CHAPTER ONE 1.0 INTRODUCTION Merger and acquisition as a business co bination cannot be o!er e "#asi$ed.

Merger and acquisition can eit#er increase or decrease t#e %inancia& base o% a %ir . T#e anage ent tea en#ance better e!a&uation. (enera&&)* be%ore a co "an) a""raised using rea&istic erges toget#er t#at is t#e "redator ust be t#oroug#&) et#od o% a""raisa&. T#is stud) ergers and ost i "ortant t#ing is t#e c#oices o% ado"ting a "ro"er conce"t t#at 'i&&

co "an) and t#at o% t#e target co "an) t#e) ode&s and

atte "ts to #ig#&ig#ts t#e sur!i!a& and gro't# o% Nigeria co "anies es"ecia&&) t#e oi& industr) 'it# s"eci%ic concern on acquisition sc#e e in Nigerian econo ). +#ere t'o or co ore autono ous co "anies co e toget#er under a ore

on contro& or '#ere t#ere is %or ation o% a ne' co "an) '#ic#

acquires t#e assets ,and "ossib&) t#e &iabi&ities- o% t'o or

e.isting co "anies or on t#e ot#er #and* '#ere a co "an) ,#o&ding co "an)- is ta/ing o!er t#e !oting s#are o% anot#er co "an) ,subsidiar)-* a erger or acquisition #as in!ariab&) occurred.

T#e current "redica ent in Nigeria ca&&s %or "u&&ing toget#er o% resources and it ore e%%icient uti&i$ation %or o!era&& econo ic rationa&i$ation* sur!i!a& and gro't#. Ho'e!er* one o% t#e instru ents to ac#ie!e sur!i!a& and gro't# in business and co "anies t#at 'i&&
1

#a!e direct e%%ect on t#e econo ) o% t#e countr) is business co bination '#ic# eanings o% a) ta/e t#e %or o% erger* acquisition* absor"tion* conso&idation etc. as regards t#e to"ic o% t#is stud)* t#e erger and acquisition are #ereb) de%ined be&o'01 erger i "&ies t#e co bination or %usion or ore %or er&) inde"endent business on o'ners#i" and

(enera&&)* t#e 'ord

rat#er co ing toget#er o% t'o or anage ent. Merger is a %or

units into one organi$ation 'it# a co

o% business co bination '#ere t'o co "anies 2oin

toget#er 'it# one being !o&untari&) disso&!ed 'it#out being 'ound u" b) #a!ing its interest* resources* s#are#o&ders* asset* and &iabi&ities ta/en o!er b) t#e ot#er co "an). In recent usage* erger is a s"ecia& case o% co bination '#ere bot# anage ent* t#e

erging co "anies 2oin toget#er on equa& ter s and at t#e sa e ti e bringing under t#e contro& o% a sing&e anage ent o% t'o inde"endent&) o"erated businesses. Merger is t#e co bination o% t'o or a continuing ore business units* '#ic# "u&& a) occur.

or unite toget#er t#eir resources and interest 'it# a !ie' to ac#ie!ing utua& s#aring in t#e bene%its and ris/s t#at erger is t#e %usion o% t'o or 3cienti%ica&&) "ut* ore enter"rises in

'#ic# no ne' concern ,entit)- is created. T#e 'ord acquisition business eans ta/ing o!er* t#ere%ore* acquisition

eans ta/e o!er or "urc#ase o% business. Acquisition arise

2

'#en a co "an) "urc#ases t#e business and underta/ing o% anot#er co "an) '#ere t#e acquired co "an) retains its &ega& e.istence and continues its business but assu es t#e status o% a subsidiar) co "an) to t#e acquiring co "an)* '#ic# auto atica&&) beco es a #o&ding co "an). Acquisition or ta/e o!er business is t#e union o% t'o or inde"endent businesses or %ir s under a sing&e ore %or er&) o'ners#i"

acco "&is#ed b) t#e co "&ete "urc#ase o% one co "an)4s stoc/ b) anot#er. T#e acquired co "an) t#en ceases to be a se"arate entit) but a subsidiar) o% t#e acquiring co "an). An acquisition is a business co bination t#at is not a union o% interest but a "urc#ase o% interest. Acquisition is an) business co bination t#at is not a erger. In '#ic# case* t#e s#are#o&ders o% t#e acquired "art) do not #a!e a continuing interest in t#e co bined entit) but instead se&& t#eir s#are#o&ding %or cas# or ot#er non equit) consideration since t#e) #a!e no contro& o!er t#e business an) &onger* as &ong as t#e "arties are not co bining on equa& ter s. According to innocent o/'uosa ,5000- an acquisition is an) business co bination t#at is not a 1.1 erger.

HI3TORICA6 7AC8(ROUND O9 E69 OI6 NI(ERIA 6IMITED E&% oi& 'as incor"orated as a "ri!ate &i ited &iabi&it) co "an) on 50t# No!e ber* 1:;1 to engage in t#e business o% ar/eting "etro&eu "roducts* &ubricants and c#e ica&s. T#e co "an)4s aut#ori$ed s#are ca"ita& on incor"oration 'as 1*000*000 di!ided into 5*000*000 ordinar) s#ares o% <0/ eac#.
3

Rig#t %ro

t#is ti e ,No!e ber 1:;1- t#e aut#ori$ed s#are ca"ita& o%%

E&% Oi& #as been recei!ing incre ent. U" to =une 5000 '#en t#e erger too/ e%%ect t#e s#are ca"ita& and increased to N>00*000*000 di!ided into 1*500*000*000 ordinar) s#are o% <0/ eac# out o% '#ic# ?00*000*000 di!ided into >00*000*000 ordinar) s#are o% <0/ eac# 'ere issued and %u&&) "aid. 1.5 TOTA6 NI(ERIA P6C Tota& Nigeria P&c 'as incor"orated as a "ri!ate &i ited &iabi&it) co "an) on 1st =une 1:<> as tota& Oi& Product ,Nigeria- 6i ited to ar/et "etro&eu "roducts t#roug#out Nigeria.

In 1:@;* t#e co "an) beca e a "ub&ic &i ited &iabi&it) co "an) and 'as granted a &isting on t#e Nigeria stoc/ e.c#ange in A"ri& 1:@:* a%ter A0B o% its equit) ca"ita& 'as so&d to t#e Nigerian Pub&ic in co "&iance 'it# t#e "ro!ision o% t#e no' re"ea&ed Nigerian Enter"rises Pro otion Decree 1:@@, t#e NEP Decree 1:@@-* t#e co "an)4s aut#ori$ed s#are ca"ita& on incor"oration 'as N1*000*000 di!ided into <0*000 ordinar) s#are o% N50 eac#. Rig#t %ro 1:<>* t#e aut#ori$ed ca"ita& o% Tota& P&c #as subsequent&) 1:<> to =une 1:@;* t#e aut#ori$ed ca"ita& o% October 1:@; as

recei!ed c#anges. 9ro

N1* 00.00 di!ided into <0*000 s#are o% N50 eac# increased to N55* <00*000* ca"ita& di!ided into 1*15<*000 s#ares. 9ro t#e s#ares /e"t on increasing* t#e "er !a&ue 'as deno inate to <0/ "er s#are. U" to t#e )ear 5000* t#e aut#ori$ed s#are ca"ita& to Tota&

#ad increase to N115* 000*000 di!ided into 55A*000*000 ordinar) s#ares o% <0/ eac#. 1.? O7=ECTICE3DPURPO3E O9 THE 3TUDE T#e stud) intends to e.a ine t#e ro&e o%

ergers and acquisition in erger and acquisition

t#e sur!i!a& and gro't# o% Nigeria co "anies. To in!estigate into business in '#ic# can be o% greatest use in Nigeria. To %ind 'a)s o% Nigeria co "anies

a/ing

ergers and acquisition attracti!e to ergers and acquisition to Nigerian

To s#o' t#e bene%its o% econo ic de!e&o" ent.

To e."&ore into t#e reason '#) Nigerian indigenous co "an) are not in!o&!ed in co binations. 1.A 3I(NI9ICANCE O9 3TUDE T#e stud) intends to "ro!ide a t#e researc# to"ic. T#e /no'&edge o% ergers and acquisition in business co unit) as endations eans o% sur!i!a&* gro't# %or "resent and %uture co "anies in Nigeria t#roug# t#e creation o% a'areness o% ergers and acquisition and ot#er re&ated business

a 'a) out o% %inancia& distress 'i&& en#ance t#e nations econo ic de!e&o" ent in ter s o% econo ic do'n turn and reco ade 'i&& be o% i ense i "ortance to t#e co "anies o% stud).

