( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.

net Impact of Mergers on Stock Return in Indian Stock Exchange with reference to BSE Dr. G.Indhumathi, Assistant Professor, Department of Commerce, Mother Teresa Womens University, Kodaikanal- 624 102, Tamil Nadu, India Phone No.: +919884434722 E-Mail: indhu_nila@rediffmail.com Dr.M.Selvam, Associate Professor and Head, Department of Commerce and Financial Studies, Bharathidasan University, Tiruchirappalli- 620 024, Tamil Nadu, India Phone No.: +919443025112 E-Mail: drmselvam@yahoo.co.in 1. Introduction Value theory views a firm as an economic unit whose objective is the maximization of profits or, more generally, the maximization of the present value of the firm. The traditional theory of firm postulates that only those firms which maximize corporate performance will survive and those that do not will either be taken over or eliminated. With firms striving to survive in the competitive business environment, mergers and acquisitions (M&A) are among the most efficient strategies for companies to grow and for driving shareholder value. In recent years, mergers have gained momentum due to liberalization of the capital market and globalization of competition. The mergers and acquisitions in India have changed dramatically after the liberalization of Indian economy. The policy of liberalization, decontrol and the globalization of the economy have exposed the corporate sector to manage domestic and global competition. Factors like low interest rates, cheap labour, and liberal government policy, have helped the Indian corporate sector to reduce their cost. However, the corporate sectors view mergers for further cost reduction through technology advancement or to make their presence felt in the market. In an efficient capital market, any new information relating to a firm is expected to be immediately incorporated into the share prices of the firm. If the market is certain about the scope, timing and success of the merger, then the value of synergy gains expected to be generated is immediately incorporated into the share prices of both the acquiring firm and the target firm when the merger deal is announced. However, if the market is doubtful about the success of the merger, it will react as and when it receives any new information related to the merger. The market will create merger value if the new information affirms the success of the merger, but will destroy merger value if the information is negative. 2. Review of Literature

Electronic copy available at: http://ssrn.com/abstract=1801144

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net An extensive review of literature has been carried out in order to enhance the level of understanding in the area of mergers, gain insight into the impact of mergers on the share price of acquirer and target companies and formulate research problem for further investigation in this area. For the purpose of this study, review has been done on empirical studies in books, journals, published papers, etc. Prasanna Chandra (1995) in his article, Shareholder Wealth Maximization, discussed the various issues connected with the goal of shareholders wealth maximization, rationale for the goal of maximizing shareholder wealth, critics for and against the shareholders wealth maximization, conflicts between managers and shareholders regarding wealth and shareholder orientation in India. The working paper entitled, The Effect of Mergers on Corporate Performance and Stock Prices, by Keisho Komoto (1999), analyzed the factors which facilitated increase in mergers and the mergers effect on business performance. It is found that merger announcements produced no significant effects on business performance. They could affect stock prices in either positive or negative ways depending on the industry. The study suggested that the efficient market and perfect information, the effects of mergers on business results were inconsistent with their effects on stock prices. Asli Ascioglu Thomas. N, Mclnish. H and Robert A. Wood (2002) in their paper entitled, Mergers Announcements and Trading, tested whether an increase either in informed traders or in large liquidity traders, leads to greater correlation of trading volume across markets. It found that both trading volume and positive returns of target companies are abnormally high before merger announcements. It also found that a statistically significant increase in the correlation between New York Stock Exchange and Nasdaq/regional trading volume before merger announcements. After merger, the study found both large liquidity trading and a statistically significant increase in the correlation of trading volume across markets. Bipul Malakar and Rajnarayan Gupta (2002) in their article entitled, Determinants of Share Price A System Approach: The Modified Model, identified determinants of share price and investigated various types of single equation models. A modified model, including more variables and excluding some of existing statistically insignificant variables, was investigated. It includes variables like share price, dividend per share, earnings per share, retained earnings, sales, etc. The statistical properties did not show any remarkable change. The empirical results were not so confirmative of other two relationships of the model like the earnings per share and the equation for retained earnings. Mishra. A. K and Rashmi Goel (2005) in their paper entitled, Returns to Shareholders from Mergers: The Case of RIL and RPL Merger, examined the financial implications of RIL-RPL merger on shareholders wealth. The profitability for shareholders was investigated by examining the daily excess returns that accrued to the shareholders around the date of announcement of merger deal. The study showed that there was positive excess returns to the shareholders of the target company- RPL and negative excess returns to the shareholders of the acquiring company- RIL. Shailesh Karnik (2005) in his paper entitled, Do M&As Create Value for Target Companies Shareholders?, assessed value creation for target companies shareholders in the Indian context. The author, using a sample of M&As spread across industries, compared the share prices of target firms before and after public announcements for open offer in relation to stock market index. The study found that the

Electronic copy available at: http://ssrn.com/abstract=1801144

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net public announcements are sometimes very short-lived. This study used differing time windows to test the hypotheses. It was found that there was a significant value creation for target companies shareholders due to public announcement as well as relative to benchmark index, irrespective of the time window used for the study. Dirk Hackbarth and Erwan Morellec (2006) in their paper entitled, Stock Returns in Mergers and Acquisitions, developed a real options framework to analyze the behavior of stock returns in mergers and acquisitions. In this framework, the time and terms of takeovers are endogenous and result from value-maximizing decisions. The implications of the model for abnormal announcement returns were consistent with the available empirical evidence. In addition, the model generates new predictions regarding the dynamics of firm-level betas for the time period surrounding control transactions. This paper presented new evidence on the dynamics of firm-level betas, which is strongly supportive of the models predictions. The working paper entitled, Shareholder Wealth Effects from Mergers and Acquisitions in the Greek Banking Industry, written by Constantine Manasakis (2006), examined the shareholder wealth effects of mergers and acquisitions in the Greek banking industry from 1995 to 2001, by using the event study methodology. The study found that targets shareholders earned significant abnormal returns upon the announcement of horizontal and diversifying deals. On the other hand, bidders shareholders had significant losses in cases of horizontal deals and zero effects in diversifying deals. Mergers and acquisitions in the Greek banking industry were not found to be value-enhancing. They were rationalized as an external growth strategy, whose goal was to strengthen the position of the participants in the domestic market and help them to become more tenacious in a fiercely competitive international environment. Aristeidis. G. Samitas and Dimitris. F. Kenourgios (2007) in their paper, Mergers and Acquisitions Impact on Tramp Shipping Firms Stock Returns, examined the behavior of tramp shipping firms stock returns, when they announced mergers and acquisitions and how this was portrayed on their stock values. The methodology used was event study analysis and bootstrap. The empirical results indicated the positive impact mergers and acquisitions announcements had on tramp firms stock returns. To sum up the review of literature, many contributions have offered different perspectives of merger in different industries worldwide and explained the shareholders wealth effect due to merger. From the review of many excellent research papers and articles analyzing the literature review on studies relating to share price behavior highlights the effect of mergers and acquisitions on share price of merged companies, determinants of share price and information efficiency during merger announcements by using different methodologies at different time periods. 3. Statement of the Problem Many studies have been conducted to analyze corporate events like mergers, takeovers, restructuring and corporate controls. The researchers have generally focused on public and corporate policy issues, financial implications, method of valuation and motives behind merger and acquisition around the world including India. They also analyzed the impact of share price reaction of companies which underwent merger and acquisition in different periods worldwide. However, most of the studies have deeply concentrated on the analysis of share price of both acquirer and target companies in different industries. There has been no comprehensive analysis attempted from the view point of the acquirer

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net and target companies which belong to the same industry in Indian concept. Hence, in order to fill this gap in research, the present study attempts to analyze the share price of both acquirer and target companies from the same industry listed in BSE during 20 days before and 20 days after the merger announcement. 4. Need for the Study Merger is a routine event in the changed economic environment. The basic motive for merger is an attempt to create value. The explanations offered for merger at various points of time, are exploitation of economies of scale, synergy, acquisition of market share, growth, diversification, tax advantage, etc. Most mergers are controlled by multiple motives rather than a single one. Therefore, there is a need to study the wealth enhancement with respect to mergers, which can be helpful in assessing the success of merger. Many studies have been conducted to analyze the share price of both acquirer and target companies in different industries. It is equally important to analyze from the view point of the acquirer and target companies which belong to the same industry during 20 days before and 20 days after the merger announcement. Hence an attempt has been made to study the share price reaction to the stock of both acquirer and target companies listed in Indian stock exchange namely BSE due to the merger announcement. 5. Objectives of the Study The main objective of the present study is to study the reaction of share prices of acquirer and target companies in BSE to the announcement of merger decision and to offer the findings, suggestions and conclusion. 6. Hypothesis of the Study The following null hypothesis has been developed for testing the objectives of the study. H0: Mergers do not increase the share price of the acquirer and target companies listed in BSE surrounding the announcement period. 7. Methodology of the Study 1. Sample selection Industry analysis helps to ascertain the financial standing and capability of the firm in the industry and each industry has its own characteristics which influence the financial and operating relationships. There are 93 companies which underwent mergers in BSE within and across industry during the study period from 01.04.2002 to 31.03.2005. For the purpose of share price analysis with the help of industry average, it was decided to select all companies which merged with other companies in the same industry during the study period. 18 companies merged in the same industry during the study period. But only for 13 companies, all the required data for analysis were available in the PROWESS (Corporate Data Base). Hence, the sample size of this study is confined to 13. Besides, while selecting the sample, following points were taken into account. Acquirer and target companies should belong to the same industry. Availability of share price information during pre- and post- merger period about acquirer and target companies. Availability of merger date and industry information. The companies should be listed in BSE. The details of sample companies, (Acquirer and Target), along with the date of merger and name of the Industry concerned are given in Table 1.

