generalizability of results on broader population. One significant limitation of semi structure interviews is the effect of social desirability bias which shape the responses in positive direction rather than actual. In terms of current study, the reach to the global respondents is an important issue and unavailability of the participants can limitize the results of the study. Moreover, the semi structured interviews can be costly when in depth investigation is required.

3.7 Proposed Data Handling and Analysis:

In order to analyze the data, two different methods will be used by the researcher. Firstly, the descriptive explanation of the results will be provided by transcribing the interviews and detailed elucidation of the responses of international strategic management professionals will be given. Secondly, the word frequency method will be used. 

3.7.1 Word Frequency methods in NVivo:

NVivo in amongst the most widely used qualitative data analysis software, which assists the researchers and organizations to sort and analyze rich text and plain text files, audio data files, pdfs, reference files, digital pictures, webpages, and data of social sites (Kumar, 2005). In the current research study, the data is qualitative and responses will in the form of plain text. The word frequency method will allow to search for the frequency of a specific word used in interviews as well as on the websites related to M&A of FedEx, Vodafone and CNOOC. This function will be of vital help for the direct analysis of the data to identify the pattern of responses. Therefore, by focusing on the trend of responses, the researcher will be able to make inferences about the factors which can contribute to success of cross border M&A. Furthermore, the researcher can also view the context in which specific word has been used for obtaining the vital understanding of the response and to interpret the result accurately. The word frequency method also allows the visualization of data in the form of a tree or cluster.

 

References:

Aguilera, R.V. and Dencker, J.C., 2004. The role of human resource management in cross-border mergers and acquisitions. The International Journal of Human Resource Management, 15(8), pp.1355-1370.

Belcher, T. and Nail, L., 2000. Integration problems and turnaround strategies in a cross-border merger A clinical examination of the Pharmacia-Upjohn merger. International Review of Financial Analysis,9(2), pp.219-234.

Blaxter, L., Hughes, L. C., & Tight, C. M., 2010. How to Research, 4th edition, Maidenhead: Open University Press.

Bleeke, J. and Ernst, D., 1992. The way to win in cross-border alliances. The McKinsey Quarterly, (1), pp.113-134.

Brady, T., Davies, A. and Gann, D.M., 2005. Creating value by delivering integrated solutions. International Journal of Project Management, 23(5), pp.360-365.

Burton, C., 2015. Canada's China policy under the Harper government. Canadian Foreign Policy Journal, 21(1), pp.45-63.

Cartwright, S. and Cooper, C.L., 2012. Managing Mergers Acquisitions and Strategic Alliances. Routledge.

Chan-Olmsted, S.M., 1998. Mergers, acquisitions, and convergence: The strategic alliances of broadcasting, cable television, and telephone services. Journal of Media Economics, 11(3), pp.33-46.

Chapman, K., 2003. Cross?border mergers/acquisitions: a review and research agenda. Journal of Economic Geography, 3(3), pp.309-334.

Chatterjee, S., 2009. The keys to successful acquisition programmes. Long range planning, 42(2), pp.137-163.

Chen, D., 2013. China's state-owned enterprises: how much do we know? From CNOOC to its siblings. From CNOOC to Its Siblings (June 6, 2013). SPP Research Paper, (6-19).

Cooper, D.R. and Schindler, P.S., 2007.Business Research Methods. 9th edition, New York: McGraw Hill.

Cooper, C.L. and Finkelstein, S. eds., 2014. Advances in mergers and acquisitions (Vol. 13). Emerald Group Publishing.

Creswell, J. W., 2009. Research design: Qualitative, quantitative and mixed methods approaches, 3rd edition, Thousand Oaks, CA: Sage Publications.

DePamphilis, D., 2009. Mergers, acquisitions, and other restructuring activities: An integrated approach to process, tools, cases, and solutions. Academic Press.

Duncan, C. and Mtar, M., 2006. Determinants of International Acquisition Success:: Lessons from FirstGroup in North America. European Management Journal, 24(6), pp.396-410.

Ferreira, M.A., Massa, M. and Matos, P., 2009. Shareholders at the gate? Institutional investors and cross-border mergers and acquisitions. Review of Financial Studies, p.hhp070.

Garrett, C.S., 2001. Towards a New Model of German Capitalism? The Mannesmann-Vodafone Merger and its Implications. German Politics, 10(3), pp.83-102.

Gassot, Y., Pouillot, D. and Balcon, L., 2000. The merger and acquisition frenzy. EuroCPR’s 2000.