T#e stud) 'i&& ser!e as a re%erence to student in t#e accounting de"art ent o% De&ta state uni!ersit)* Abra/a and ot#er students
5

carr)ing out %urt#er researc# on t#e to"ic and ot#er re&ated disci"&ines. T#e stud) 'i&& add to t#e e.isting &iteratures on and acquisitions. 1.< 3COPE AND 6IMITATION O9 3TUDE T#e researc# e.tensi!e&) co!ers t#e #istorica& bac/ground o% t#e co "an)4s stud)* Tota& E&%* t#e state o% t#e ne' co "an) a%ter acquisition* t#e researc# instru ent used i.e. "ri ar) source* "ersona& inter!ie' and secondar) source* "ub&is#ed in%or ation and %inancia& "ub&ications. More o!er* t#e researc# co!ers t#e deter ination o% t#e re&ated business co bination si i&ar to ergers ergers

and acquisition e.g. absor"tion* conso&idation etc. t#e &i itations o% t#e stud) inc&ude t#e %o&&o'ingF1 t#e cost o% trans"ortation to Tota& #eadquarters in Cictoria Is&and* t)"ing and "#otoco")ing #a!e restricted t#e sco"e o% t#e stud) areas o% researc# 'or/ '#ic# cou&d adequate&) be co!ered. T#e di%%icu&ties in getting 1.> DE9INITION O9 TERM3 T#e /e) ter or 'ord use in t#is stud) is #ereb) de%ined01 Ho&ding Co "an)0 A #o&ding co "an) is a co "an) t#at #as anot#er co "an) t#at it contro&s. 3ubsidiar) Co "an)0 A co "an) is a subsidiar) i% it is contro&&ed b) a #o&ding co "an). an) inter!ie'ers to c&ari%) so e "oints.

Aut#ori$ed 3#are Ca"ita&0 T#e ca"ita& stated in t#e o% association 'it# '#ic# t#e co "an) 'is#es to co business.

e orandu ence t#e

Ordinar) 3#ares0 T#e s#ares o% t#e o'ners o% t#e co "an)* on '#ic# di!idends are "aid according to "ro%it &e%t a%ter "a) ent o% di!idend on "re%erence s#ares '#ic# attract %i.ed di!idend. Issued 3#ares0 T#ere are "art o% t#e aut#ori$ed s#ares issued out to t#e "ub&ic %or subscri"tion. 9u&&) Paid0 T#is re"resents t#e issued s#ares t#at #a!e been %u&&) "aid %or b) t#e "ub&icF t#at is* t#e no ina& !a&ue on t#e s#ares #as been %u&&) recei!ed b) t#e co "an). Par Ca&ue0 t#is is t#e !a&ue at '#ic# a s#are is to be so&d to t#e "ub&ic. It is ot#er'ise 1.@ eans no ina& !a&ue.

3UMMAREDOUT6INE O9 3TUDE In su ar)* business co binations Is a eans e."ansion* (ro't# and acquisition are strategies o% aintaining e."ansion* (ro't# and

"ro%itabi&it) &e!e& in co "anies business. Merger acquisition and ot#er business co binations ter s &i/e conso&idation. Absor"tion* ta/e o!er* "u&&ing o% interest* a a&ga ation etc* are used to describe t#e business transaction bet'een one %ir Ho'e!er* t#e) a&& identi%) tec#nica& interc#angeab&).
7

and ot#er.

eaning and are used

T#e co "anies o% stud) TOTA6 OI6 and E69 OI6

erged in t#e )ear

5000. +it# E&% Oi& being disso&!ed !o&untari&) 'it#out being 'ound u"* in '#ic# TOTA6 acquired a&& t#e assets* &iabi&ities s#ares and s#are#o&ders o% E69 under t#e na e TOTA6 9INA E69.

RE9ERENCE3 Ican 3tud) Te.t ,1:;;- "g 101 1500 PE II 9inancia& Manage ent* 6agos Ma) Associates Innocent O/'uosa ,5000-0 (rou" Accounts. 3a%e Pub&ication 6td* 6agos. 8a * Ceron ,1::0-0 Accounting T#eor) 5nd Edition ,Ne' Eor/* =o#n +i&eg and 3ons Inc.Mat#ur I. ,1:@:-0 9inancia& Manage ent* Mac i&&an Pub&ication Co "an) Incor"oration Ne' Eor/ O/'uosa I. ,5000-0 (rou" Account Pub&is#ed b) Arno&d Consu&ting 6td* Martins 3treet* 6agos. Pande) I.N ,1::0-0 9inancia& Manage ent ,Ne' De&#i* Ci/as Pub&is#ing=ennings A.R ,1::0-0 9inancia& Accounting Manua&* 5nd and ?rd Edition 6o' Priced 7oo/ 3c#e e ,E673- Pub&is#ed. TOTA6 9INA E69* TOTA6 DE69 5001 sc#e e o% erger 5001.

CHAPTER T+O 5.0 5.1 6ITERATURE RECIE+ INTRODUCTION Mergers and acquisition are !er) co on in t#e de!e&o"ed countries &i/e 7ritain and Unites 3tate o% A erica but are to be !er) "ro inent in t#e sc#e e o% e!ents in Nigeria. Ho'e!er* it is no' co ing to t#e a'areness o% Nigeria4s t#at* to ac#ie!e t#e ob2ecti!es o% "robabi&it) and gro't# a ong t#e /e) ob2ecti!es o% business concern* t#e strategies o% Merger* acquisition* conso&idation* ta/eo!er* business* absor"tion etc. ust be de!e&o"ed and t#e e%%ect o% our cu&tura& ust be eradicated in order to consu ate t#e bac/ground in ter s o% t#eor) o% assets o'ners#i" ,'#o o'ns assets and ta/es contro&strateg) o% erger and acquisition.

In actua& %act* gro't# #as been a 'a) o% &i%e %or business units !irtua&&) %ro t#e da) business acti!ities began in ear&) ti es. (ro't# can be acco "&is#ed eit#er 'it#in t#e business unit or t#roug# co bination 'it# acco "&is#ed co "anies eit#er 'it#in business unit or t#roug# co bination 'it# ot#er business units* organi$ations* erger* acquisition* absor"tion* ta/e o!er* conso&idation* a a&ga ation. 5.5 CONCEPT O9 7U3INE33 COM7INATION MER(ER According to t#e co "anies A&&ied Matter Decree o% 1::0 ,CAMD 1::0- section <:1* erger is an) a a&ga ation o% t#e underta/ing or

10

an) "art o% t#e underta/en or interest o% t'o or t#e underta/en o% one or ore bodies cor"orate.

ore co "anies or

Pande) I.M ,5000- de%ines

ergers as t#e co bination o% t'o or

ore co "anies unto one co "an) Internationa& Accounting 3tandard No. 55 ,IA3 55- de%ines Gt#e uniting or "oo&ing o% interest o% t'o or ore businessH erger as

An acquisition is de%ined b) internationa& accounting standard No 55 as a G7usiness co bination t#at is not a uniting o% interestH Aa ia/or in #is "a"er G ergers and acquisitionH de%ined acquisitions as inc&uding a&& business and cor"orate organi$ationa& and o"erationa& de!ices and arrange ent b) '#ic# t#e o'ners#i" and t#e contro& o% a sing&e anage ents o% inde"endent&) o"erated "ro"erties and business are broug#t under anage ent. E.a "&es o% acquisition o% businesses are =o#n Ho&t P&c acquire Haco 6td 1:>?* 6e!er 7rot#ers Nigeria P&c and 6i"ton o% Nigeria in 6e!er 7rot#ers Nigeria and C#eesebroug# Product in 1:;;. A73ORPTION Absor"tion is a co bination o% t'o se"arate business entities in '#ic# t#e business o% one is trans%erred to anot#er and t#e trans%eror ,t#e acquired co "an)- !o&untari&) 'inds u" or disso&!es. An e.a "&e o% business co bination '#ic# can be described as absor"tion is t#e co bination o% t#e co "anies o% case o% stud). Tota& and E&% oi& as trading Tota& P&c ta/es o!er t#e assets and &iabi&ities and o"eration o%
11

E&% Oi& Nigeria &i ited and E&% 6eases trading and U7A acquired 3T7 500<.

CON3O6IDATION A conso&idation is a %or entit) is %or ed. A conso&idation as a %or is t#e union o% t'o or ne' %ir o% business and econo ics* a conso&idation ore %or er&) business or %ir s into a t#ird or o% erger according to Pand) I.M ,5000- is a co bination '#ere a&& co "anies are &ega&&) disso&!ed and a ne'

under a sing&e o'ners#i". ost suitab&e to si$e business* o"erating on a

Conso&idation is

re&ati!e&) s a&& sca&e. AMA6(AMATION A a&ga ation is a business co bination t#at in!o&!es s a&& sca&e business* '#ere a #o&ding co "an) is usua&&) estab&is#ed to acquire a&& or a co "an). a2orit) #o&ding o% t#e !oting s#ares o% t#e ot#er business '#ic# continue in e.istence as t#e subsidiaries o% t#e #o&ding

5.?

