The impact of Merger and Acquisition on firm performance and Shareholder benefits : The case of Hung Vuong Corp and Agifish Corp

Abstract

This paper investigates the impact of Merger and Acquisition on the performance of the companies and the shareholders’ benefit. The study employs two approaches of methodology: the market measures-based study and accounting measure-based study. The period of the examination covers from 2007 to 2012 and divided into two periods: three years before acquisition and three years after acquisition. The results reveal that the acquisition created negative abnormal returns to the acquiring company’s shareholders and the insignificant positive abnormal returns to the acquired company’s shareholders. The paper also found out that both companies presented the better enhance in revenue, the increase level of COGS and the SG&A making the companies become less profitable. In addition, both of the companies indicated the low level of fixed assets turnover as well as the total asset turnover during the first year of the event, and accompanied with the improvement in the following years. Regarding to the financing synergies, the acquisition of HVG and AGF did not create quite much financial but negative impact to the liquidity and the financial structure of the target company. In general, the M&A could not deliver all improvement on the financial performance as well as create any positive benefit to the shareholders of both companies in short-run.