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

Table 1 List of Sample Companies

Sl. No. I A 1 2 3 4 5 B 6 7 C 8 D 9 E 10 II A 11 B 12 C 13 Acquirer MANUFACTURING Chemicals J K Tyre & Inds. Ltd. Tata Chemicals Ltd. Supreme Industries Ltd. Glaxosmithkline Pharmaceuticals Ltd. Matrix Laboratories Ltd. Transport equipment T V S Motor Co. Ltd. Sundram Fasteners Ltd. Non-metallic mineral products Asahi India Glass Ltd. Food & Beverage Gujarat Ambuja Exports Ltd. Textiles Eastern Silk Inds. Ltd. SERVICE Banking services Oriental Bank Of Commerce Trading Ricoh India Ltd. Information technology Silicon Valley Infotech Ltd. Merger Date Target

2002.10.07 2003.01.22 2003.02.05 2004.03.10 2004.03.29 2003.10.03 2003.10.29 2003.01.21 2003.07.25 2004.07.19

Vikrant Tyres Hind Lever Chemicals Siltap Chemicals Burroughs Wellcome (India) Fine Drugs & Chemicals Lakshmi Auto Components T V S Autolec Floatglass India Jupiter Biotech Sstella Silks

2004.07.26 2004.07.29 2005.01.17

Global Trust Bank Gestetner (India) Pentasoft Technologies Ltd.

Source: PROWESS DATA BASE 2. Period of the study For the purpose of selecting sample companies, the present study covers a period of three years from 1st April, 2002 to 31st March, 2005. In order to further analyze the announcement effect, the forty days period from day -20 to +20 was selected. 3. Sources of data The present study basically depends on secondary data. The required data on before and after merger were collected for the three year period. The data for each of the sample company were obtained on stock prices from CMIE-PROWESS, one of the leading Indian Corporate Data Base and www.bse-india.com. The data were also collected from books, articles in various journals, magazines and newspapers. 4. Tools used A standard Event Study Methodology was used to measure share price reaction to the offer announcements. The event day for each company is the date of Stock Exchange

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net Announcement during which time decision to merge was taken. An event window of 41 days, centered on the event day, was used to study the announcement effect on merger. The Market Model and Market Adjusted Model were used for estimating the expected returns for sample companies. The parameters of the model were estimated 20 days before the merger and 20 days after the merger by using the BSE 100 Index. 1. Market model method The abnormal returns for each of the sample company for the window period was computed by subtracting the expected returns from the actual returns. The expected returns on the sample companies were estimated by using the Optimum Least Square (OLS) method for the market model by using the following equation: Where, ----------- (7.4.1.1) is the Market Model Abnormal Returns of a company j at time t, is the sensitivity

is the mean returns over the period not explained by the market, of firm j to the market measure of risk, day t and

is the returns on a market index (BSE 100) for

is the statistical error term jt =0.

2.

Market adjusted returns method

Abnormal returns under Market Adjusted Model was calculated by using the equation as below: Where, on day t, ----------- (7.4.1.2) is the Market Adjusted Model Abnormal Returns for company j is the Actual Returns on

is the Actual Returns of company j at time t and

market index, which is proxied by BSE 100 at time t. 8. Analysis of Share Price Behavior Mergers and acquisitions, on an average, have the potential to enhance the shareholder value. While there are many popular ways to measure the value created by mergers, the short-run stock performance of the acquirer, the target and the combined entity is the most widely used method. The short-run stock performance is widely viewed as the most reliable evidence of value creation because in an efficient capital market, stock prices quickly adjust to new information and incorporate any changes in value that the mergers are expected to bring. Rather than considering actual stock returns occurring over a few days, studies focus on abnormal returns. In other words, it means that actual returns are reduced by the returns investors could have earned by investing in the market as a whole. As stated earlier, the event day for each sample company is taken as the date of Stock Exchange Announcement, during which period decision to merger was taken place. An event window of 41 days (+20 and -20), centered on the event day, is used to study the announcement effect of merger. Usually the event day is centered on the announcement date, which is designated as day 0 in event time. The purpose of the event

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net period is to capture all the effects on stock price of the event. Longer periods will make sure all the effects are captured, but the estimate is subject to more noise in the data. The residual represents the abnormal returns, that is, part of the returns that is not predicted and is therefore an estimate of the change in firm value on that day, which is caused by the event. For each day in event time, residuals are averaged across firms to produce the average residual for that day. The reason for averaging across firms is that stock returns are noisy, but the noise tends to cancel out when averaged across a large number of firms. Therefore, more firms in the sample, better the ability to distinguish the effect of an event. For producing the Cumulative Average Return (CAR), there is a need to aggregate the average residuals for each day over the entire event period. The CAR represents the average total effect of the event across all firms or across event days. The analysis of this study is presented under the following heads. a) Abnormal Returns of Acquirer and Target Companies on the Announcement dateMarket Model. b) Abnormal Returns of Acquirer and Target Companies on the Announcement dateMarket Adjusted Model. c) Acquirer and Target Company wise distribution of CAR before and after merger period- Market Model and Market Adjusted Model. 1. Abnormal returns of acquirer and target companies on the announcement date- market model For the purpose of analysis of this study, all companies that underwent mergers in the industry during the period of 2002-2005 were chosen. As explained earlier, out of 91 companies, only thirteen of them are qualified as sample population in this study. Table 2 shows abnormal returns for both acquiring companies and target companies under Market Model on the announcement date. In the case of sample acquirer companies, eleven acquirer companies received positive abnormal returns while the rest of two companies, Asahi India Glass Ltd (-0.0303) and Silicon Valley Infotech Ltd (-0.0149), earned negative abnormal returns. It is clear that nine target companies out of 13, received positive abnormal returns while remaining four target companies, namely, T V S Autolec (-0.0468), Sstella Silks (-0.0066), Global Trust Bank (-0.2003) and Pentasoft Technologies Ltd (-0.0512), earned negative abnormal returns. The overall analysis of abnormal returns during the announcement date shows that out of 13 merger deals, one merger acquirer company, namely, Asahi India Glass Ltd-Floatglass India in which the acquirer company received negative abnormal returns and target company ended up with positive abnormal returns, three mergers (Sundram Fasteners Ltd-T V S Autolec, Eastern Silk Inds Ltd-Sstella Silks and Oriental Bank of Commerce-Global Trust Bank) in which the acquirer companies earned positive abnormal returns and target companies received negative abnormal returns, eight mergers (J K Tyre & Inds Ltd-Vikrant Tyres, Tata Chemicals Ltd-Hind Lever Chemicals, Supreme Industries Ltd-Siltap Chemicals, Gujarat Ambuja Exports Ltd-Jupiter Biotech, T V S Motor Co. Ltd-Lakshmi Auto Components, Glaxosmithkline Pharmaceuticals Ltd-Burroughs Wellcome (India), Matrix Laboratories Ltd-Fine Drugs & Chemicals and Ricoh India Ltd-Gestetner (India)) in which both acquirer and target companies experienced positive abnormal returns, and one merger (Silicon Valley Infotech Ltd-Pentasoft Technologies Ltd) resulted in negative abnormal returns for both acquiring and target companies.

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

Table 2 Abnormal Returns of Acquirer and Target Companies on the Announcement date - Market Model
Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13

Event day 2002.10.07 2003.01.21 2003.01.22 2003.02.05 2003.07.25 2003.10.03 2003.10.29 2004.03.10 2004.03.29 2004.07.19 2004.07.26 2004.07.29 2005.01.17

Acquirer J K Tyre & Inds. Ltd. Asahi India Glass Ltd. Tata Chemicals Ltd. Supreme Industries Ltd. Gujarat Ambuja Exports Ltd. T V S Motor Co. Ltd. Sundram Fasteners Ltd. Glaxosmithkline Pharmaceuticals Ltd. Matrix Laboratories Ltd. Eastern Silk Inds. Ltd. Oriental Bank Of Commerce Ricoh India Ltd. Silicon Valley Infotech Ltd.