C6A33I9ICATION O9 7U3INE33 COM7INATION3

12

Carious c&assi%ication o% business co binations #a!e been di%%erent aut#ors but t#is 'rite u" 'i&& %ocus on t'o c&assi%ications '#ic# are0 C&assi%ication based on econo ic e%%ect C&assi%ication based on &ega& status.

ade b) a2or

C6A33I9ICATION 7A3ED ON ECONOMIC E99ECT T#e e.tend to '#ic# a co bination a) "roduce econo ic gains or anage ent o% t#e e%%ect de"ends on '#et#er t#e business !entures o% co bining "artners are re&ated or not. T#ere%ore* t#e '#et#er it is !ertica&* #ori$onta& or cong&o erate. HORIIONTA6 COM7INATION T#is is a co bination to t'o or ore %ir s in t#e sa e business* in a anu%acturing or erger o% Nest&e and si i&ar t)"e o% "roduction and in t#e sa e distribution &e!e&. 9or e.a "&e* t#e 1:;< carnation '#ere bot# co "anies CERTICA6 COM7INATION T#is is a co bination o% t'o or ta/e t#e %or ore %ir s in di%%erent stages o% "roduction and distribution &e!e&. It is a &ine co bination '#ic# can o% a %or'ard or bac/'ard integration. acquiring co "an) s#ou&d c&ear&) de%ine t#eir organi$ationa& strateg)

anu%acture %ood "roduct.

9OR+ARD INTER(RATION
13

Occurs i% a co "an) co bines 'it# its custo er to t#e u&ti ate ar/et.

o!e u" to'ards

7AC8+ARD INTER(RATION T#is occurs i% a co "an) co bines 'it# its su""&ier o% 'i&& "ro!ide its basic i "act. CON(6OMERATE COM7INATION Cong&o erate co binations ta/es "&ace bet'een t'o or ore %ir s '#ose businesses are not direct&) re&ated or '#ose "roducts #a!e &itt&e or no rese b&ance to one anot#er. T#is is done to reduce ris/ as t#e business resources 'ou&d be di!ersi%ied. 9or instance* i% a co "an)* t#e co "an) o% anu%acturer o% babies4 c&ot#s co bines 'it# anot#er anu%acturing te.ti&es. ateria&s t#at

C6A339ICATION 7A3ED ON 6E(A6 3TATU3D9ORM T#e ain categories to be discussed #ere are statutor) ergers* statutor) conso&idation* and sa&es o% assets and &ease o% assets. 3TATUTORE MER(ER Under statutor) erger t#e erger co "an) t#at is ta/en o!er b) anot#er co "an) ceases to e.ist as a se"arate entit). T#e co bination id based on a ta. %ree e.c#ange o% s#ares '#ere a&& t#e assets and &iabi&ities o% t#e acquired co "an) are assu ed b) t#e sur!i!ing co "an).

3TATUTORE CON3O6IDATION3
14

Under statutor) conso&idation* bot# %ir 4s bot# cease to e.ist as se"arate entit).

erger into a ne' in and

3#ares o% bot# co "anies are e.c#anged %or sa&es o% t#e ne' co "anies '#ere t#e ne' co "an) assu es a&& t#e asserts and &iabi&ities o% bot# co "anies. 3A6E3 O9 A33ET3 Under t#e sa&es o% assets are co "an) t#at se&&s a&& its assets to anot#er '#ere in addition* t#e bu)ing co "an) assu e so e or a&& o% t#e !endor "urc#ase "a) ent 6EA3E O9 A33ET3 6ease o% assets #a!e to do 'it# renting out an asset &i/e "&ant* ac#iner) equi" ent etc* %or a &ong "eriod o% ti e* 'e can &ease it out to anot#er asset ,&essor- discontinues its o"erationF 'e can &ease it out to anot#er co "an) and t#ereb) deri!e inco e %ro t#e rent* '#ic# accrues under t#e &ease. T#is situation is usua&&) broug#t about b) "ersistent &osses in t#e &essor co "an) eit#er t#roug# t#is anage ent or o%ten in Nigeria conte.t* t#roug# &ac/ o% ra' ateria&s. REA3ON3 9OR MER(ER3 AND ACJUI3ITION Nu erous %actors account %or erger and acquisition in an) business sector irres"ecti!e o% t#e constraints in#erent in suc# 3ectors or !entures. 3o e o% t#ese %actors '#ic# cou&d be ca&&ed t#e reason %or ergers and acquisitions are discussed be&o'01
15

a) a&so agreed to

co "an)4s &iabi&ities '#ic# t#e

a) be in cas#* securities or co bination.

2.4

(RO+TH E."ansion is a a2or ob2ect or business organi$ation. In cor"orate anage ent o%ten &ists gro't# a ong its "ri ar) erging or booing an on going ar/et annua& re"ort* to"

goa&s. 3o e co "anies be&ie!e t#at

concerns aids gro't# t#an brea/ing into or estab&is#ing a ne' 6e!er 7rot#ers Nigeria P&c * =o#n Ho&t* 6td. 9INANCIN(

'#ic# in rea&it) #e&"ed t#e gro't# o% so e Nigerian co "anies e.g.

T#e sur!i!a& and "rogress o% an) business are deter ined b) %inance. 9ir s 'it# e.ce&&ent gro't# "otentia& &i/e t#is* it is reasonab&e %or suc# %ir #ig#&) &iquid %ir . ECNOMIC3 O9 3CA6E IN OPERATION Mergers and acquisitions a) resu&t in econo ics o% sca&e in ateria& resources t#at is* o"eration in ter s o% sa!ing #u an and a) %ind it di%%icu&t to ac#ie!e to erger 'it# cas# ric# or t#is "otentia& as a resu&t o% &ac/ o% access to %inancing. In a situation

cost reduction in t#e area o% 'are #ousing* de"ot c#arges* site uti&i$ation* "ersonne&* "&anning and s#i""ing. Moreo!er* a&&ocations o% %i.ed cost o!er a &arge !o&u e o% sa&es and t#ereb) obtain sa!ings on "roduction cost b) e&i inating du"&icati!e %i!e costs &eads to and acquisition. erger

DICER3I9ICATION

16

A co "an) reasons.

a)

erge 'it# anot#er co "an) it is 'is#ed to di!ersi%) aturit) and s"ace '#ic# a) be %or securing

in "roduction* ris/s

ACIODANCE O9 EKPEN3E3 O9 (OIN( PU76IC A "ri!ate&) o'ned co "an) a) co bine 'it# "ub&icit) o'ned ar/et and a&so co "an) to a!oid t#e e."enses o% going "ub&ic i.e. &isting require ents %or its quotation in t#e stoc/ e.c#ange a!oid t#e ris/ o% under subscri"tion. COMPETITION E&i ination o% co "etition so eti e business 3ENER(E Merger and acquisition in ost cases* "roduces s)nergetic e%%ect in eans t#at t#e co bined co "anies. In %inancia& conte.t* s)nergi$ing '#ere o"erating as se"arate entities. TA8EOCER Pand) I.M ,5000- de%ined ta/e o!er as obtaining contro& o!er anage ent o% a co "an) b) anot#er. It is &i/e acquisition but under t#e ono"o&ies and restricti!e trade "ractice Act* ta/e o!er eans acquisitions o% not &ess t#at 5<B o% t#e !oting "o'er in a co "an). ig#t be a concrete reason %or erging or acquiring one anot#er.

%ir s is doing better or are #a!ing i "ro!ed "ro%it t#an '#en t#e)

2.5

PRO76EM3 A33OCIATED +ITH MER(ER3 AND ACJUI3ITION3 17

It s#ou&d be a""arent t#at t#e 2oining 'it# or "urc#ase o% anot#er %ir is ere&) a co "&e. in!est ent "ro2ect. As suc#* it ust satis%) t#e ergers sa e criteria and be 2usti%ied on t#e sa e ground as an) ot#er in!est ent o"ened to a %ir . T#e "rob&e s associated 'it# and acquisitions are #ereb) discussed be&o'01 (o!ern ent* s#are#o&ders* &abour union and indi!idua& 'or/ers a&i/e a) disa""ro!e o% a creation o% s)ste ergerDacquisition because o% %ear i% it &eading to ono"o&istic "o'ers* retrende ent or being against "ub&ic

interest. In order to e!o&!e a strong and !iri&e econo ic and %inancia& in '#ic# its citi$ens 'ou&d "artici"ate* go!ern ent t#ere%ore a) be detri enta& stri!e to e&i inate i "er%ections and abuses t#at s)ste . Per#a"s t#e ost di%%icu&t 2ob in ) ergersDacquisitions is t#e #and&ing ergers* t#eir %ee&ing and !ie's

to t#e order&) de!e&o" ent o% t#e "o&itica&* econo ic and %inancia&

o% "eo"&e. T#e %act

ust be recogni$ed ob2ecti!e&) t#at "eo"&eDgrou"s utua& res"ect. A&so* due to t#e &i ited

'#o are &i/e&) to be a%%ected deser!e understanding and

business !ision and traditiona& con%rontations bet'een sta%% and anage ent* t#e 2ob o% noti%)ing* brie%ing* education t#e non anage ent sta%% to secure t#eir su""ort is usua&&) ore di%%icu&t.

