Stock Price Returns of Manufacturing Companies in India in Post M&A Period

Abstract

Mergers and acquisitions are those corporate growth strategies which are taken by the companies to position their business in top among their competitors. As a part of business strategy, these are those investment decisions which contribute various economic/financial or non-economic /non-financial advantages to the shareholders, customers and employees related to the firm. Business combinations through mergers or acquisitions, helps the companies to use their complementary physical and human resources that make use of their competence and brings competitive advantage of the company among the rest of companies. In the changing face of competitive business environment, companies in India and around the world are using this M&A as growth strategy. This paper investigates the stock price performance of manufacturing companies in India. For the purpose, one year before and one year after M&A is taken to analyse performance and know immediate impact of M&A. Performance is also analysed using average of two year before and after M&A. It is found that in majority of cases (56%, i.e. 67 out of 139), the companies have shown positive return in terms of market price in both one year as well as two year after M&A.