ly et al. (1992) considered the industry ratios (operating cashflows/total assets) to be the touchstone of effective mergers. On the other hand De Pamphilis(2009) described failure as shutting down of business and sale of business, incapability to meet or exceed financial objectives, non-achievement of strategic objectives. When target firms are liquidity constrained anterior to merger,chances of gain from merger will be stupendous (Kruse et al., 2002). Cost cutting is a greater driver of acquisition success (Kaplan, 1992) as recommended by large sample studies and clinical studies. With regards to the negative returns, Mergers and Acquisitions generate inadequate financial value because they obstruct business performance, damage profits over short-term, drawaway the management and adding not a thing to the book value of new business (Devine, 2007). Cross-Border mergers are often ineffective due to lack of strategy and postmerger integration (Hopkins, 2008).
The testable framework is developed by a research that is previously published,outlined by the part of this paper. The aim of the theory is to examine the company specific elements describing the wealth effects evidenced by competitors following the disclosure of merger between Arcelor and Mittal.
Analysts explain the relationship between the rise in the rivals stock price when there is a disclosure of a merger with that of something good happening in return. Nevertheless there are dissimilar justifications of what this “good” is. They have further quoted theories. They are Collusion theory( Stigler, 1964; Eckbo,1983; Eckbo and Wier, 1985; Mullins et. al., 1995; Sharur, 2004), Buyer power (Robinson, 1933; Galbraith, 1952; Stillman, 1983; Snyder, 1996; Fee and Thomas, 2004) and Productive efficiency (Eckbo, 1983; Stillman, 1983; Sharur, 2004). In the stock markets, these theories have numerous justification for the same event.