AR0 0.0308 -0.0303 0.0839 0.0417 0.0220 0.0301 0.0634 0.0334 0.0071 0.0390 0.0062 0.0446 -0.0149

Target Vikrant Tyres Floatglass India Hind Lever Chemicals Siltap Chemicals Jupiter Biotech Lakshmi Auto Components T V S Autolec Burroughs Wellcome (India) Fine Drugs & Chemicals Sstella Silks Global Trust Bank Gestetner (India) Pentasoft Technologies Ltd.

AR0 0.0820 0.0104 0.0907 0.0168 0.0259 0.0753 -0.0468 0.1246 0.0196 -0.0066 -0.2003 0.0085 -0.0512

Source: Computed from PROWESS 2. Abnormal returns of acquirer and target companies on the announcement date- market adjusted model The abnormal returns for both acquiring companies and target companies under Market Adjusted Model on the announcement date are given in Table 3. From the sample acquirer companies (13), ten companies received positive abnormal returns while the rest of them (three), namely, Asahi India Glass Ltd (-0.0268), Matrix Laboratories Ltd (-0.0007) and Silicon Valley Infotech Ltd (-0.0097), ended up with negative abnormal returns. In the target companies, nine companies received positive abnormal returns while the rest of them (three), namely, T V S Autolec (-0.0569), Sstella Silks (-0.0053), Global Trust Bank (-0.2318) and Pentasoft Technologies Ltd (-0.0431), earned negative abnormal returns. The analysis of overall results of abnormal returns during the

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net announcement date reveals the fact that there were two mergers (Asahi India Glass Ltd-Floatglass India and Matrix Laboratories Ltd-Fine Drugs & Chemicals) in which the acquirer companies received negative abnormal returns and target companies received positive abnormal returns, three mergers in which the acquirer companies had positive abnormal returns and target companies received negative abnormal returns, seven mergers in which both acquirer and target companies experienced positive abnormal returns, and one merger, namely, Silicon Valley Infotech Ltd-Pentasoft Technologies Ltd, resulted in negative abnormal returns for both acquiring and target companies. Table 3 Abnormal Returns of Acquirer and Target Companies on the Announcement date- Market Adjusted Model
Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Event day 2002.10.07 2003.01.21 2003.01.22 2003.02.05 2003.07.25 2003.10.03 2003.10.29 2004.03.10 2004.03.29 2004.07.19 2004.07.26 2004.07.29 2005.01.17 Acquirer J K Tyre & Inds. Ltd. Asahi India Glass Ltd. Tata Chemicals Ltd. Supreme Industries Ltd. Gujarat Ambuja Exports Ltd. T V S Motor Co. Ltd. Sundram Fasteners Ltd. Glaxosmithkline Pharmaceuticals Ltd. Matrix Laboratories Ltd. Eastern Silk Inds. Ltd. Oriental Bank Of Commerce Ricoh India Ltd. Silicon Valley Infotech Ltd. AR0 0.0363 -0.0268 0.0904 0.0358 0.0192 0.0233 0.0686 0.0418 -0.0007 0.0438 0.0074 0.0463 -0.0097 Target Vikrant Tyres Floatglass India Hind Lever Chemicals Siltap Chemicals Jupiter Biotech Lakshmi Auto Components T V S Autolec Burroughs Wellcome (India) Fine Drugs & Chemicals Sstella Silks Global Trust Bank Gestetner (India) Pentasoft Technologies Ltd. AR0 0.0897 0.0147 0.0921 0.0169 0.0272 0.0824 -0.0569 0.1329 0.0110 -0.0053 -0.2318 0.0135 -0.0431

Source: Computed from PROWESS 3. Acquirer and target company wise distribution of CAR before and after merger period- market model and market adjusted model The abnormal returns or average residuals represent the returns that was unexpected or different from the expected returns if the event had not occurred. The average residuals were calculated over the entire event period to obtain the cumulative average residuals. The analysis of this section is given as below. i. J K Tyre & Inds Ltd-Vikrant Tyres ii. Asahi India Glass Ltd-Floatglass India iii. Tata Chemicals Ltd-Hind Lever Chemicals iv. Supreme Industries Ltd-Siltap Chemicals v. Gujarat Ambuja Exports Ltd-Jupiter Biotech vi. T V S Motor Co. Ltd-Lakshmi Auto Components vii. Sundram Fasteners Ltd-T V S Autolec viii. Glaxosmithkline Pharmaceuticals Ltd-Burroughs Wellcome (India) ix. Matrix Laboratories Ltd-Fine Drugs & Chemicals x. Eastern Silk Inds Ltd-Sstella Silks xi. Oriental Bank of Commerce-Global Trust Bank xii. Ricoh India Ltd-Gestetner (India)

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net xiii. 1. Silicon Valley Infotech Ltd-Pentasoft Technologies Ltd J K Tyre & Inds Ltd-Vikrant Tyres

The result of Cumulative Abnormal Returns (CAR) calculated under Market Model and Market Adjusted Model with regard to merger of J K Tyre & Inds Ltd (Acquirer) and Vikrant Tyres Ltd (Target) companies is presented in Table 4. The CAR value under Market Model and Market Adjusted Model is the cumulative excess returns adjusted with the market portfolio of BSE 100. Among the J K Tyre & Inds Ltd and Vikrant Tyres Ltd companies, J K Tyre & Inds Ltd earned negative returns under both the models, namely, Market Model (AR= -0.0605) and Market Adjusted Model (AR= -0.0139) on the event day (0). The analysis of CAR under Market Model shows that the merger of J K Tyre & Inds Ltd brought about negative impact on its stock in the pre announcement days. CARs was in the negative zone since day -20 to -16 and from day -13 onwards, moved to positive zone during day +1 and +3 and again it dipped into negative zone till +12. With reference to Vikrant Tyres Ltd, CAR earned positive values from -20 to -5 days. Later it showed negative reaction between -4 and -1 days. Again +3 day onwards, it fell down to the negative region. It indicates the fact that the target company reacted negatively to the merger event when compared to the acquirer. As per the Market Adjusted Model, during the pre merger announcement days, J K Tyre & Inds Ltd (Acquirer) recorded negative CAR and Vikrant Tyres Ltd (Target) earned positive CAR. But in the post announcement period, both the companies performed badly compared to their pre merger performance. Till the announcement date (0 day), J K Tyre & Inds Ltd (Acquirer) recorded negative CAR and from +1 day onwards, it moved to the positive zone. This clearly indicates the fact that there was leakage of information to the public so that they would have earned excess returns after the day of merger announcement. Contrary to this, Vikrant Tyres Ltd (Target) reached the negative zone from +6 day onwards. In other words, the market reacted favorably before the announcement date to the target and in the post announcement date, to the advantage of the acquirer. In conclusion, this study confirms that Vikrant Tyres Ltd did not receive any positive abnormal returns during the post merger period. Furthermore, CAR for acquirer firm was greater than that of the target firm due to merger. Table 4 CAR of J K Tyre & Inds Ltd and Vikrant Tyres Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 Market Model J K Tyre & Inds Vikrant Tyres Ltd Ltd -0.0097 0.0467 -0.0082 0.2383 0.0136 0.1663 -0.0482 0.1300 -0.0154 0.1182 0.0002 0.1333 0.0038 0.1721 -0.0693 0.1112 Market Adjusted Model J K Tyre & Inds Vikrant Tyres Ltd Ltd -0.0066 0.0505 -0.0053 0.2410 0.0171 0.1691 -0.0414 0.1370 -0.0051 0.1297 0.0111 0.1448 0.0157 0.1842 -0.0526 0.1298

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

-12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 -0.0605 -0.0793 -0.0179 -0.0205 -0.0885 -0.0936 -0.0829 -0.0942 -0.0779 -0.0715 -0.0731 -0.0912 -0.0605 0.0197 -0.0413 0.0103 -0.0002 -0.0282 -0.0612 -0.0686 -0.0690 -0.0539 -0.0635 -0.0719 -0.0339 0.0488 0.0240 0.0778 0.0684 0.0574 0.0516 0.0325 0.0000 0.1040 0.0378 0.0540 0.1296 0.0762 0.0129 0.0382 0.0079 -0.0160 -0.0155 -0.0373 -0.0400 0.0420 0.0694 0.0081 -0.0450 -0.0339 -0.0478 -0.1408 -0.0986 -0.1081 -0.0934 -0.0980 -0.1123 -0.0764 -0.0833 -0.0564 -0.0638 -0.0444 -0.0090 -0.0047 0.0196 0.0000 -0.0439 -0.0614 0.0025 0.0024 -0.0634 -0.0652 -0.0515 -0.0584 -0.0427 -0.0351 -0.0348 -0.0502 -0.0139 0.0713 0.0117 0.0666 0.0615 0.0361 0.0055 0.0017 0.0042 0.0213 0.0127 0.0059 0.0445 0.1275 0.1026 0.1630 0.1577 0.1519 0.1495 0.1359 0.1054 0.1217 0.0566 0.0757 0.1543 0.1034 0.0445 0.0734 0.0492 0.0234 0.0250 0.0051 0.0058 0.0955 0.1300 0.0699 0.0210 0.0397 0.0291 -0.0614 -0.0141 -0.0201 -0.0033 -0.0072 -0.0200 0.0158 0.0085 0.0344 0.0365 0.0614 0.1039 0.1128 0.1448 0.1274

