CHALLENGES OF MERGER AND ACQUISTION IN NIGERIA (A CASE STUDY OF TELECOMMUNICATION INDUSTRY: 9MOBILE AND AIRTEL
1.1 BACKGROUND OF THE STUDY
Mergers and Acquisitions (M & A) continue to be a highly popular form of corporate development. However, in a paradox to their popularity, acquisitions appear to provide at best a mixed performance to the broad range of stakeholders involved. While target firm shareholders generally enjoy positive short-term returns investors in bidding firms frequently experience share price underperformance in the months following acquisition, with negligible overall wealth gains for portfolio holders (Agrawal and Jaffe, 2000).
The complex phenomenon which mergers and acquisitions represent has attracted the interest and research attention of a broad range of management disciplines encompassing the financial, strategic, behavioural, operational and cross-cultural aspects of this challenging and high risk activity. While in recent years research into the human and psychological aspects of M&A have increased in prominence, the M&A literature continues to be dominated by financial and market studies (Cartwright, 2005).
M&A research has tended to develop along discipline-based lines and this has brought detailed insights into a number of important aspects. However, it is arguable that this specialization has been at the cost of developing a more holistic understanding of what determines their performance and what consequences they bring.
For the purpose of this research work, focus will be made on merger and acquisition that has taken place in the Nigeria telecommunication companies. The challenges will be identified and viable solutions will be suggested.
1.2 STATEMENT OF PROBLEM
Despite the goal of performance improvement, results from mergers and acquisitions (M&A) are often disappointing. Numerous empirical studies show high failure rates of M&A deals. Studies are mostly focused on individual determinants. A book by Thomas Straub (2007) “Reasons for frequent failure in Mergers and Acquisitions” develops a comprehensive research framework that bridges rival perspectives and promotes a modern understanding of factors underlying M&A performance.