Question

In 2008, the Board of Directors and shareholders of Anheuser Busch agreed to be acquired by a Belgian Brewer (InBev). Prior to the merger, InBev made many pledges to AB regarding how the company would operate after the merger, how its employees would be treated, and so on. With some stipulations, the U.S. Government agreed to allow the merger.

Since the merger, InBev has laid off a significant number of Anheuser Busch employees, most of whom worked at the St. Louis headquarters. Where the merger created duplication of job duties, those being terminated have to-date been from AB, not InBev. There is a great deal of speculation and trepidation around the St. Louis area about the long-term fate of the remaining employees, as well as worry about how the new company will view the many and varied civic contributions the company has made to St. Louis and the many other U.S. areas in which it has operations.

View 1 - AB acted as a well-managed business that takes the actions necessary to remain competitive in a very competitive market. If AB had not approved the merger, its profits and stock price would have fallen, and investment capital would have fled the company. As difficult as the decision was, AB operates in a very competitive environment and owes its stockholders the best return it can provide.

View 2 - The decision to sell the company was both short-sighted and, ultimately, a bad business decision. Any short term benefits AB stockholders reaped from the merger will be more than offset by U.S. job losses, lower tax revenues for States and the U.S. Government, and damage to the U.S. communities in which the company operates. Employees whose employers are loyal to them during difficult times repay that loyalty to the company through hard work. Employees who view themselves as economic pawns to be added or discarded as needed will feel only a marginal commitment to the new AB and their work performance will reflect the negative opinion they hold of their employer.

Let's hear your thoughts. Don't just tell us what you think personally, but bring Managerial Economic theory to bear on this issue.

Answer 1

Merger is a procedure of coordinating at least two organizations into a solitary one. Objective isn't to do any mischief to any of the organization under its preview. Generally merger ought to give additional advantage to all gatherings associated with it. Fundamental point you need to remember that merger is attractive just when it can improve the situation without hurting the current status. It ought not more terrible off any gatherings associated with it. It might exist investors, employs or client. A successful merger ought to improve the situation to the general public and include some value.

In order to make it possible merger should be well structured and planned. It is essential to diligently follow understated points:

1. There ought to be a superior comprehension amongst purchaser and dealer concern. They should know every others position appropriately before starting any contemplations on merger.

2. Before settling on the merger existing position ought to be appropriately broke down. Specialists on budgetary investigation framework ought to break down them completely to recognize zones of shortcoming and strong zone of the two firms. It will enable them to see how merger to can be beneficial for both organization. In the event that required assistance of outside specialists on monetary examination ought to be taken.

3. Most imperative advance is the arrangement procedure. Before transaction you ought to have clear thought regarding territories of change conceivable and target showcase where they are sold. In choosing the states of merger understanding you need to recollect that investors and representatives of the two firms ought not to endure unfavorably after merger. On the off chance that additional income is earned through such plan then go for such transaction

4. Fundamental individual taking care of the merger procedure ought to be a man with composed attitude and relentless. He ought not to be a bustling official. He ought to be able to do obviously investigating lawful and monetary arrangements. He has a solid authority quality. He can allocate particular duty on others with the goal that procedure can be executed altogether and meticulously. General Mix is an unquestionable requirement to make it fruitful.

5. Agreement should provide adequate protection of the existing status of employees and other stakeholders. It should clearly indicate financing sources of the merged company.

6. Estimate properly the net worth of common stock holders of the selling company. The payment to them in the merger process should not reduce their actual premerger net worth. Terms of payment should be clear and unambiguous. It should not be variable and linked with the post performance. In that situation agreement will be confusing and disputes will crop up after merger has been made. Result will be reflected negatively on the post merged performance.

7. A merger is effective just when administration of purchasing organization can get satisfactory support and certainty of administration group and representatives of offering firm. Human asset group needs to endeavor to assemble confidence on combined management collaborations. Workers of two separate concerns are originating from two distinct situations. They are to be effectively coordinated into a solitary unity. Employees need to be protected. They should be provided adequate impetus and incentives for better performance.

8. Post merger team should be carefully formed. It should consist of workforce of both companies. They should start integrating products, production process, technology, management information system, and incentive schemes and employees benefits in a well planned manner. It will help in resolving disputes and achieving target turnover, productivity and revenues.

9. Most complex merger is observed in cross border arrangements. Here companies are established in different countries. They have different culture, accounting standard, labor laws work culture and environment. Integrating all such variations successfully is a very challenging one.

On the off chance that above advances are meticulously taken after the merger will undoubtedly be effective. In this issue these focuses may not been taken after meticulously. It has made uncertainty in purchasers workers. They are not feeling sheltered and ensured. Under this circumstance merger can't give ling run successful outcome. It will give brief advantage. In any case it will flop over the long haul. So post merger administration group should give a qualm to reestablish confidence and dependability of representatives of dealer firm.