Source: Computed from PROWESS 2. Asahi India Glass Ltd-Floatglass India

The result of CAR under Market Model and Market Adjusted Model calculated on the share price reaction of the market with regard to merger (on Asahi India Glass Ltd (Acquirer) and Floatglass India Ltd (Target) companies) is presented in Table 5. Among the two firms, namely, Asahi India Glass Ltd and Floatglass India Ltd companies, Asahi India Glass Ltd earned positive returns under both the models, namely, Market Model (AR= 0.0099) and Market Adjusted Model (AR= 0.0972) on the event day of zero (0). But Floatglass India Ltd earned negative returns under the Market Model (AR=-0.0308) and positive returns under the Market Adjusted Model (AR=0.0888). The analysis of CAR under Market Model clearly shows that the merger brought about negative impact on the Asahi India Glass Ltd and Floatglass India Ltd companies stock in the pre

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net announcement days. It is to be noted that CAR was in the negative zone for Asahi India Glass Ltd from day -19 to -4 except -16, -13, -8 and -6 and dropped to positive zone during day -3. It signifies that merger benefited the acquirer. With reference to Floatglass India Ltd, it earned negative CAR values from -20 to +19 days i.e. in all the days surrounding merger including announcement day. It indicates the fact that the target company reacted negatively to the merger event when compared to the acquirer. Under Market Adjusted Model during the pre merger announcement days, Asahi India Glass Ltd (Acquirer) recorded positive CAR and Floatglass India Ltd (Target) earned negative CAR. But in the post announcement period, both the companies reacted positively to the merger event. Asahi India Glass Ltd (Acquirer) recorded negative CAR during -18 and -17 days only and from -16 day onwards, it moved to the positive zone. This demonstrates the fact that investors reacted positively and they would have earned excess returns after the day of merger announcement. The Floatglass India Ltd (Target) entered the negative zone from -19 to -7 days. From -6 day onwards, it again entered into the positive region. As a whole, it is inferred that the market reacted favorably before the announcement date to the acquirer and in the post announcement date, it was favorable to the acquirer and target. It is significant that the merger made good impact on the share prices of both acquirer and target companies. In conclusion, this study confirms that both acquirer and target companies received positive abnormal returns during the post merger period. Table 5 CAR of Asahi India Glass Ltd and Floatglass India Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 Market Model Asahi India Glass Floatglass India Ltd Ltd 0.0146 -0.0039 -0.0075 -0.0179 -0.0261 -0.0081 -0.0304 -0.0526 0.0034 -0.0583 -0.0067 -0.0552 -0.0236 -0.0672 0.0216 -0.0604 -0.0007 -0.0787 -0.0165 -0.0819 -0.0336 -0.0704 -0.0284 -0.0969 0.0051 -0.0858 -0.0079 -0.0800 0.0163 -0.0333 -0.0146 -0.0608 -0.0037 -0.0167 0.0286 -0.0372 0.0484 -0.0356 0.0402 -0.0412 0.0099 -0.0308 Market Adjusted Model Asahi India Glass Floatglass India Ltd Ltd 0.0185 0.0010 0.0012 -0.0055 -0.0145 0.0068 -0.0159 -0.0352 0.0222 -0.0348 0.0160 -0.0267 0.0025 -0.0348 0.0527 -0.0203 0.0350 -0.0318 0.0243 -0.0270 0.0115 -0.0093 0.0199 -0.0325 0.0566 -0.0180 0.0504 -0.0001 0.0799 0.0551 0.0526 0.0319 0.0666 0.0790 0.1025 0.0628 0.1269 0.0712 0.1240 0.0741 0.0972 0.0888

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 0.0493 0.0575 -0.0067 0.0315 0.0464 0.0591 0.0607 0.0473 0.0383 0.0364 0.0342 0.0213 0.0281 0.0099 0.0176 0.0171 0.0206 0.0154 0.0007 0.0000 -0.0386 -0.0911 -0.0953 -0.1155 -0.1165 -0.0528 0.0233 0.0175 -0.0045 -0.0308 -0.0489 -0.0443 -0.0202 -0.0252 -0.0424 -0.0486 -0.0406 -0.0192 -0.0291 0.0000 0.1404 0.1548 0.0973 0.1424 0.1601 0.1779 0.1844 0.1744 0.1674 0.1696 0.1725 0.1617 0.1740 0.1612 0.1732 0.1777 0.1870 0.1826 0.1716 0.1744 0.0856 0.0440 0.0519 0.0441 0.0453 0.1169 0.2006 0.1987 0.1770 0.1564 0.1461 0.1514 0.1844 0.1883 0.1770 0.1787 0.1966 0.2151 0.2100 0.2430

Source: Computed from PROWESS 3. Tata Chemicals Ltd-Hind Lever Chemicals Table 6 presents the effect of merger on Tata Chemicals Ltd (Acquirer) and Hind Lever Chemicals Ltd (Target) companies under Market Model and Market Adjusted Model. It is clear from the above Table that on the event day of zero, the Tata Chemicals Ltd (Acquirer) and Hind Lever Chemicals Ltd (Target) earned positive returns under both the models, namely, Market Model (AR= 0.0981, 0.1317 respectively) and Market Adjusted Model (AR= 0.1743, 0.1081 respectively). Regarding Tata Chemicals Ltds stock in the pre announcement days, CARs under the Market Model commenced its journey from the negative zone since day -20 to -6 except -17 and -16 and dropped to positive zone during day -5 to +12 and again it crashed down to negative zone from day +13 onwards. With reference to Hind Lever Chemicals Ltd too, CAR started at negative zone from -20 to -14 days. Later it showed positive reaction between -13 and +2 days and from +3 day onwards, it again dipped to the negative region. The above analysis signifies that the target company reacted negatively to the merger event when compared to the acquirer company under the Market Model. In the Market Adjusted Model during the pre merger announcement days, Tata Chemicals Ltd (Acquirer) recorded positive CAR and Hind Lever Chemicals Ltd (Target) earned negative CAR from -20 to -15. Later it earned positive returns up to +3 day. But in the post announcement period, Tata Chemicals Ltd reacted positively to the merger announcement. This means that the investors of Tata Chemicals Ltd welcomed the merger announcement and earned excess returns after the day of merger announcement. Conversely, Hind Lever Chemicals Ltd (Target) reached the negative zone from +3 day onwards. As a whole, it is found that the market reacted favorably before the announcement date to the target under the Market Model and Market Adjusted Model and in the post announcement date, it was favourable to the acquirer in Market Model and Market Adjusted Model. Thus these results are divided in their effect because the merger created positive impact on the share prices of Tata

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net Chemicals Ltd contrary to its effect of pre merger. In conclusion, this study confirms that Hind Lever Chemicals Ltd did not receive any positive abnormal returns during the post merger period. Table 6 CAR of Tata Chemicals Ltd and Hind Lever Chemicals Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Market Model Tata Chemicals Hind Lever Ltd Chemicals Ltd -0.0169 -0.0141 -0.0171 -0.0215 -0.0164 -0.0289 0.0025 -0.0046 0.0020 -0.0193 -0.0195 -0.0180 -0.0183 -0.0033 -0.0096 0.0020 -0.0169 0.0075 -0.0316 0.0130 -0.0273 0.0095 -0.0271 0.0092 -0.0119 0.0630 -0.0053 0.0571 -0.0127 0.0373 0.0075 0.0318 0.0263 0.0312 0.0308 0.0400 0.0202 0.0484 0.0141 0.0410 0.0981 0.1317 0.0689 0.1304 0.0654 0.0562 0.0413 -0.0164 0.0496 -0.0254 0.0504 -0.0225 0.0500 -0.0254 0.0250 -0.0399 0.0027 -0.0594 0.0301 -0.0310 0.0267 -0.0243 0.0043 -0.0427 0.0043 -0.0531 -0.0002 -0.0373 -0.0147 -0.0459 -0.0035 -0.0376 0.0040 -0.0212 0.0018 -0.0360 Market Adjusted Model Tata Chemicals Hind Lever Ltd Chemicals Ltd -0.0052 -0.0079 0.0065 -0.0090 0.0147 -0.0140 0.0314 0.0039 0.0361 -0.0105 0.0228 -0.0063 0.0219 0.0022 0.0310 0.0035 0.0210 0.0021 0.0083 0.0051 0.0225 0.0060 0.0322 0.0099 0.0337 0.0470 0.0362 0.0330 0.0360 0.0152 0.0667 0.0148 0.0926 0.0163 0.0973 0.0209 0.0828 0.0213 0.0839 0.0160 0.1743 0.1081 0.1345 0.0928 0.1175 0.0021 0.0791 -0.0878 0.1001 -0.0898 0.0982 -0.0937 0.0962 -0.1025 0.0795 -0.1139 0.0749 -0.1218 0.1054 -0.0950 0.0999 -0.0946 0.0942 -0.1022 0.0889 -0.1219 0.0796 -0.1148 0.0678 -0.1254 0.0767 -0.1236 0.0765 -0.1186 0.1005 -0.1140