Goulet, P.K. and Schweiger, D.M., 2006. 21 Managing culture and human resources in mergers and acquisitions. Handbook of research in international human resource management, p.405.

Hale, G., 2014. CNOOC-Nexen, State-Controlled Enterprises and Canadian Foreign Investment Policies: Adapting to Divergent Modernization. Canadian Journal of Political Science, 47(02), pp.349-373.

Harbison, J.R. and Pekar, P., 1997. Cross-border alliances in the age of collaboration. New York: Booz Allen.

Hitt, M.A., Harrison, J.S. and Ireland, R.D., 2001. Mergers & acquisitions: A guide to creating value for stakeholders. Oxford University Press.

Irrman, O., 2005. Communication dissonance and pragmatic failures in strategic processes: the case of cross-border acquisitions. Advances in strategic management, 22, pp.251-266.

Jing, X.I.A.O., 2014. Financial Risks of Chinese Enterprises' Cross-Border Mergers and Acquisitions. Management Science and Engineering, 8(3), p.27.

Kumar, R., 2005. Research Methodology: A Step-by-Step Guide for Beginners, 2^nd edition,London: SAGE Publications.

Kummer, C. and Steger, U., 2008. Why merger and acquisition (M&A) waves reoccur: the vicious circle from pressure to failure. Strategic Management Review, 2(1), pp.44-63.

Lodorfos, G. and Boateng, A., 2006. The role of culture in the merger and acquisition process: Evidence from the European chemical industry. Management Decision, 44(10), pp.1405-1421.

Marks, M.L. and Mirvis, P.H., 2011. A framework for the human resources role in managing culture in mergers and acquisitions. Human Resource Management, 50(6), pp.859-877.

Lorentz, H., Häkkinen, L. and Hilmola, O.P., 2006. Analysis of the Russian retail sector: prospects for cross-border M&A activity. Baltic Journal of Management, 1(2), pp.148-168.

Pekar, P. and Allio, R., 1994. Making alliances work—guidelines for success. Long Range Planning, 27(4), pp.54-65.

Piekkari, R., Vaara, E., Tienari, J. and Säntti, R., 2005. Integration or disintegration? Human resource implications of a common corporate language decision in a cross-border merger. The International Journal of Human Resource Management, 16(3), pp.330-344.

Pryor, F.L., 2001. Dimensions of the worldwide merger boom. Journal of Economic Issues, 35(4), pp.825-840.

Ramamurthy, G.C., 2011.Research Methodology. New Delhi: DreamTech Press.

Rizvi, Y., 2011. Human capital development role of Human Resource (HR) during mergers and acquisitions. African Journal of Business Management,5(2), p.261.

Rosenbloom, A.H. ed., 2010. Due diligence for global deal making: the definitive guide to cross-border mergers and acquisitions, joint ventures, financings, and strategic alliances (Vol. 8). John Wiley & Sons.

Roy, J.A., 2013. An Event Study Analysis of the Nexen-CNOOC Takeover: Implications for the Canadian Market. [Online], Available at: <https://www.ruor.uottawa.ca/handle/10393/30594>

Rui, H. and Yip, G.S., 2008. Foreign acquisitions by Chinese firms: A strategic intent perspective. Journal of World Business, 43(2), pp.213-226.

Schuler, R.S., Jackson, S.E. and Luo, Y., 2004. Managing human resources in cross-border alliances. London: Routledge.

Sebenius, J.K., 1998. Negotiating cross-border acquisitions. MIT Sloan Management Review, 39(2), p.27.

Shimizu, K., Hitt, M.A., Vaidyanath, D. and Pisano, V., 2004. Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future. Journal of International Management, 10(3), pp.307-353.

Sinkovics, R.R., Zagelmeyer, S. and Kusstatscher, V., 2011. Between merger and syndrome: The intermediary role of emotions in four cross-border M&As. International Business Review, 20(1), pp.27-47.

Sleuwaegen, L., 1998. Cross?border Mergers and EC Competition Policy. The World Economy, 21(8), pp.1077-1093.

Uddin, M. and Boateng, A., 2011. Explaining the trends in the UK cross-border mergers & acquisitions: An analysis of macro-economic factors. International Business Review, 20(5), pp.547-556.

Vaara, E. and Tienari, J., 2011. On the narrative construction of multinational corporations: An antenarrative analysis of legitimation and resistance in a cross-border merger. Organization Science, 22(2), pp.370-390.