9INANCIA6 DI99ICU6TIE3 T#is "oses a &ot o% concern to t#e %ir . T#e cost and t#e %uture in%&o'* in ascertain cost* it is necessar) to estab&is# t#e a&ternati!e
18

!a&ue to its o'ners o% t#e %ir T#at is t#e !a&ue %ro

under considerations %or "urc#ase.

continued o"eration or se&&ing out to t#ird "art)

and t#is ca&&s %or a rat#er di%%erent tec#niques t#at t#e a""&icab&e to nor a& interna& in!est ent "ro2ects. EKI3TENCE O9 (OOD+I66 T#e assets o% going concern usua&&) inc&ude good'i&& i.e. t#e re"utation a business en2o)s 'it# its custo ers '#ic# gi!es t#e business !a&ue abo!e its "#)sica& assets !a&ue. 3ince good'i&& is an intangib&e assets* its !a&uation usua&&) "oses "rob&e ergerDacquisitions. PER3ONA6 PRO76EM3 Manage ent and &abour are o%ten a critica& a %actor a%%ecting t#e "ro%itabi&it) o% t#e ne' co "an) '#ic# !ariants t#roug# in!estigation in !ie' o% t#eir %inancia& i "&ications* %irst&)* t#e &e!e& o% 'ages and sa&aries in t#e %ir costs. Ot#er %ir a2or %inancia& "rob&e s are t#e setting o% outstanding inorities* etc* '#en a is "urc#ased '#ic# #as redee ab&e "re%erence s#ares* suc# ob&igations* t#e rig#t o% e.isting s#are#o&ders* 'i&& need to be co "ared to t#ose ri!a& and &abour neig#boring %ir s as a re requisite to assessing &ong ter in situation o%

debentures secured or insecure &oans* ban/s o!erdra%t etc. t#ere is o%ten t#e o""ortunit) and so eti es t#e ob&igation to redee t#e case o% interna& in!est ents. 6E(A6 9RAME+OR8 Merger arrange ent is an e.#i&arating ga e and &i/e a&& business ga es* it is not a %un ga e. It #as its "&a)ers and s"ecia& ru&es and
19

%inance at t#e ti e o% "urc#ase. T#ese co "&ications do not e.ist in

t#ere are bot# 'inners and &osers. As in a&& ga es t#e ru&es c#ange 'it# ti e and need. Most regu&ator) "rocedures %or t#e antirust i "&ication o% suc# "re!enting t#e incidence o% suc# to resu&t in ergers and acquisition are ai ed at erger arrange ents. In ot#er 'ords* ergers beco ing ono"o&). T#us*

it 'ou&d be rationa& to re2ect an) "ro"osa& %or t#e sc#e e i% it is &i/e&) ono"o&) or to o"erate against "ub&ic interest. Un&i/e U3A ergers and t#e United 8ingdo * t#ere are no %or a& regu&ations on

acquisitions in Nigeria. T#e co "anies and A&&ied Matters Decree 1::0 ere&) sti"u&ate t#e "rocedures and a""ro!a& %or reconstruction and erger* t#ese are #ig#&ig#ted be&o'. 5.> PROCEDURE3 AND APPROCA6 9OR RECON3TRUCTION AND MER(ER +#ere under a sc#e e "ro"osed %or a co "ro ise arrange ent or reconstruction bet'een %i!e or ore co "anies* t#e '#o&e or an) "art o% t#e underta/ing o% t#e "ro"ert) o% an) co "an) concerned in t#e sc#e e ,t#e trans%er co "an)- is to be trans%erred to anot#er co "an)* t#e court su I% a oned in a) on t#e a""&ication o% an) o% t#e co "anies eeting o% t#e co "anies to be a) direct. to be a%%ected* order* se"arate anners as t#e court

a2orit) re"resenting not &ess t#an t#ree quarter in !a&ue o% t#e e bers* being "resent and !oting eit#er in "erson or b) eetings* agree to t#e sc#e e* t#e

s#ares o%

"ro.) at eac# o% t#e se"arate Co ission %or a""ro!a&.

sc#e e s#a&& be re%erred to as t#e 3ecurities and E.c#ange

20

I% t#e sc#e e is a""ro!ed* an i "&ication o% one or

a) be

ade to t#e court

ore o% t#e co "anies and t#e court s#a&& sanction t#e a) b) order sanctioning t#e sc#e e or

sc#e e* and '#en so sanctioned* t#e sa e s#a&& beco e binding on t#e co "anies and t#e court b) an) subsequent order atters01 T#e trans%er to t#e trans%eree co "an) o% t#e '#o&e or an) "art o% t#e underta/ing and o% t#e "ro"ert) or &iabi&ities o% an) trans%eror co "an). T#e a&&otting or a""ro"riation b) t#e trans%eree co "an) o% an) s#ares* debentures* "o&icies or ot#er &i/e interest in t#at co "an) '#ic# under t#e co "ro ise or arrange ent are to be a&&otted or a""ro"riated b) t#at co "an) to or %or an) "erson. T#e continuation b) or against t#e trans%eree co "an) o% an) &ega& "roceedings "ending b) or against an) trans%eree co "an). T#e disso&ution* 'it#out 'inding u" o% an) trans%eror co "an). T#e "ro!isions to be court 3uc# ade %or an) "ersons '#o 'it#in suc# anner as t#e a) direct* dissent %ro incidenta&* t#e co "ro ise or arrange ent. and su""&e enta& aters are a/e "ro!ision %or a&& or an) o% t#e %o&&o'ing

consequentia&

necessar) to secure t#at t#e reconstructions or and e%%ecti!e&) carried out.

erger s#a&& be %u&&)

An order under "aragra"# ,IC- o% subsection C o% t#is secures t#at t#e reconstruction or erger s#a&& not be
21

ade un&ess01

T#e '#o&e o% t#e underta/ing and t#e "ro"ert) assets and &iabi&ities o% t#e trans%eror co "an) are being trans%erred into t#e trans%eree co "an)* and o% t#e court is satis%ied t#at adequate "ro!ision b) 'a) o% co "ensation or ot#er'ise #a!e been e "&o)ees o% t#e co "an) to be disso&!ed. +#ere an order under t#is section "ro!ides %or t#e trans%er o% "ro"ert) or &iabi&ities* t#at "ro"ert) s#a&& be !irtue o% t#e order* be trans%erred to and beco e t#e &iabi&ities o% t#e trans%eree co "an)* and in t#e case o% an) "ro"ert)* i% t#e order so directs* %reed %ro an) c#arge '#ic# is b) !irtue o% t#e co "ro ise or arrange ent to cease to #a!e e%%ect. +#ere an order is de&i!ered to t#e co ade under t#is section* e!er) co "an) in re&ation ade s#a&& cause an o%%ice co") t#ere o% to be ission %or registration 'it#in @ da)s a%ter t#e ade 'it# res"ect to t#e

to '#ic# t#e order is

a/ing o% t#e order and a notice o% t#e order s#a&& be "ub&is#ed in t#e ga$ette and in at. &east one nationa& ne's"a"er and i% de%au&t is ade in co "&)ing 'it# t#e "ro!isions o% t#is subsection* t#e co "an) and e!er) o%%icer o% t#e co "an) '#o is in de%au&t s#a&& be gui&t) o% an o%%ence and &iab&e to a %ine o% N100.

In t#is section01 GPro"ert)H inc&udes "ro"ert) rig#ts and "o'ers o% e!er) descri"tion. G6iabi&itiesH inc&udes duties o% e!er) descri"tion not'it#standing t#at suc# rig#t* "o'er and duties are o% a "ersona& c#aracter '#ic# cou&d not genera&&) be designed or "er%or ed !i!acious&).
22

GCo "an)H '#ere used in t#is section does not inc&ude an) co "an) ot#er t#an a co "an) 'it#in t#e 5.@ PO+ER TO ACJUIRE eaning o% t#is decree 3HARE3 I9 DI33ENTIN(

3HAREHO6DER3 +#ere a sc#e e or contact in!o&!ing t#e trans%eree o% s#ares o% an) c&ass o% s#ares in a co "an) ,trans%eror co "an)- to anot#er co "an)* '#et#er a co "an) #as 'it#in A ont#s a%ter t#e a/ing o% t#e o%%er in t#at be#a&% b) t#e trans%eror co "an) been a""ro!ed b) t#e #o&ders %or not &ess t#an nine tent#s in !a&ue o% t#e s#are '#ose trans%er is in!o&!ed ,ot#er t#an s#ares a&read) #e&d at t#e date o% t#e o%%er b) or b) a no inee %or t#e trans%eree co "an)* or its subsidiar)-* t#e trans%eree co "an) a%ter t#e e."iration o% t#e said A a) at an) ti e 'it# 5 ont#s ont#s gi!e notice in t#e "rescribed

anner to an) dissenting s#are#o&der t#at it desires to acquire #is s#ares* and '#en suc# notice is gi!en* t#e trans%eree co "an) s#a&& un&ess on an a""&ication one ont# %ro ade b) t#e dissenting s#are#o&der 'it#in t#e date on '#ic# t#e notice is gi!en t#e court t#in/s

%it be entit&ed and band to acquire t#ose s#ares on t#e ter s on '#ic#* under t#e sc#e e or contract* t#e s#ares o% t#e a""ro!ing s#are#o&ders are to be trans%eree co "an)* "ro!ided t#at '#ere s#are in t#e trans%eror co "an) o% t#e said c&ass or c&asses as t#e s#ares '#ose trans%er is in!o&!ed are a&read) #e&d as t#e s#ares '#ose trans%er is in!o&!ed are a&read) #e&d as a%oresaid to a !a&ue greater t#an one tent# o% t#e aggregate o% t#eir !a&ue and t#at o% t#e s#are '#ose trans%er is in!o&!ed* t#e %oregoing "ro!isions o% t#is sub section s#a&& not a""&) un&ess01
23

T#e trans%eree co "an) o%%ers t#e sa e ter s to a&& #o&ders o% t#e s#ares '#ose trans%er is in!o&!ed* or '#ere t#ose s#ares inc&udes s#ares o% di%%erent c&asses* o% eac# o% t#e andF

t#e #o&ders '#o a""ro!ed t#e sc#e e or contracts besides #o&dings not &ess t#an nine tent#s in !a&ue o% t#e s#ares ,ot#er t#an t#ose a&read) #e&d as a%oresaid- '#ose trans%er is in!o&!ed* s#a&& not be &ess t#an t#ree quarters in nu ber o% t#e #o&ders o% t#ese s#ares.