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

18 19 20 -0.0183 -0.0059 0.0000 -0.0473 -0.0164 0.0000 0.0858 0.1065 0.1153 -0.1249 -0.0909 -0.0763

Source: Computed from PROWESS 4. Supreme Industries Ltd-Siltap Chemicals The consequence of Cumulative Abnormal Returns (CAR) of Supreme Industries Ltd (Acquirer) and Siltap Chemicals Ltd (Target) companies under Market Model and Market Adjusted Model is presented in Table 7. In respect of Market Model, both acquirer and target companies, namely, Supreme Industries Ltd (Acquirer) and Siltap Chemicals Ltd (Target) earned positive returns of 0.0865 and 0.0834 respectively on the event day of zero (0). It is understood that in Market Adjusted Model, Siltap Chemicals Ltd earned positive returns of 0.0468 and the acquirer Supreme Industries Ltd earned negative returns of -0.0308. The analysis of Cumulative Abnormal Returns in Market Model shows that the merger brought about positive impact on the Supreme Industries Ltds stock in the pre announcement days. CARs almost created its synergy at positive zone since day -19 to +20 except +12. With reference to Siltap Chemicals Ltd, it earned negative CAR values from -19 to -15 days except day -18. Later it dipped to the positive region from -14 day onwards. In other words, the acquirer and target companies reacted positively to the merger event. The results of CAR under the Market Adjusted Model show that during the pre merger announcement days, both the companies, Supreme Industries Ltd (Acquirer) and Siltap Chemicals Ltd (Target), recorded negative CAR. The Supreme Industries Ltd earned positive returns only during -19 to -7 except -13 to -11 and -8. From -7 day onwards, it came to the negative region even after the merger announcement. Between the days of -13 and +4, Siltap Chemicals Ltd (Target) recorded positive CAR and from +5 day onwards, it went into the negative zone. This means that investors reacted negatively to the merger between Supreme Industries Ltd (Acquirer) and Siltap Chemicals Ltd (Target) and they earned negative returns under the Market Adjusted Model after the day of merger announcement. It is concluded that the market reacted favorably, before and after the announcement date, to the acquirer and target companies under the Market Model and no company performed well during the pre as well as post merger under the Market Adjusted Model. Thus these models imply mixed impact of merger. Table 7 CAR of Supreme Industries Ltd and Siltap Chemicals Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 Market Model Supreme Industries Siltap Chemicals Ltd Ltd -0.0006 0.0006 0.0409 -0.0050 0.0580 0.0007 0.0478 -0.0018 0.0357 -0.0054 0.0519 -0.0062 0.0426 0.0137 0.0356 0.0328 0.0477 0.0626 Market Adjusted Model Supreme Industries Siltap Chemicals Ltd Ltd -0.0054 -0.0051 0.0312 -0.0163 0.0414 -0.0050 0.0250 -0.0064 0.0078 -0.0145 0.0192 -0.0213 0.0049 -0.0059 -0.0078 0.0121 -0.0019 0.0428

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

-11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 0.0489 0.0599 0.0838 0.0719 0.0805 0.0526 0.0615 0.0557 0.0281 0.0459 0.0447 0.0865 0.1020 0.0946 0.0521 0.0406 0.0129 0.0216 0.0060 0.0248 0.0197 0.0356 0.0088 -0.0097 0.0005 0.0035 0.0279 0.0139 0.0279 -0.0049 0.0058 0.0000 0.0621 0.0640 0.0564 0.0315 0.0202 0.0154 0.0372 0.0456 0.0339 0.0379 0.0666 0.0834 0.0750 0.0816 0.0649 0.0491 0.0383 0.0349 0.0088 0.0135 0.0181 0.0125 0.0224 0.0278 0.0288 0.0207 0.0219 0.0240 0.0266 0.0096 0.0083 0.0000 -0.0057 0.0001 0.0174 -0.0014 0.0001 -0.0323 -0.0294 -0.0411 -0.0737 -0.0600 -0.0666 -0.0308 -0.0195 -0.0331 -0.0818 -0.0987 -0.1323 -0.1301 -0.1491 -0.1355 -0.1456 -0.1352 -0.1674 -0.1911 -0.1876 -0.1908 -0.1711 -0.1903 -0.1820 -0.2213 -0.2166 -0.2289 0.0379 0.0357 0.0322 0.0129 0.0076 -0.0044 0.0178 0.0260 0.0093 0.0037 0.0299 0.0468 0.0293 0.0375 0.0222 0.0041 -0.0066 -0.0072 -0.0470 -0.0459 -0.0463 -0.0542 -0.0470 -0.0457 -0.0405 -0.0472 -0.0525 -0.0545 -0.0525 -0.0658 -0.0669 -0.0718

Source: Computed from PROWESS 5. Gujarat Ambuja Exports Ltd-Jupiter Biotech The Cumulative Abnormal Returns (CAR) values of merger between Gujarat Ambuja Exports Ltd (Acquirer) and Jupiter Biotech Ltd (Target) companies are presented in Table 8. The computation of CAR under the Market Model and Market Adjusted Model for acquirer and target companies, incorporates the systematic risk of these companies. It is clear that both companies, namely, Gujarat Ambuja Exports Ltd (Acquirer) and Jupiter Biotech Ltd (Target) companies, earned positive returns under both the models, namely, Market Model (AR= 0.1176 and 0.1283 respectively) and Market Adjusted Model (AR= 0.1719 and 0.3656 respectively) on the event day of zero. The analysis of Cumulative Abnormal Returns under the Market Model clearly shows that the merger brought about positive impact on the Gujarat Ambuja Exports Ltds stock in the pre announcement days from -13 day onwards. CARs commenced on the negative zone since day -20 to -14. In the case of Jupiter Biotech Ltd, it earned positive CAR values from -20 to -13 days. Later it recorded negative reaction between -12 and -7 days and -6 day onwards and later it fell

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net down to the positive region. In other words, acquirer and target companies reacted positively after the merger event. As per the analysis of Market Adjusted Model during the pre merger announcement days, Gujarat Ambuja Exports Ltd (Acquirer) recorded negative CAR during -20 to -16 and Jupiter Biotech Ltd (Target) earned negative CAR on -11 day. But in the post announcement period, both the companies performed negatively to their pre merger performance. This indicates the fact that the market reacted positively and the investors possibly earned excess returns after the day of merger announcement. As a whole, the market reacted favorably before the announcement date to the acquirer and target from -6 day onwards and during the entire period of the post announcement for both acquirer and target companies. Thus these results signify that the merger created impact on the share prices of both acquirer and target companies as an affirmative effect. It is concluded that Cumulative Abnormal Returns for target firm was greater than that for the acquirer firm due to merger. Table 8 CAR of Gujarat Ambuja Exports Ltd and Jupiter Biotech Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 Market Model Gujarat Ambuja Jupiter Biotech Exports Ltd Ltd -0.0084 0.1168 -0.0077 0.1448 -0.0212 0.0867 -0.0204 0.1199 -0.0402 0.1048 -0.0068 0.0491 -0.0062 0.1398 0.0125 0.0591 0.0032 -0.0420 0.0468 -0.1304 0.2259 -0.1081 0.2577 -0.0723 0.1655 -0.0047 0.1769 -0.0593 0.1018 0.0443 0.1093 0.1416 0.1410 0.1714 0.1064 0.1892 0.1142 0.1447 0.0956 0.1024 0.1176 0.1283 0.1412 0.1623 0.1262 0.1631 0.1082 0.1026 0.1162 0.1387 0.1077 0.0972 0.0832 0.1025 0.0635 0.0638 0.0652 0.0845 Market Adjusted Model Gujarat Ambuja Jupiter Biotech Exports Ltd Ltd -0.0086 0.1229 -0.0067 0.1597 -0.0167 0.1145 -0.0122 0.1611 -0.0329 0.1508 0.0031 0.1064 0.0051 0.2061 0.0286 0.1408 0.0251 0.0572 0.0668 -0.0284 0.2492 0.0066 0.2803 0.0476 0.1951 0.1348 0.2050 0.0837 0.1396 0.2118 0.1538 0.3281 0.1969 0.3858 0.1678 0.4202 0.1766 0.3840 0.1527 0.3384 0.1719 0.3656 0.1965 0.4079 0.1843 0.4202 0.1651 0.3641 0.1766 0.4132 0.1677 0.3775 0.1396 0.3825 0.1293 0.3677 0.1356 0.4036

