Essays on Mergers and Acquisitions - International Airlines Group and British Midland International Assignment

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The paper "Mergers and Acquisitions - International Airlines Group and British Midland International" is a brilliant example of an assignment on finance and accounting. A business may grow either internally or externally. As a part of internal growth, a business expands in its normal course activity by acquiring new assets, setting up better product lines, and enhancing technology. On the other hand, external growth is a much quicker process. A business can take over a running business and through such corporate strategies, it can expand overnight. Such corporate strategies include mergers, acquisitions, takeover, and amalgamation.

Such external expansion has become very popular in recent years. This is primarily because such expansions facilitate the globalization of companies; improve competitiveness, free from trade barriers and promote capital flow between countries (Watson and Head, 2013). Under the corporate restructuring, mergers and acquisitions have become a very important port of entry and expansion strategy. Companies are increasingly going for mergers with a view to avoid competition and gain some sort of monopoly. IAG’ s (International Airlines Group) merger with BMI (British Midland International) is directed towards creating synergy in the airline industry and eliminating competition via a greater market power.

IAG also believes that such consolidation of two businesses shall also help in eliminating some traditional problems that have plagued the industry for a long. It shall also increase IAG’ s participation in the global airline industry. Mergers and Acquisitions Mergers and acquisitions reflect an entire change in business activity. It is one of the major changes that a business might have to go through in its life cycle. Listed here are various types of mergers and acquisitions that generally occur. Mergers In this method of the takeover, the managers of firms, who are in conversation, decide to unite stocks of the two entities after seeking shareholder approvals.

Such approval shall be of at least 50% shareholders for both the firm taking over and the one being taken over. A merger is more often than not, a cheaper mode of acquisition than the other methods discussed here. For example, a merger between Compaq and Digital Computers resulted in Digital Computers lost its own identity and became a part of Compaq (Booth and Cleary, 2010).

References

Booth, L. D. and Cleary, W. S., 2010. Introduction to Corporate Finance. Ontario: John Wiley & Sons Canada, Limited

Brealey, R., Myers, S. and Allen, F., 2010. Principles of Corporate Finance, Concise. New York: McGraw-Hill Education

Cornell, R., 2008. Why Companies Do Not Pursue Attractive Mergers and Acquisitions. New York: Cambria Press

Evans, M. H., 2000. Mergers & Acquisitions. [pdf].Excellence in Financial Management. Available at: [Accessed 5 November 2013].

IAG Consolidated Annual Report. 2013. Full Year Results Announcement. [pdf].IAG. Available at: [Accessed 5 November 2013].

IAGshares. 2013. IAG Stock Chart. Available at: < http://www.iagshares.com/phoenix.zhtml?c=240949&p=irol-stockcalculator.> [Accessed 8 November 2013].

IAG. 2011. IAG – acquisition of BMI. [pdf]. IAG Available at: [Accessed 5 November 2013].

Mail Online. 2012. IAG's Takeover Of BMI Means 2,000 Jobs Grounded. [online] Available at: [Accessed 5 November 2013].

Ryanair/Aer Lingus Merger Inquiry. 2013. Summary Of Third Party Hearing With International Airlines Group Held On 19 March 2013. [pdf]. Competition Commission. Available at: [Accessed 5 November 2013].

Watson, D., and Head, A., 2013. Corporate Finance: Principles and Practice. London: Pearson Education, Limited

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