24

RE9ERENCE3 A&!e ec#e* 8.O ,1::>-0 Accounting %or Managers and Acquisition o% 7usiness in Nigeria. O/'uoas I. ,5000-0 (rou" Accounting Pub&is#ed 7) Arno&d Consu&ting 6td* Martins 3treet* 6agos. I.A.3 ,5005-0 Internationa& Accounting 3tandard* Paragra"# 5* No 55 =ennings A.I ,1::0-0 9inancia& Accounting Manua& 5nd and ?rd Edition* Education 6o' Priced 7oo/s* 3c#e e ,E673Pub&is#er. A er C. ,1:@@-0 Dictionar) o% 7usiness and Econo ics Pub&is#ed Ne' Eor/ 9ree Press. Mat#ur I. ,1:@:-0 9inancia& Manage ent. Mac i&&an Pub&ication Co "an) Incor"orations* Ne' Eor/. Ca " ,1::0-0 Co "anies and A&&ied Matters Decree Pub&is#ed b) 9edera& Re"ub&ic o% Nigeria

25

CHAPTER THREE ?.0 ?.1 RE3EARCH METHODO6O(E INTRODUCTION T#is c#a"ter e.a ines t#e t#e data. It 'i&& treat t#e !arious et#ods ado"ted in carr)ing out and et#ods suc# as et#ods et#odo&og) o% researc# to be ado"ted in et#od t#is researc#. T#e c#a"ter "resents a co "re#ensi!e descri"tion o% eans b) '#ic# necessar) data are obtained and t#e ado"ted %or "resentation and subsequent ana&)sis o% t#e researc#

e."eri ent t#e researc# #)"ot#esis. T#is c#a"ter 'i&& %urt#er e.a ine and K1ra) !arious t#e data co&&ection et#od* sa "&ing "rocedures* and "&an*

o% data ana&)sis* and t#e "rocedures ado"ted in ad inistering t#e researc# questionnaire. T#us* t#e i "ortance o% t#is c#a"ter cannot be o!er e "#asi$ed. ?.5 RE3EARCH DE3I(N T#is cou&d be described as t#e b&ue "rint t#at a&&o's a researc#er to "ro!ide so&ution to t#e "rob&e s to t#e stud). T#e researc# design is a&so ser!es as a guide to co&&ect* ana&)$e and inter"ret researc# obser!ations* it a&so de%ines t#e e.tent o% genera&i$ation o% researc# %indings. 9or t#e success o% t#is stud)* sur!e) %ro et#od '#ic# 'as de%ined b) Dona&d and De& ,1:@5- as t#e s)ste atic gat#ering o% in%or ation res"ondent %or t#e "ur"ose o% t#e "o"u&ation o% interest. T#is
26

'i&& be used e.tensi!e&) to obtain broader ranger o% in%or ation %ro !arious categories o% sta%% 'it#in t#e organi$ation o% TOTA6 E69 NI( P6C. +i&& be e "&o)ed as t#e case stud). ?.? DATA CO66ECTION METHOD T#e data %or t#is stud) 'i&& be co&&ected t#roug# "ri ar) and secondar) sources to carr) out t#is stud) to its &ogica& conc&usion. PRIMARE DATA T#is describes data obtained t#roug# "ri ar) sources suc# as sur!e) et#ods ,questionnaire- et cetera. In t#is researc# stud)* t#e "ri ar) sources to be e "&o)ed inc&ude t#e use o% 'e&& structured questionnaires* and t#e conduct o% "ersona& inter!ie's 'it# t#e sta%% o% TOTA6 E69 NI(. P6C. 3ECONDARE DATA T#is inc&udes* data sourced t#roug# 2ourna&s* te.tboo/s* "re"ared artic&es etc "ut di%%erent&)* it describes data sources t#roug# not origina&&) "re"ared %or t#at stud). T#e data in t#e stud) 'ere sourced t#roug# 2ourna&s 'ritten artic&es and te.tboo/s on t#e to"ic. ?.A RE3EARCH IN3TRUMENT T#e researc# instru ents used 'ere t#e questionnaire and t#e inter!ie' et#od.

JUE3TIONNIARE T#is questionnaire et#od describes a source or "ri ar) data in '#ic# series 'e&& structure question are "re"ared and ad inistered to
27

a de%ined stud) "o"u&ation. T#ese questions are c#aracteri$ed b) "reciseness and are designed in si "&e and straig#t%or'ard %or . T#is is designed in order to test !arious #)"ot#esis %or u&ated and to obtain ore in%or ation regarding t#e sub2ect atter. T#e questionnaire consists o% t'o ain sections ,A L 7-. T#e section A

contains questions re&ating to t#e res"ondents bio&ogica& data '#i&e section 7 contains questions re&ating to t#e to"ic o% t#e stud). T#e ob2ecti!e o% t#is is to see #o' t#e res"ondents "ersona& qua&ities a%%ect its ans'er.. 9or t#is stud)* c&ose ended questionnaire et#od 'i&& be e "&o)ed.

T#is is used as a su""&e ent to t#e questionnaire* it is anot#er et#od o% in!estigation %urt#er ore* it can be used to obtain ans'er t#at 'ere i "ossib&e to be structured in t#e questionnaire. It a&so gi!es o""ortunit) %or t#e "eo"&e '#o cannot %i&& questionnaires to e."ress t#eir !ie's or and add t#eir !ie's or add t#eir o'n quota t#roug# t#eir !erba& e."ressions. ?.< 3AMP6IN( PROCEDURE T#e sa "&e0 t#is describes t#e tota& nu ber o% e&e ent* '#ic# is under discussion and %ro "o"u&ation si$e 'as '#o in%or ation are desired. T#e ade u" o% t#e sta%% o% TOTA6 E69 NI(. P6C t#e

sa "&e si$e c#osen 'as A0 sta%%s. ?.> CA6IDITE O9 DATA Percinger N. ,1:@?- !a&idit) is t#e degree to '#ic# a instru ent easures '#at is designed to easure. E!er) instru ent is designed %or a s"eci%ic
28

easuring easuring

easure ent. It is correct&)

design. It

easures '#at it is su""osed to

easure. I% its design

"rocess is a%%ected b) error* t#e instru ent. ?.@

easure ent 'i&& not be correct. T#e

!a&idit) researc# instru ent gi!es credibi&it) to t#e researc#

METHOD O9 ANA6E3IIN( DATA In ana&)$ing t#e data o% t#e stud)* t#e c#i square statistica& tec#nique 'i&& be e "&o)ed or a""&ied. T#e c#i square statistica& tec#nique in testing t#e researc# #)"ot#esis b) co "aring t#e on ser!ed %requencies and t#e e."ected %requenc) and t#en dra'ing a conc&usion in !ie' o% t#e decision ru&e %or u&ated initia&&). C#i square test statistica& is gi!en be&o' K5 M ,O1E-5 E +#en E N su ation E N e."ected %requenc) ON Obser!ed %requenc) Decision criterion %or t#e !a&idation o% #)"ot#esis T#e !a&ue o% c#i square is co "uted %ro t#e abo!e %or u&a and t#e a""ro"riate nu&& H)"ot#esis is started. T#e decision ru&e is t#at i% t#e co "uter !a&ue o% c#i square is greater t#an t#at tab&e !a&ue at t#e a""ro"riate &e!e& o% signi%icance ,<B- and degree o% %reedo * 'e re2ect t#e nu&& #)"ot#esis ,Ho- and acce"ted t#e a&ternati!e #)"ot#esis ,Ho- and acce"t t#e a&ternati!e #)"ot#esis.
29

T#e nu ber o% degree o% %reedo

de"ends on t#e nu ber o%

constraints i "osed on t#e data %or a contingenc) tab&e. T#e degree o% %reedo is ca&cu&ated on b) using t#e %or u&a.