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

9 10 11 12 13 14 15 16 17 18 19 20 0.0564 0.0499 0.0271 0.0378 0.0276 0.0666 0.0375 0.0393 0.0243 0.0075 0.0000 0.0135 0.1081 0.0598 0.0703 0.0660 0.0622 0.0886 0.1651 0.0897 0.1224 0.0787 0.0888 0.0000 0.1206 0.1076 0.0825 0.0984 0.0866 0.1299 0.0957 0.1023 0.0882 0.0693 0.0602 0.0904 0.4221 0.3681 0.3806 0.3925 0.3924 0.4333 0.5066 0.4468 0.4876 0.4463 0.4600 0.4087

Source: Computed from PROWESS 6. T V S Motor Co. Ltd-Lakshmi Auto Components Table 9 reveals the result of market reaction to the merger between T V S Motor Co. Ltd (Acquirer) and Lakshmi Auto Components Ltd (Target) companies. The two merged companies, namely, T V S Motor Co. Ltd (Acquirer) and Lakshmi Auto Components Ltd (Target) earned positive returns under both the models, namely, Market Model i.e. 0.0747 and 0.2310 respectively and in Market Adjusted Model i.e. 0.1104 and 0.2469 respectively on the event day (0). The examination of Cumulative Abnormal Returns under Market Model clearly shows that the merger brought about negative impact on the T V S Motor Co. Ltd and Lakshmi Auto Components Ltd companies stock in the pre announcement days of -20 to -18. With reference to merger of T V S Motor Co. Ltd and Lakshmi Auto Components Ltd, they earned positive CAR values from -17 day onwards. Later, Lakshmi Auto Components Ltd showed negative reaction on +13 and +19 days. It means that both the acquirer and target companies reacted positively to the merger event. In respect of Market Adjusted Model during the pre merger announcement days, T V S Motor Co. Ltd (Acquirer) and Lakshmi Auto Components Ltd (Target) earned negative CAR in the pre announcement days of -20 to -18. Later, both the companies entered into positive zone and continued till the +20 day. This means that there was leakage of information to the public so that they would have earned excess returns before the day of merger announcement. As a whole, it is found that market reacted favorably before as well as after the announcement date to the acquirer and target companies and these companies provided adequate returns to their investors. Table 9 CAR of T V S Motor Co. Ltd and Lakshmi Auto Components Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 Market Model T V S Motor Lakshmi Auto Co. Ltd Components Ltd -0.0121 -0.0063 0.0056 -0.0304 -0.0007 -0.0236 0.0464 0.0260 0.0587 0.0164 0.0534 0.0393 Market Adjusted Model T V S Motor Co. Lakshmi Auto Ltd Components Ltd -0.0152 -0.0019 -0.0027 -0.0201 -0.0143 -0.0073 0.0378 0.0406 0.0498 0.0332 0.0495 0.0544

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

-14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 0.0408 0.1005 0.1048 0.0659 0.0561 0.0708 0.0710 0.0607 0.0542 0.0477 0.0733 0.0565 0.0424 0.0446 0.0747 0.0883 0.0970 0.0892 0.0836 0.0705 0.0606 0.0315 0.0287 0.0412 0.0512 0.0855 0.0524 0.0439 0.0296 0.0170 0.0251 0.0319 0.0081 0.0000 0.0046 0.0533 0.0872 0.0926 0.1316 0.1429 0.1404 0.1496 0.1455 0.0794 0.1195 0.1579 0.1839 0.1569 0.1557 0.2310 0.2654 0.2747 0.2321 0.2435 0.2521 0.2755 0.2788 0.2742 0.2502 0.2224 0.0361 0.0721 -0.0347 0.0253 0.0007 0.0131 0.0192 0.0182 -0.0051 0.0000 0.0546 0.1417 0.1357 0.1138 0.1252 0.1350 0.1491 0.1262 0.1057 0.1051 0.1241 0.0997 0.0824 0.0871 0.1104 0.1124 0.1268 0.1201 0.1107 0.0983 0.0795 0.0668 0.0603 0.0734 0.0793 0.1298 0.1118 0.1129 0.1103 0.0875 0.0901 0.1136 0.0937 0.0853 0.0884 0.0572 0.0725 0.0877 0.1160 0.1134 0.1165 0.1175 0.1249 0.0712 0.1090 0.1543 0.1881 0.1654 0.1645 0.2469 0.2920 0.2992 0.2577 0.2740 0.2842 0.3162 0.3093 0.3095 0.2870 0.2643 0.0679 0.0946 -0.0173 0.0360 0.0210 0.0396 0.0352 0.0333 0.0123 0.0205

Source: Computed from PROWESS 7. Sundram Fasteners Ltd-T V S Autolec The effect of merger between Sundram Fasteners Ltd and T V S Autolec Ltd on their share prices with respect to Market Model and Market Adjusted Model for a period of 41 days, including the announcement date, is illustrated in Table 10. Cumulative Abnormal Returns (CAR) calculated under the Market Model reveals that Sundram Fasteners Ltd and T V S Autolec Ltd recorded negative returns on the announcement date (-0.0099 and -0.1456 respectively). During the pre merger period, both the companies earned positive returns from -20 day to -12. Later, Sundram Fasteners Ltd crashed into the negative region for the period from -11 to -8 and from -5 to 0 and +6 day onwards. In the case of T V S Autolec Ltd, it was negative from -3 day onwards and the down trend continued till the day of +19. The analysis of CAR under the Market Adjusted Model shows that the

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net merger brought about positive impact on the Sundram Fasteners Ltds stock in the pre as well as post announcement days, including the event day (AR=0.1456). In respect of the target company, namely, T V S Autolec Ltd, it earned positive residuals till -7 day. On the event day, it gained negative impact of AR=-0.3164. The analysis represents the fact that there was information efficiency in the market and the market reacted positively to Sundram Fasteners Ltd and negatively reacted to the target company (T V S Autolec Ltd). The investors were not able to gain any benefit from the merger. Table 10 CAR of Sundram Fasteners Ltd and T V S Autolec Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Market Model Sundram Fasteners T V S Autolec Ltd Ltd 0.0189 0.0554 0.0182 0.1006 0.0674 0.1115 0.0536 0.0942 0.0585 0.1374 0.0443 0.1706 0.0460 0.1445 0.0307 0.1896 0.0067 0.2576 -0.0024 0.2187 -0.0127 0.2067 -0.0268 0.1827 -0.0234 0.1902 0.0037 0.1572 0.0068 0.1190 -0.0306 0.0830 -0.0459 0.0274 -0.0487 -0.0243 -0.0306 -0.0558 -0.0733 -0.0988 -0.0099 -0.1456 0.0734 -0.1821 0.0557 -0.2303 0.0470 -0.1859 0.0112 -0.1901 0.0127 -0.1925 -0.0122 -0.2350 -0.0399 -0.2164 -0.0513 -0.2009 -0.0536 -0.2017 -0.0438 -0.1905 -0.0666 -0.1753 -0.0445 -0.1597 -0.0414 -0.1489 -0.0435 -0.0973 Market Adjusted Model Sundram Fasteners T V S Autolec Ltd Ltd 0.0265 0.0474 0.0254 0.0774 0.0701 0.0690 0.0667 0.0465 0.0781 0.0807 0.0662 0.1010 0.0740 0.0656 0.0565 0.0937 0.0523 0.1649 0.0456 0.1133 0.0413 0.0919 0.0292 0.0548 0.0522 0.0654 0.0980 0.0347 0.1150 -0.0057 0.0933 -0.0421 0.0747 -0.1158 0.0726 -0.1818 0.1108 -0.2098 0.0770 -0.2595 0.1456 -0.3164 0.2332 -0.3639 0.2087 -0.4333 0.1970 -0.4066 0.1642 -0.4231 0.1728 -0.4338 0.1542 -0.4856 0.1399 -0.4695 0.1324 -0.4654 0.1333 -0.4782 0.1522 -0.4737 0.1472 -0.4570 0.1870 -0.4400 0.1927 -0.4418 0.1951 -0.4009

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

15 16 17 18 19 20 -0.0495 -0.0513 -0.0188 -0.0094 0.0000 0.0211 -0.0938 -0.1081 -0.1039 -0.1034 -0.0477 0.0000 0.2020 0.2167 0.2643 0.2760 0.2933 0.3144 -0.4005 -0.4146 -0.4114 -0.4237 -0.3757 -0.3429

