Question

Merger and Acquisition

. Describe the two most important reasons behind each of the cross-border transactions discussed in the brief example in the text?

. what has been driving the big pharmaceutical mergers in recent years

Answer 1

Ans)

Two most important reasons behind the cross boarder transactions

1.

Gaining Cost Efficiency

When two companies come together by merger or acquisition, the joint company benefits in terms of cost efficiency. A merger or acquisition is able to create economies of scale which in turn generates cost efficiency. As the two firms form a new and bigger company, the production is done on a much larger scale and when the output production increases, there are strong chances that the cost of production per unit of output gets reduced.

2. Tapping new Market

Through cross - border transactions compnay cover very wide International market. It helps in imporving sell growth and expansition of bussion.

Pharmaceutical mergers : Research and development productivity has been driving the big pharmaceutical merger in recent years.