+#ere

d% N ,r1I- ,c1IrN t#e nu ber o% ro's cN t#e nu ber o% co&u ns d%N degree o% %reedo

?.;

6IMITATION O9 METHODO6O(E Des"ite t#e e%%ort "ut into t#is researc#* so e "rob&e s sur%aces and t#e gat#ering o% data %ro t#is c#a"ter. T#e "rob&e s inc&ude0

3o e o% t#e res"ondents %ai&ed to return t#e questionnaire at t#e a""ro"riate ti e. 3o e res"ondents didn4t return t#e questionnaire at a&&. T#e inabi&it) to conduct inter!ie' 'it# so e o% t#e to" anage ent sta%% o% t#e organi$ation. 9inancia& constraints in carr)ing out t#e researc# 'or/. Ti e &i itation

30

RE9ERENCE3 Ada s 3.O ,1::@-0 3tatistics %or 7eginners* E!ans 7rot#ers 6td. Ibadan. Nn adi A. ,1::>-0 Researc# Met#odo&og) in t#e 7e#a!iora& 3ciences* 6ong an Nig P&c. 6agos. 6ur) D.A ,1:;A-0 Data Co&&ection in t#e De!e&o" Countries* (reat 7ritain O.%ord Uni!ersit) Press* 6td 6ondon.

31

CHAPTER 9OUR

A.0 A.1

DATA ANA6E3I3* PRE3ENTATION AND INTERPRETATION INTRODUCTION T#is c#a"ter atte "ts to #ig#&ig#t t#e data co&&ected* t#roug# t#e use o% "ri ar) and secondar) data in ana&)$ing t#e !a&idit) and re&iabi&it) o% t#e data. A questionnaire et#od 'as ado"ted in co&&ecting t#e res"ondent4s

res"onse. 9i%t) %i!e ,<<- questions 'ere distributed but ,A0- %ort) questions 'ere returned. A.5 ANA6E3I3 O9 RE3PONDENT3 Data "resented and ana&)$ed in t#e stud) 'ere e&icited %ro rando &) se&ected res"ondents is indicated in t#e In t#is section* an atte "t 'as researc# %indings. To inter"ret and ana&)$e t#e data* t#e use o% nu ber and "ercentage is ado"ted as ,A0- %ort) and 10B res"ecti!e&) re"resents be&o' is t#e ana&)sis o% t#e res"ondents "ro%i&e. t#e et#odo&og).

ade to ana&)$e res"ondent4s

res"onses to t#e questions structure %or ing t#e bac/bone o% t#ese

32

Tab&e A.10 3e. o% Res"ondents 3e. Ma&e 9e a&e Tota& Nu ber o% res"ondents ?0 10 A0 Percentage ,B@< 5< 100 a&e* '#i&e 5<B o%

Tab&e A.1 s#o's t#at @<B o% t#e res"ondents are t#e res"ondents are %e a&e. Tab&e A.5 De"art ent Nu ber o% res"ondents %inance < tec#nica& "ersonne& accounts audits Tota& 5 ? 10 50 A0

Percentage ,B15.< < @.< 5< <0 100

T#e ana&)sis in tab&e A.5 s#o's t#at o% t#e tota& "o"u&ation sa "&ed* ,A0- a ong !arious de"art ents* t#e audit de"art ent constitute t#e &argest "o"u&ation o% <0B* Account de"art ent 5<B* %inance 15.<B* "ersonne& @.<B and tec#nica& de"art ent M <B.

33

Tab&e A.?0 3tatus o% Res"ondents 3tatus 3enior e.ecuti!e Manage ent sta%% =unior sta%% Tota& Nu ber o% res"ondents 10 50 10 A0 Percentage ,B5< <0 5< 100 anage ent sta%% constitute t#e &argest

Tab&e A.? s#o's t#e status o%

"o"u&ation o% 50 ,<0B- o% t#e sta%%* '#i&e senior e.ecuti!e is 10 ,5<B- and 2unior sta%% is 10 ,5<B-. Tab&e A.A0 Age o% Res"ondents 3e. 5<1?A )ears ?<1AA )ears A< )ears and abo!e Tota& 9ro Nu ber o% res"ondents Percentage 10 5< < A0 ,B5< >5.< 15.< 100

t#e tab&e A.A* s#o's t#at Age ?<1AA consist t#e &argest

"o"u&ation sa "&ed ,>5.<B- '#i&e age 5<1?A )ears %a&&s into 5<B and A< )ears %a&&s into 15.<B o% t#e tota& res"ondents sa "&ed.

34

Tab&e A.<0 Jua&i%ications o% Res"ondents Jua&i%ication 33CED(CE GOH &e!e& ONDDNCEDATT HNDD73C ACCA* ACA* ACI7 M7A* MA* M3C* MPA Tota& Nu ber o% res"ondents 1 < 50 10 < A0 Percentage ,B1 15.< <0 5< 15.< 100

Tab&e A.< s#o's t#at HNDD73C is 50 ,<0B- o% t#e tota& res"ondents* '#i&e ACCA* ACA* ACI7 is 10 ,5<B-* ONDDNCE* AAT is <,15.<B- and M7A* MA* M3C* MPA is < ,15.<B- o% t#e "o"u&ation sa "&ed. Tab&e A.>0 6engt# o% 3er!ice 6engt# o% ser!ice 11< >110 1111< 1> )ears L abo!e Tota& Nu ber o% res"ondents 5 ; 5< < A0 Percentage ,B< 50 >5.< 15.< 100

T#e tab&e A.> abo!e s#o's c&ear&) t#at 1111< )ears o% &engt# o% ser!ice constitute t#e 5< ,>5.<B- o% t#e "o"u&ation* >110 )ears is ;,50B-* 1> )ears and abo!e and abo!e is < ,15.<B- and 11< )ears is 5,<B- o% t#e tota& "o"u&ation sa "&ed.

35

Tab&e A.@0 Do Eou Understand +#at Merger and Acquisition MeansO O"tions Ees No Tota& 9ro Nu ber o% res"ondents 50 50 A0 Percentage ,B<0 <0 100

t#e ana&)sis abo!e in tab&e s#o's t#at <0B o% t#e res"ondents eant b) erger and acquisition* '#i&e <0B o%

understand '#at is

t#e res"ondents do not. Tab&e A.;0 Is Merger and Acquisition a 3igni%icant Econo ic Too& %or 7usinessO O"tions Ees No Tota& 9ro t#at Nu ber o% res"ondents 50 50 A0 Percentage ,B<0 <0 100

t#e tab&e A.; s#o's c&ear&) t#at <0B o% t#e res"ondents agreed erger and acquisition is signi%icant econo ic too& %or business

re!ita&i$ation so e do not agree. Tab&e A.:0 Is Merger and Acquisition t#e 7est +a)s to Re!a "ing a 9ai&ing 7usiness and En#ancing 7usiness (ro't#O

O"tions Ees

Nu ber o% res"ondents ?<

36

Percentage ,B;@.<

No Tota&

< A0

15.< 100

T#e tab&e in A.: indicates t#at ;@.<B o% res"ondents are o% t#e o"inion t#at erger and acquisition is t#e best 'a) o% re!a "ing a %ai&ing business and en#ancing business gro't#* '#i&e 15.<B o% t#e res"ondents disagree. Tab&e A.100 Can 7usiness (ro't# and E%%icienc) be Di!orced %ro O"tions Ees No Tota& Merger and AcquisitionO Percentage ,B<0 <0 100 Nu ber o% res"ondents 50 50 A0

In t#e abo!e tab&e s#o's t#at <0B o% t#e res"ondents disagrees as <0B agree to t#e %act t#at business gro't# and e%%icienc) di!orced %ro erger and acquisition.

Tab&e A.110 Merger and Acquisition Does Not En#ance (ro't# and E%%icienc) o% 7usiness O"eration O"tions Ees No Tota& 9ro Nu ber o% res"ondents 50 50 A0 Percentage ,B<0 <0 100

tab&e A.11 states c&ear&) t#at <0B o% t#e res"ondents agrees erger and

and <0B o% t#e res"ondents disagrees to t#e o"tion t#at o"eration.

37

acquisition does not en#ance gro't# and e%%icienc) o% t#e business

Tab&e A.150 Does Merger and Acquisition En#ance (ro't# and Ensure E%%icient 7usiness O"erationO O"tions Ees No Tota& Nu ber o% res"ondents ?0 10 A0 Percentage ,B@< 5< 100

Tab&e A.15 re!ea&s t#at @<B o% t#e res"ondents are o% "ositi!e su""ort t#at erger and acquisition en#ances gro't# and ensures e%%icient business o"erations* '#i&e 5<B o% t#e res"ondents disagree. A.A ANA6E3I3 AND TE3T O9 HEPOTHE3I3 T#e genera& "ur"ose o% #)"ot#esis or signi%icance testing is to e.a ine t#e degree o% !a&idit) and re&iabi&it) o% #)"ot#esis and t#e degree o% %reedo . T#e c#i square test is gi!en as0 T#e c#i square test is gi!en as0 K5 N P ,01E-5 E +#ere P N 3u ation ON obser!ed %requenc) E N E."ected %requenc) T#e statistica& test at <B &e!e& o% signi%icance t#at0 Ans'ers gi!en b) t#e res"ondents are denoted b) t#e ter e."ected %requenc) ,E-. E."ected %requenc) N ,Ro' tota& . Co&u n Tota&(rand tota&
38

obser!ed

%requencies ,0- '#i&e t#e t#eoretica& %requenc) is denoted b) ter

HEPOTHE3I3 TE3TIN( Ho0 Merger and Acquisition does not en#ance gro't# and e%%icienc) o% 7usiness o"eration Hi0 Merger and Acquisition en#ance gro't# and e%%icienc) o% business o"eration DECI3ION RU6E I% t#e c#i square ca&cu&ated !a&ues e.ceeds t#e Nu&& H)"ot#esis ,Hoand t#en acce"t t#e A&ternati!e H)"ot#esis ,Hi-. HEPOTHE3I3 I O"tions Ees No Tota& @ ?0 10 A0 ; 50 50 A0 Juestions : ?< < A0 10 50 50 A0 Tota& 10< << 1>0

T#e deri!ation o% e."ected %requenc) is as %o&&o's01 E."ected %requenc) N ,Ro' tota& . Co&u n Tota&(rand Tota& 9 ,1.19 ,1.59 ,1.?9 ,1.AN N N N ,10< . A0,10< . A0,10< . A0,10< . A039

Q Q Q Q

1>0 1>0 1>0

N N N

5>.? 5>.? 5>.? 5>.?