Source: Computed from PROWESS 8. Glaxosmithkline Pharmaceuticals Ltd-Burroughs Wellcome (India) The Cumulative Abnormal Returns (CAR) values of merger between Glaxosmithkline Pharmaceuticals Ltd and Burroughs Wellcome (India) Ltd are presented in Table 11. Between the Glaxosmithkline Pharmaceuticals Ltd and Burroughs Wellcome (India) Ltd companies, Burroughs Wellcome (India) Ltd earned high positive returns under both the models, namely, Market Model (AR= 0.0777) and Market Adjusted Model (AR= 0.0855) on the event day of zero when compared to the Glaxosmithkline Pharmaceuticals Ltd (Market Model = 0.0491 and Market Adjusted Model = 0.0466). The analysis of Cumulative Abnormal Returns under Market Model shows the fact that the merger has brought about positive impact on the stock of Glaxosmithkline Pharmaceuticals Ltd from -20 to -12 days and Burroughs Wellcome (India) Ltd from -20 to -7 days. It is to be noted that during the rest of the period, both the companies started to earn negative returns. From the announcement day onwards, Glaxosmithkline Pharmaceuticals Ltd and Burroughs Wellcome (India) Ltd again gained positive residuals till +4 and +7 respectively and from +14 onwards, it again entered into the positive region. With reference to Market Adjusted Model, the market reacted positively during the pre merger period for both Glaxosmithkline Pharmaceuticals Ltd and Burroughs Wellcome (India) Ltd from the day of -20 onwards except -5, -3, -2 and -1 days. During the post merger period, both the companies continued in the positive region. From +11 day onwards, Glaxosmithkline Pharmaceuticals Ltd earned negative returns but conversely, the Burroughs Wellcome (India) Ltd continued in the positive zone till the +20 day. The above analysis signifies that the merger of above firms created impact on the prices of their shares. In conclusion, this study confirms that Glaxosmithkline Pharmaceuticals Ltd did not receive any positive abnormal returns during the post merger period. The target firm, on the other hand, experienced positive abnormal returns during both pre and post merger periods. Table 11 CAR of Glaxosmithkline Pharmaceuticals Ltd and Burroughs Wellcome (India) Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 Market Model Glaxosmithkline Burroughs Pharmaceuticals Wellcome (India) Ltd Ltd 0.0325 0.0112 0.0411 0.0140 0.0432 0.0014 0.0444 0.0634 0.0454 0.0478 Market Adjusted Model Glaxosmithkline Burroughs Pharmaceuticals Wellcome (India) Ltd Ltd 0.0320 0.0112 0.0353 0.0096 0.0384 -0.0017 0.0290 0.0511 0.0315 0.0373

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

-15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 0.0313 0.0351 0.0226 0.0029 -0.0003 0.0177 -0.0034 0.0121 0.0011 0.0088 -0.0085 -0.0074 -0.0111 -0.0163 0.0157 0.0491 0.0581 0.0417 0.0478 0.0472 -0.0173 -0.0078 0.0131 0.0091 -0.0296 -0.0280 -0.0614 -0.0297 -0.0404 -0.0028 0.0081 0.0045 0.0046 0.0150 0.0000 0.0019 0.0724 0.0597 0.0335 0.0262 0.0122 0.0219 0.0128 0.0070 0.0103 -0.0017 -0.0137 0.0032 0.0021 -0.0318 -0.0469 0.0777 0.0831 0.0851 0.0992 0.0792 0.0161 0.0174 0.0244 -0.0183 -0.0049 -0.0071 0.0208 -0.0008 -0.0114 -0.0016 0.0177 0.0240 0.0166 0.0136 0.0124 0.0000 0.0161 0.0150 0.0259 0.0058 0.0268 0.0406 0.0400 0.0596 0.0336 0.0167 -0.0009 0.0026 -0.0161 -0.0369 0.0048 0.0466 0.0695 0.0516 0.0824 0.0789 0.0117 0.0355 0.0537 0.0652 0.0254 0.0252 -0.0128 0.0019 -0.0158 0.0238 0.0266 0.0056 -0.0058 -0.0019 -0.0151 -0.0130 0.0613 0.0445 0.0403 0.0332 0.0421 0.0483 0.0586 0.0570 0.0470 0.0128 0.0009 0.0205 0.0061 -0.0419 -0.0474 0.0855 0.1041 0.1053 0.1426 0.1204 0.0554 0.0703 0.0752 0.0474 0.0602 0.0569 0.0811 0.0441 0.0276 0.0397 0.0519 0.0427 0.0252 0.0166 0.0175 0.0058

Source: Computed from PROWESS 9. Matrix Laboratories Ltd-Fine Drugs & Chemicals Cumulative Average Residuals under Market Model and Market Adjusted Model revealing the reaction of the market with regard to merger of Matrix Laboratories Ltd (Acquirer) and Fine Drugs & Chemicals Ltd (Target) companies, is presented in Table 12. The event day of merger of Matrix Laboratories Ltd and Fine Drugs & Chemicals Ltd recorded negative residuals under the Market Model (-0.1131 and -0.0105 respectively) and the Market Adjusted Model (-0.1725 and -0.0484 respectively). With reference to the analysis of CAR under the Market Model, there was negative returns for the acquirer from -10 and under Market Adjusted Model, the whole study period of -19 to +20 recorded negative returns only. It implies that the merger was not welcomed by the

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net investors of the acquirer company. On the other hand, Fine Drugs & Chemicals Ltd (Target) never gained positive returns under the Market Model. Under the Market Adjusted Model, it earned positive residuals only between -14 and -3. As a whole, the Table depicts that the merger between Matrix Laboratories Ltd (Acquirer) and Fine Drugs & Chemicals Ltd (Target), did not provide any positive impact on the wealth of the shareholders of both companies after the merger. Table 12 CAR of Matrix Laboratories Ltd and Fine Drugs & Chemicals Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Market Model Matrix Fine Drugs & Laboratories Ltd Chemicals Ltd 0.0210 -0.0211 0.0030 -0.0039 0.0225 0.0165 0.0081 0.0369 -0.0013 0.0549 -0.0008 0.0733 0.0314 0.0942 0.0258 0.1153 0.0225 0.1367 0.0023 0.1568 -0.0121 0.1407 -0.0563 0.1212 -0.0730 0.1021 -0.0635 0.0845 -0.0742 0.0654 -0.1158 0.0480 -0.0877 0.0292 -0.1214 0.0099 -0.1008 -0.0093 -0.1202 -0.0302 -0.1131 -0.0105 -0.1091 -0.0293 -0.1147 -0.0496 -0.1128 -0.0704 -0.1199 -0.0728 -0.1200 -0.0929 -0.1185 -0.0748 -0.1098 -0.0941 -0.0932 -0.0928 -0.1078 -0.0867 -0.1147 -0.1062 -0.1058 -0.1168 -0.0907 -0.0969 -0.1015 -0.0770 -0.0892 -0.0686 Market Adjusted Model Matrix Fine Drugs & Laboratories Ltd Chemicals Ltd 0.0064 -0.0389 -0.0344 -0.0506 -0.0171 -0.0311 -0.0313 -0.0085 -0.0554 -0.0083 -0.0701 -0.0085 -0.0315 0.0231 -0.0319 0.0534 -0.0253 0.0902 -0.0487 0.1080 -0.0440 0.1198 -0.0926 0.0963 -0.1134 0.0738 -0.0937 0.0721 -0.1086 0.0493 -0.1389 0.0492 -0.1137 0.0284 -0.1508 0.0066 -0.1360 -0.0183 -0.1718 -0.0594 -0.1725 -0.0484 -0.1688 -0.0654 -0.1832 -0.0957 -0.1978 -0.1369 -0.2166 -0.1532 -0.2243 -0.1814 -0.2231 -0.1617 -0.2161 -0.1814 -0.2045 -0.1848 -0.2165 -0.1731 -0.2389 -0.2116 -0.2281 -0.2175 -0.2176 -0.2018 -0.2306 -0.1830 -0.2124 -0.1645

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

15 16 17 18 19 20 -0.1026 -0.0880 -0.0243 -0.0129 0.0000 0.0034 -0.0680 -0.0508 -0.0316 -0.0120 -0.0204 0.0000 -0.2283 -0.2251 -0.1694 -0.1607 -0.1232 -0.1214 -0.1653 -0.1613 -0.1509 -0.1331 -0.1061 -0.0858

Source: Computed from PROWESS 10. Eastern Silk Inds Ltd-Sstella Silks Table 13 presents the CAR values of acquirer and target companies, namely, Eastern Silk Inds Ltd (Acquirer) and Sstella Silks Ltd (Target) for the 20 days before and 20 days after the merger periods, including the date of merger. It is to be noted that under the Market Model, the market reacted positively to the merger of Eastern Silk Inds Ltd and Sstella Silks Ltd on the day of announcement and the AR values under the Market Model were 0.0907 and 0.0710 respectively and under the Market Adjusted Model, the values were 0.2138 and 0.0657 respectively. Under both the models, the Acquirer Company earned high abnormal returns when compared to the target company. With reference to the Market Adjusted Model also, Eastern Silk Inds Ltd and Sstella Silks Ltd earned negative CAR values from -20 to -4 days. Later, Eastern Silk Inds Ltd showed positive reaction from 6th day of pre merger period onwards. But Sstella Silks Ltd continued to provide negative returns to its share holders from 6th day onwards in the post merger period. In conclusion, this study confirms that the acquirer and target companies earned positive returns only on the announcement day only. Later, it failed to benefit. Table 13 CAR of Eastern Silk Inds Ltd and Sstella Silks Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 Market Model Eastern Silk Inds Sstella Silks Ltd Ltd -0.0106 -0.0956 0.0017 -0.0255 -0.0001 -0.0954 -0.0574 -0.1325 -0.0577 -0.2031 -0.0556 -0.3202 -0.0561 -0.4386 -0.0629 -0.3715 -0.0676 -0.4619 -0.0405 -0.4570 -0.0704 -0.4701 -0.0896 -0.4541 -0.1021 -0.3844 -0.1159 -0.3786 -0.0738 -0.2784 -0.0057 -0.1834 0.0314 -0.0726 0.0353 0.0382 Market Adjusted Model Eastern Silk Inds Sstella Silks Ltd Ltd -0.0017 -0.0999 0.0132 -0.0257 0.0268 -0.1082 -0.0233 -0.1474 -0.0081 -0.2308 -0.0044 -0.3426 -0.0038 -0.4551 -0.0121 -0.3787 -0.0113 -0.4688 0.0257 -0.4693 -0.0042 -0.4751 -0.0136 -0.4645 -0.0266 -0.3868 -0.0364 -0.3788 0.0133 -0.2811 0.0876 -0.1869 0.1355 -0.0826 0.1499 0.0218

