lp firms to procure a pre-existing perception base of proven value (Empson 2001).
The merger of Arcelor-Mittal is considered to help incorporate the shifting of prices in the steel industry ( The Economic Times, 2006). An addtional characteristic of the merger is that it will develop the consolidation in world steel industry and therefore, it would help the producers of steel to retain the performance constancy through higher efficiencies (Anon., 2008)
Teerikangas and Very (2006) condemned the actuality that loose definitions of Mergers and Acquisitions have resulted in an ill-defined focus in M&A studies. Further Nummela (2005) questions that there is an articulate variation amidst the two concepts.
Firms make use of Mergers and acquisitions to increase their success and growth, seize and also expand,access assets which are expensive to follow, also to decrease the competition, yet majority of the mergers and acquisitions fail to meet their objective (Haleblian, Devers, McNamara, Carpenter, & Davison, 2009).
The operation of the firms should be measured not only in terms of financial aspects but also taking into consideration the non-financial aspects. Most of the studies have a sensation that this may be the cause for them to reckon the failure of mergers. The success or failure is conditional on the purpose for which mergers and acquisitions are done. It would be regarded as a failure if it is impossibe to achieve the target that are set(Rosenweig, 2006). Success is the degree of goal achievement (Bierich, 1988 cited from Brouthers, Hastenburg and Ven, 1998). Nonetheless there are opposed views. A merger is fruitful if it inflates the total current wealth of the owners of acquiring firm with other things being constant(Kumar and Rajib, 2007).
Healy 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).