1>0 N

9 ,5.19 ,5.59 ,5.?9 ,5.A-

N N N N

,<< . A0,<< . A0,<< . A0,<< . A0-

Q Q Q Q

1>0 1>0 1>0 1>0

N N N N

1?.; 1?.; 1?.; 1?.;

3UMMATION O9 THE CHI 3JUARE CA6CU6ATED CA6UE Ce&&s Obser!ed %requenc ) 9 ,1*19 ,1*59 ,1*?9 ,1*A9 ,5*19 ,5*59 ,5*?9 ,5*A?0 50 ?< 50 10 50 < 50 K
5

E."ected %requenc) 5>.? 5>.? 5>.? 5>.? 1?.; 1?.; 1?.;

01E

,O1E- 5

,O1 E- 5 DE

?.@ 1>.? ;.@ 1>.? 1?.; >.5 1;.;

1?.>: ?:.>: @<.>: ?:.>: 1A.AA ?;.AA @@.AA ?;.AA

0.<5 1.<1 5.;; 1.<1 1.0< 5.@: <.>1 5.@: 1;.>>

1?.; >.5 CA6CU6ATED

C#i square ca&cu&ated !a&ue N 1?.:?: C#i square ,.5- tab&e !a&ue at <B 6e!e& o% signi%icance Degree o% %reedo ,D9- N ,R11- ,C11-* 0.0< ,511- ,A11,1- ,?-* 0.0< @.;1

40

COMMENT3 3ince t#e c#i square ca&cu&ated !a&ue o% 1?.:?:* 'e re2ect t#e nu&& #)"ot#esis and t#en acce"t t#e a&ternati!e #)"ot#esis* '#ic# states t#at erger and acquisition* is e%%ecti!e and e%%ecti!e strateg) %or %ai&ing business organi$ation. A.< 3UMMARE O9 HEPOTHE3I3 9INDIN(3 HEPOTHE3I3 1 Ho0 erger and acquisition does not en#ance gro't# and e%%icienc) o% business organi$ation Hi0 Merger and Acquisition en#ance gro't# and e%%icienc) o% business o"eration. O73ERCATION AND DECI3ION It 'as obser!ed t#at t#e c#i square ca&cu&ated !a&ue 1;.>> e.ceeds t#e c#i square tabu&ated !a&ue 1;.>> e.ceeds t#e c#i square tabu&ated !a&ue o% @.;1* 'e re2ect t#e nu&& #)"ot#esis and acce"t t#e a&ternati!e #)"ot#esis '#ic# states t#at0 Merger and Acquisition is an e%%ecti!e and e%%icient sur!i!a& strateg) %or %ai&ing business o"eration. RE9ERENCE3 Ada 3.O ,1::1-0 3tatistica& 7eginners* E!ans 7rot#ers 6td.* Ibadan.

Aboris#ade 9. ,1:@@-0 GResearc# Met#od* A 3tudent Handboo/H Mu&ti%or 6td* 6agos.

Ha burg M. ,1:@@-0 7asic 3tatistic Modern A""roac#* 5nd Edition Harcourt 7race Internationa&* Ne' Eor/.
41

6ur) D.A ,1:;A-0 Data Co&&ection in t#e De!e&o" ent Countries* (reat 7ritain* O.%ord Uni!ersit) Press 6td* 6ondon. Nna di A. ,1::>-0 Researc# Met#odo&og) in t#e 7e#a!iora& 3ciences* 6ong an Nig P&c. 6agos.

42

CHAPTER 9ICE

<.0 <.1

3UMMARE* CONC6U3ION AND RECOMMENDATION 3UMMARE C&ear&)* co ergers and acquisition as %or o% business co bination are on occurrence in ti e o% born as 'e&& as de"ression. T#e one) #a!e a&so been in!o&!ed.

co binations #a!e in!o&!ed co "anies o% !arious si$es and &ines o% business. Cer) o%ten* #uge su s o%

In Nigeria* '#ic# "er#a"s #as t#e #ig#est %requenc) o% business co binations* di!erse &iterature #as been 'ritten to co!er at &east t#e i "ortance %act o% A or erger and acquisition.

erger #as been de%ined b) t#e co "anies A&&ied Matters Act o% ore co "anies or t#e underta/ings o% one or ore co "anies a sing&e

,1::0- as an) a a&ga ation o% t'o underta/ings or interests o% t'o and one or co "an). Acquisition and or ta/e o!er on t#e ot#er #and* describes t#e "rocess o% acquiring b) one co "an) o% su%%icient s#ares in ot#er co "an) to gi!e t#e acquiring co "an) contro& o!er t#at o% t#e ot#er t#roug# t#e "urc#ase o% t#e assets ,rat#er t#an s#ares- o% t#e ot#er co "an). ore cor"orate bodies. Merger t#ere%ore si "&) describes ore se"arate co "anies to %or

t#e co bination o% t'o or

43

9ro

t#e test o% #)"ot#esis conducted in c#a"ter %our using tota& E&% ar) o% its %indings. Degree %reedo ? ? o% 6e!e& signi%icant 0.0< 0.0< o%

as a case stud)* t#e %o&&o'ings is t#e su H)"ot#esis K5 ca&cu&ated K5 tabu&ated 1 1*1 1;.>> 1;.>> @.;1 @.;1

HEPOTHE3I3 1 Ho0 Merger and acquisition does not en#ance gro't# and e%%icienc) o% business o"eration. DECI3ION 3ince t#e ca&cu&ated c#i square o% 1;.>> e.ceeds t#e tab&e !a&ue o% @.;1* 'e re2ect t#e Nu&& H)"ot#esis ,Ho- and t#en acce"t t#e a&ternati!e H)"ot#esis ,Hi- '#ic# state t#at0 GMerger and Acquisition en#ances gro't# and e%%icienc) o% business O"erationsH HEPOTHE3I3 II Ho0 Merger and Acquisition is not e%%ecti!e and e%%icient sur!i!a& strateg) %or %ai&ing business organi$ations. DECI3ION 3ince t#e ca&cu&ated c#i square o% 1?.:?: e.ceeds t#e tab&e !a&ue o% @.;1* 'e re2ect t#e Nu&& H)"ot#esis ,Ho- and t#en acce"t t#e a&ternati!e H)"ot#esis ,Hi- '#ic# state t#at0 GMerger and Acquisition is
44

an

e%%ecti!e and e%%icient

sur!i!a& strateg) %or %ai&ing business o"erationsH

besides* it is i "ortant to

ention t#at e.ists !arious %or s o%

business re!ita&i$ation D re1engineering strategies or o"tions o% '#ic# erger and acquisition is one and t#at t#ere is one o%% strateg)Do"tion "ro!en to be t#e best o% a&&* rat#er t#e c#oice o% business re!i!ing o"tion 'ou&d de"end on so e non qua&itati!e %actors &i/e nature o% industr)* ti e %ra e* econo ic situationD indices* go!ern ent "o&icies and tec#no&ogica& ad!ance ent et cetera. CONC6U3ION DRA+N 9ROM THE 9INDIN(3 9or ergers and acquisition to be %u&&) acce"ted or underta/en b) ust be created t#roug# organi$ation b) re"utab&e and cor"orate bod) Nigeria co "anies* a'areness

5.2

o% 'or/s#o"s* se inars* s) "osiu

to en&ig#ten Nigerians entre"reneursDbusiness en. It 'ou&d not be o!er e "#asi$ed to deduce t#at bene%ited b) t#e econo ) t#roug# secure ore credit %aci&ities %ro uc# stands to be

ergers and acquisitions. T#is is

in ter s o% s)nergistic e%%ects* "oo&ing o% re&ati!e resources* abi&it) to %inancia& institutions* '#ic# %urt#er increase "roduction ca"acit) and subsequent&)* qua&itati!e and quantitati!e goods and ser!ices* cut in ad inistration and o!er#ead cost and t#e di!ersi%ication ad!antages goes be)ond &ong 'a) to i "ro!e t#e econo ). T#e sc#e e %a!ours businesses t#at are ca"ita& intensi!e in nature suc# as anu%acturing concerns* trans"ort and co ining sector etc.
45

unications*

agricu&tura& sector* oi& and

T#e idea o% t#e science being %oreign is gradua&&) disa""earing as an) Nigeria co "anies #a!e ta/en to t#e ad inistration o% t#e sc#e e. T#is is borne out o% t#e rea&i$ation o% t#e bene%its to be gained and t#e %act t#at ost co "anies '#o #ad undergone it #a!e erged 'it# been success%u&. 9or e.a "&e* 6e!er 7rot#ers Nig P&c acquiring 3c#'e""es %ro 7eec#a

