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Management Report

Management reports, briefs issued by Samsung Economic Research Institute

The Global Waves of Mergers and Acquisitions

The Global Waves of Mergers and Acquisitions

KANG Won

Apr. 17, 2006

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The world has witnessed six waves of corporate takeovers since the late 19th century. In the first three waves, each crest involved horizontal integration, vertical integration, or diversification, which all focused on increasing business volume. In the fourth wave of takeovers in the 1980s, companies pursued restructuring to maximize efficiency.

Since the fifth wave that began in 1993, companies chose takeovers as a way of global growth strategy. At this time, a series of mega-mergers between large corporations appeared in the wake of globalization and deregulation. Prime examples include cross-border mergers and acquisitions (M&As) between German industrial giant Daimler Benz and US car-maker Chrysler, between British Petroleum (BP) and American Oil Company (Amoco).

In the most recent sixth wave, global companies pursue cross-border M&A deals with emerging market companies. In 2004, a third of global M&A deals occurred in Asia. China and India have emerged as a new powerhouse in the global M&A market since they began taking over leading global companies.

Korean companies are yet to successfully pursue cross-border takeovers. In the midst of rapid changes in the business environment, they also need to focus on the cross-border takeover trends and prepare themselves to ride the crest. If they continue their reluctance to jump on the bandwagon and join the currents of cross-border takeovers, they will increasingly face problems when competing against their global counterparts.


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