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and acquisition has been widely acclaimed by scholars and professionals in
business as the most desirable and effective strategy to revive the difficult
situations facing Nigeria
economic climate. The situation is so terrible that organizations had to turn
around and adopt strategy to survive through this turbulent water. This research work has the objective
undertaking to examines, analyze and evaluate the effectiveness of merger and
acquisitions as a strategy for organizational survival in Nigeria and
investigates whether it can result to economic of scale and increase
profitability of the combined firms. To this end, questionnaire were
administrated to Oando Nigeria Plc and some few other organizations that
merged. The data and information collected were analyzed using simple tables,
frequencies and percentages. The findings of this research reveals that merger
and acquisitions brings about improve in the productivity of the emerged
organizations. The researcher is of the opinion that, based on the findings,
the recommendations made if properly followed, it will improve the activities
of merger and acquisition for the benefit of the government, proposing
organizations and the interested public at large.
TABLE OF CONTENTS
Cover page - - - - - - - - - i
Title page - - - - - - - - - - ii
Declaration - - - - - - - - - - iii
Approval page - - - - - - - - - iv
Dedication - - - - - - - - - - v
Acknowledgement - - - - - - - - vi
Abstract - - - - - - - - - - viii
Table of content - - - - - - - - - ix
CHAPTER ONE - Introduction
1.0 Background of the study - - - - - - 1
1.1 Historical Background of Oando Nigeria Plc - - - 3
1.2 Statement of the general problem - - - - - 5
1.3 Objective of the study - - - - - - - 6
1.4 Significance of the study - - - - - - 8
1.5 Research question - - - - - - - 9
1.6 Statement of hypothesis - - - - - - 10
1.7 Scope and limitation of the study - - - - - 10
1.8 Definition of terms - - - - - - - 12
CHAPTER TWO - Review of Related Literature
2.0 Introduction - - - - - - - - 14
2.1 Merger and Acquisition definitions - - - - - 14
2.2 Types of Merger - - - - - - - - 16
2.3 Strategies for business survival - - - - - 18
2.4 Motive behind merger and acquisition - - - - 19
2.5 Reason for merger and acquisition preference over
investment in new business generated from scratch - - 23
2.6 Procedure for effective merger - - - - - 26
2.7 Method of financing merger - - - - - - 28
2.8 Merger and acquisition investment banking - - - 31
2.9 Merger and acquisition market place difficulties - - 32
2.10 The effect of merger and acquisition - - - - 35
2.11 Legal issues in M & A - - - - - - - 36
2.12 Regulation of M & A in Nigeria - - - - - 37
2.13 Summary of the review - - - - - - - 40
3.0 Introduction- - - - - - - - - 42
3.1 Area of study - - - - - - - - 42
3.2 Research design - - - - - - - - 43
3.3 Research population - - - - - - - 43
3.4 Sample and sampling technique - - - - - 44
3.5 Data collection instruments - - - - - - 44
3.6 Data collection method - - - - - - - 46
3.7 Validity and reliability of the instrument - - - - 46
3.8 Administration of research instruments - - - - 47
3.9 Techniques of data analysis (mode) - - - - 47
CHAPTER FOUR - Presentation and Analysis of Data
4.0 Introduction - - - - - - - - 49
4.1 Respondent characteristic and classification - - - 49
4.2 Presentation and Analysis of data - - - - - 50
4.3 Testing of hypothesis - - - - - - - 58
4.4 Summary of findings - - - - - - - 60
CHAPTER FIVE - Summary, Conclusion and Recommendation
5.0 Introduction - - - - - - - - 62
5.1 Summary - - - - - - - - 62
5.2 Conclusion - - - - - - - - - 65
5.3 Recommendations - - - - - - - 65
Bibliography - - - - - - - - - 68
1.0 BACKGROUND OF THE STUDY
The increase in oil boom in the 70’s was an era of huge and expensive prospect of doubtful utility and viability. However, the heavy dependence on oil and imported input rendered the Nigerian economy to be sensitive to external shocks with the collapse of the world oil market in the mids 1981, an economic crisis emerged in Nigeria, various control measures were put in place in order to correct the disturbing situation between 1982 – 1985 but these measures failed to deal effectively with the fundamental economic and financial problems confronting the economy which was deteriorating.
The nation began to face a situation of persistence and deteriorating balance of payment problem, the external debt continually rise, the emotion of international credit worthiness and the acute shortage of raw materials and consumer goods, as agriculture suffered and severely, neglected, the country (Nigeria) was at the point of collapsing.