6i"ton 6td. And C#eese boroug# Products 6td* Nigeria 7re'eries P&c Nigeria 7ott&ing Co "an) P&c* 3 it/&ine "&c acquiring ster&ing "roducts "&c and tota& Nigeria P&c*

erged 'it# E&% Nigeria P&c. ,t#e case stud)-. <.? RECOMMENDATION3 7A3ED ON CONC6U3ION DRA+N In !ie' o% t#e %indings o% t#e researc# stud)* t#e %o&&o'ing is #ereb) reco ended t#at0

Merger and Acquisition s#ou&d be encouraged "articu&ar&) at a ti e &i/e t#is. Due* to econo ic do'nturn di%%icu&t to sur!i!e on t#eir o'n. Ta. #o&ida)s and ot#er re&ati!e incenti!es s#ou&d stand one o% t#e bene%its to be en2o)ed b) co "anies a&read) or intending to underta/e t#e sc#e e to encourage Co ore co "anies on t#e !erge o% to" e.ecuti!es but a&so co&&a"sing. A'areness created to en&ig#ten t#e Nigeria 7usiness unit) s#ou&d not be restricted to on&) disse inated to t#e e "&o)ees at !arious &e!e&s. 3tatutor) regu&ations s#ou&d be introduced to &i it t#e tendenc) o% ergers and acquisition beco ing in t#e s#ort run "ractices.
46

an) co "anies are %inding it

ono"o&istic

T#e Nigerian Accounting 3tandard 7oard ,NA37- sco"e o% &egis&ations is broadened to incor"orate t#e accounting standards %or acquisitions %or ation. 9or ot#er sectors &i/e t#e 7an/ing industries '#ic# #as been &ate&) besieged 'it# distress* suggestions #a!e gone to t#e %our big ban/s to acquire t#e distressed ban/s and so e #a!e been ad!ised to erge toget#er to sa!e t#e industr) %ro besto'ed on t#e and <.A b) t#e "ub&ic. erged toget#er. &oosing t#e con%idence ergers and

3uggestions #a!e gone to big ban/s to acquire t#e distressed ban/ ost ban/s #a!e been

3U((E3TION 9OR 9URTHER 3TUDIE3DINCE3TI(ATION3 In an atte "t to !a&idate or dis"e& t#e u"surge in ad!erse o"inion on ergers and acquisition as a sur!i!a& strateg) %or %ai&ing businesses* certain areas 'ere re!ea&ed '#ic# 'ere be)ond t#e sco"e o% t#e stud). T#us* I suggest %urt#er studies or in!estigations in t#e %o&&o'ing areas. Mergers and acquisition0 Accounting i "&ication a case stud) o% 3 it#/&ine 7eec#a P&c.

Mergers and Acquisition0 A sur!i!a& strateg) %or %ai&ing business. Mergers and Acquisition0 A too& %or re!a "ing t#e Nigeria econo ).

47

7I76IO(RAPHE Aboris#ade 9. ,1::@-0HResearc# Met#od* A 3tudent Handboo/* Mu&ti 9or * 6td* 6agos. ACCA ,1:;@-0 Ad!anced Accounting Practice* 9inancia& Accounting ,6ondon0 7PPAda 3.O. ,1:::-0 3tatistics %or 7eginners* E!ans 7rot#ers 6td* Ibadan. A&!e ec#e 8.O ,1::>-0 Accounting %or Mergers and Acquisitions o% 7usiness in Nigeria. A er C. ,1:@@-0 Dictionar) o% 7usiness and Econo ic Pub&is#ed b) Ne' Eor/ 9ree Press. Ca " ,1::0-0 co "anies and A&&ied Matters Decrees. Pub&is#ed b) 9edera& re"ub&ic o% Nigeria. (EE* PAU6 ,1:;;-0 7oo/ 8ee"ing and Accounting. 50t# Edition ,8ent0 E673D7utter +ort#-. Ha burg ,1:@@-0 7asis 3tatistics Modern A""roac#* 5nd edition* Harcourt 7race Internationa&* Ne' Eor/. IA3 ,5005-0 Internationa& accounting standard* "aragra"# ?* No55

48

ICAN stud) te.t ,1:;;-0 PE II 9inancia& Manage ent ,6agos AssociatesInnocent O/'uosa ,5000-0 (rou" Accounts. 3a%e Pub&ication 6td. 6agos. =ennings A.R ,1::0-0 9inancia& accounting Manua&* 5nd and ?rd Edition education* 6o' Price 7oo/s 3c#e e ,E673- Pub&is#er. 8a * Cerno ,1::0-0 Accounting T#eor)* 5nd Edition ,Ne' Eor/0

=o#n +i&e) and sons Inc.6ur) D. A ,1:;A-0 Data Co&&ection in t#e De!e&o" ent Countries* (reat 7ritain* O.%ord Uni!ersit) Press 6td. 6ondon. Mat#ur I. ,1:@>-0 9inancia& Manage ent. Mac i&&an Pub&ication Co "an) Incor"oration* Ne' Eor/. Nna di A. ,1::>-0 Researc# Met#odo&og) in t#e 7e#a!iora& 3ciences* 6ong an Nig. P&c* 6agos. O/'uosa I. ,5000-0 (rou"s Account* "ub&is#ed b) Arno&d Consu&ting 6td. Martins 3treet* 6agos. Pande) I.M ,1::0-0 9inancia& Manage ent ,Ne' De&#i0 Ci/as Pub&is#ingTOTA6 9INA E69* TOTA6DE69 ,5001- sc#e e o%
49

erger

6agos 3tate Po&)tec#nic* 6agos 3c#oo& o% Part ti e studies De"art ent o% Accountanc) Ma)* 500: Dear Res"ondent 6ETTER O9 INTRODUCTION Ia a Hig#er Nationa& di"&o a %ina& )ear student o% t#e abo!e ention institution carr)ing out a researc# "ro2ect on t#e i "act o% Merger and acquisition o% business in Nigeria. Ia "resenting t#is "ro2ect in "artia& %u&%i&& ent %or t#e a'ard o%

Hig#er Nationa& Di"&o a in Accounting. A&& in%or ation 'it# t#e questionnaire 'ou&d be treated 'it# ut ost con%identia&it). T#is questionnaire is "ure&) designed %or acade ic "ur"oses and 'ou&d be !er) grate%u&* i% )ou can #e&" in co "&eting it. T#an/ %or )our co1o"eration Eours %ait#%u&&)*

A&iu Mu)ideen

50

P&ease tic/ ,R- %or re&e!ant ans'er '#ere a""&icab&e. 3EK DEPARTMENT a&e S T 9e a&e S S S S S S S S S S S T S S S S S T S S S S S S
51

1.

T T T T T T T T T T

5.

9inance Tec#nica& Personne& Accounts Audit

?.

A(E

1< M 5< Eears 5> M ?< Eears ?> M A< )ears A0 Eear and abo!e

A.

Position #e&d in t#e co "an) 3enior =unior anage ent sta%% anage ent 3u"er!isor) C&erica& sta%% Ot#er s"eci%) T T T T T T T T T T T

<.

Acade ic D Pro%essiona& Jua&i%ication +A3C D (CE O &e!e& or Equi!a&ent OND* NCE L (CE A 6e!e& HND* 7. sc * 7A or Equi!a&ent M. sc* M7A* MA or Equi!a&ent Ot#er s"eci%) "&ease S

>.

Ho' &ong #a!e )ou been in t#e ser!iceO 1 M < )ears > M 10 )ears 11 M 1< )ears

1> 1 50 )ears 51 M 5< )ears 5> )ears and abo!e 6engt# o% ser!ice 1 1 < Eears > M 10 )ears 11 M 1< )ears 1> M 50 )ears 51 )ears and abo!e ;. :. Marita& status0 Married S Ees No
10.

S S S

T T T

7.

S S S S S T Di!orce S

T T T T T T

3ing&e S S S T T

Do )ou understanding '#at Merger and Acquisition

eansO

Is Merger and Acquisition a signi%icant econo ic too& business re!ita&i$ationO Ees No S S T T

11.

Is Merger and Acquisition t#e best 'a) o% re!a "ing a %ai&ing business and en#ancing business gro't#O Ees No 15. AcquisitionO Ees No S S T T
52

S S

T T Merger and

Can business gro't# and e%%icienc) be di!orced %ro

1?.

Merger and Acquisition doesn4t en#ance gro't# and ensure e%%icienc) business o"erationO Ees No S S T T

1A.

Does Merger and Acquisition en#ance gro't# and ensure e%%icienc) business o"erationO Ees No S S S S T T T T

1<.

Is Merger and Acquisition a sur!i!a& strateg)O Ees No

1>.

Is Merger and Acquisition an E%%ecti!e strateg) %or re!a "ing %ai&ing businessO EE3 No S S T T

53