Considering the above circumstances, there is need for national economic reform which the federal government eventually came up with Structural Adjustment Programme (SAP) in 1988 as a strategy to end the deformation of the nation economy and achieve a turn around in the fortunes.
The current global economic depression facing the world has been described by the world economic and financial experts as the longest and deepest depression in the post war period. Major industrial developed countries share in this performance characterized by declining growth rate, high inflationary pressure, increase in number of unemployment and this trend had serious adverse effect on the economic of developing countries of which Nigeria is included.
The present development is quite affecting a substantial number of Nigeria contemporary business most of them are on the path of decline, leading to folding up of some companies and many others laying off their staff and equipment as a result of operational hardship with lack of ability to expand and decline in sales volume as well as profit.
With the present difficult situation in the Nigeria businss environment. There is need for businesses to be re-structured for survival in response to changes that is occurring in the economic environment either a company decide whether to acquire, merge or sell part or whole of its existing business thus, given birth to a stronger, bigger and more profitable outfit that is capable of surviving amidst strong competition.
1.1 HISTORICAL BACKGROUND OF OANDO NIGERIA PLC
Oando Plc commence its business operation as a petroleum marketing company in Nigeria in 1956 under the name “ESSO West Africa Incorporated” a subsidiary of Export Corporation of the USA. In 1969, the company was incorporated under Nigeria laws as “ESSO standard Nigeria Limited. In 1976, the Nigeria Government brought ESSO interest and thus, became the 100% owner of the company. The company was then rename “Unipetrol Nigeria Limited”.
On 1st March, 1991 the company became a public limited company and was known as Unipetrol Nigeria Plc in the same year, 60% of the company’s shares was sold to the Nigeria public under the first phase the then privatization exercise and the company was quoted on the Nigeria stock exchange in February 1992.
In 2000, under the 2nd phase of the Federal Government of Nigeria’s privatization programme, ocean and soil services limited became a core investor by acquiring 305 of the Federal Government’s 40% equity stock in the company, the remaining 10% was sold to the Nigeria public. The investment in the then Unipetrol Nigeria Plc by Ocean Oil Services Limited was with support of its International Technical Partners Compania Espanola De Petroleos (CESPSA) who are currently 2nd largest oil group in Spain and ranks among the top 10 oil group in Europe. CEPSA is a fully Integrated Petroleum Company involved in exploration and production, petrochemicals natural gas, trading, refining, distributing and marketing.
In August 2002, the company acquired Agip Petrol’s 60% stake of Agip Nigeria Plc, the sale of the 60% interest of Agip Petrol International was the result of an international bid conducted by Agip petrol international B.V with the assistance of an international adviser during which Agip Petroleum International selected to them Unipetrol Nigeria Plc following the acquisition of Agip Nigeria Plc the company was again i.e. branded to Oando Plc in 2003 and emerged as Nigeria 2nd largest company in the downstream sector of the oil industry with 15.64% market share.
1.2 STATEMENT OF THE GENERAL PROBLEM
Due to the present economic situation of the country (Nigeria), report indicated that many Nigeria businesses and corporate organizations have closed up while many more may soon close up, even those that have survived, it has been a mergical survival and they are operating far below installed and optimum productive capacities leaving none in doubt that the situation is bad enough, the following problems are notice.
· There is need to note the fact that many of this organization that are depressed situation can either still be acquired or merged with more prosperous and strong enterprise. In other word, an alternative to this ugly economic woe in the country should have been for companies to come together and continue through merger or acquisition.
· There is overextension which tend to make the organization fuzzy and unmanageable. There is manager’s hubris, overconfidence about synergies form merger and acquisition which results in overpayment for the target company.
· There is negative reactions from company’s employees, bankers, suppliers, customers and other which make the process by which a company is bought or sold prove difficult, slow and expensive. Thus, they are not sold as often as they might or should be.
· Multiple listing service concept has not been applicable to merger and acquisition due to the need for confidentiality.
· There is lack of proper method, apparatus and techniques for efficiently executing merger and acquisition transactions without compromising the confidentiality of thee parties involved without unauthorized release of information.
· Lack of good recording keeping of incomes from business undertakings, mostly attributed to illiteracy and in other cases, a deliberate attempt to evade tax is also a problem.
1.3 OBJECTIVE OF THE STUDY
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