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

-2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 0.0402 0.0517 0.0907 0.0538 0.0152 0.0117 -0.0073 0.0346 -0.0088 -0.0402 -0.0418 -0.0622 -0.0731 -0.0801 -0.1038 -0.0856 -0.0539 -0.0377 0.0012 -0.0089 0.0045 0.0000 0.0626 0.0197 0.0775 0.0710 -0.0019 0.0694 -0.0295 0.0388 0.0066 -0.0385 -0.0088 -0.0454 -0.1563 -0.0678 0.0182 0.0309 -0.0631 -0.0226 -0.0232 -0.0353 -0.0595 -0.1298 -0.0841 0.0000 0.1574 0.1700 0.2138 0.1852 0.1501 0.1487 0.1346 0.1792 0.1464 0.1227 0.1227 0.1053 0.0990 0.0988 0.0834 0.1014 0.1440 0.1642 0.2079 0.2111 0.2368 0.2390 0.3070 0.0073 0.0710 0.0657 -0.0107 0.0634 -0.0308 0.0385 0.0101 -0.0414 -0.0144 -0.0457 -0.1531 -0.0632 0.0213 0.0306 -0.0559 -0.0220 -0.0205 -0.0315 -0.0656 -0.1445 -0.1002 -0.0157

Source: Computed from PROWESS 11. Oriental Bank of Commerce-Global Trust Bank The share price reactions after the merger between Oriental Bank of Commerce (Acquirer) and Global Trust Bank Ltd (Target), based on Market Model and Market Adjusted Model, are given in Table 14. The values of CAR under the Market Model and the Market Adjusted Model for acquirer and target companies were calculated for 41 days window period. On the event day of (0) under the Market Model, Oriental Bank of Commerce and Global Trust Bank Ltd achieved positive abnormal returns of AR=0.0951 and AR=0.9002 respectively. But Oriental Bank of Commerce under the Market Adjusted Model gained positive returns of AR=0.0715. It is significant that under both the models, Oriental bank of Commerce earned the highest AR on the event day when compared to the Global Trust Bank. The calculation of CAR under the Market Model shows positive returns for Oriental Bank of Commerce during the pre merger period except days from -12 to -10. On the other hand, Global Trust Bank, in all the pre merger days, gained positive residuals except -20. While observing the post merger period, it is found that both the companies entered into the negative region. The above facts indicate that the merger created negative impact on the acquirer and target companies performance. The CAR values under the Market Adjusted Model for Oriental Bank of Commerce clearly show positive results during the pre announcement date except from -12 to -9. But the target company, namely, Global Trust Bank moved into the negative region from -15 day onwards. It is important that in the post merger period, CAR values of both acquirer and target companies moved into the negative region. As a whole, it is inferred that the market reacted unfavorably, after the announcement date, to the Oriental Bank of Commerce (Acquirer) and Global Trust Bank Ltd (Target). These outcomes

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net imply that the merger created an impact on the share prices of both acquirer and target companies in post merger period when compared to the pre merger. Table 14 CAR of Oriental Bank of Commerce and Global Trust Bank Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Market Model Oriental Bank of Global Trust Commerce Bank Ltd 0.0214 -0.0020 0.0253 0.1366 0.0320 0.2608 0.0493 0.2309 0.0370 0.2981 0.0203 0.2679 0.0236 0.2853 0.0114 0.2905 -0.0174 0.4522 -0.0585 0.4071 -0.0149 0.4708 0.0154 0.5815 0.0381 0.6744 0.0325 0.6884 0.0467 0.7177 0.0549 0.8824 0.0821 1.0072 0.0943 1.0127 0.0997 1.0568 0.0889 1.1004 0.0951 0.9002 0.0326 -0.1239 0.0196 -0.3691 0.0031 -0.3651 -0.0164 -0.3121 -0.0212 -0.1427 -0.0283 -0.2484 -0.0266 -0.1752 -0.0184 -0.1634 -0.0071 0.0547 -0.0083 0.2453 -0.0146 0.1281 -0.0048 0.1835 0.0005 0.1971 -0.0004 0.2900 0.0095 0.5429 0.0045 0.5068 0.0105 0.4160 -0.0027 0.1884 Market Adjusted Model Oriental Bank Of Global Trust Bank Commerce Ltd 0.0272 0.0091 0.0296 0.0897 0.0300 0.1117 0.0515 0.0781 0.0362 0.0740 0.0134 -0.0570 0.0214 -0.0387 0.0093 -0.0764 -0.0330 -0.0861 -0.0674 -0.1100 -0.0261 -0.1119 -0.0030 -0.1127 0.0127 -0.1293 0.0085 -0.1443 0.0257 -0.1303 0.0331 -0.0165 0.0556 0.0208 0.0684 -0.0127 0.0758 0.0080 0.0641 -0.0013 0.0715 -0.2331 0.0020 -1.3670 -0.0150 -1.6928 -0.0290 -1.7086 -0.0474 -1.6886 -0.0529 -1.5685 -0.0630 -1.7467 -0.0659 -1.7600 -0.0533 -1.7502 -0.0493 -1.6440 -0.0506 -1.4975 -0.0577 -1.6660 -0.0579 -1.7480 -0.0586 -1.8349 -0.0651 -1.8382 -0.0582 -1.6564 -0.0647 -1.7503 -0.0668 -1.9608 -0.0758 -2.1925

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

19 20 0.0000 -0.0135 0.1017 0.0000 -0.0811 -0.1010 -2.3977 -2.6027

Source: Computed from PROWESS 12. Ricoh India Ltd-Gestetner (India) The effect of merger between Ricoh India Ltd and Gestetner (India) Ltd on their share prices under the Market Model and the Market Adjusted Model for the pre and post merger period, is presented in Table 15. The merger reaction on the event day was positive for Gestetner (India) Ltd under both Market Model (0.2334) and Market Adjusted Model (0.5761). But there was impact for Ricoh India Ltd only under the Market Adjusted Model (0.1654). This shows that the merger earned positive impact on the share prices of Gestetner (India) Ltd. The analysis of Cumulative Abnormal Returns in the Market Model shows that the merger brought about negative impact on the Ricoh India Ltd and Gestetner (India) Ltd companies share prices in the pre announcement days of upto -11 day. CARs moved into the negative zone from day -20 to -11 except -19 and switched to positive zone during day -10 to -7. Again it crashed into the negative zone till announcement day for Ricoh India Ltd. From day 1 of post merger period onwards, it earned positive returns. In the case of Gestetner (India) Ltd, it earned positive CAR value from -10 to +4 days. Later it recorded negative reaction from +5 day onwards. In short, the target company reacted negatively to the merger event when compared to the acquirer. Under the Market Adjusted Model, during the pre merger announcement days, Ricoh India Ltd and Gestetner (India) Ltd earned negative CAR upto -12. But in the post announcement period, both the companies performed poorly to their pre merger performance. From day -10 onwards, both the companies entered the positive zone. This means that there was leakage of information to the public and informed investors earned excess returns by using merger announcement. On the whole, the market reacted unfavorably before the announcement date to the acquirer and target firms under the Market Model and the Market Adjusted Model and in the post announcement date, the reaction was positive to the acquirer under the Market Adjusted Model. Thus these results clearly indicate that the merger created an impact on the share prices of both acquirer and target companies. Table 15 CAR of Ricoh India Ltd and Gestetner (India) Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 Market Model Ricoh India Gestetner (India) Ltd Ltd -0.0207 -0.1118 0.0107 0.0168 -0.0547 -0.0407 -0.0608 -0.0594 -0.0639 -0.1020 -0.0612 -0.0177 -0.0934 -0.1279 -0.1443 -0.1439 -0.1366 -0.2015 -0.1292 -0.0472 Market Adjusted Model Ricoh India Gestetner (India) Ltd Ltd -0.0200 -0.1085 0.0061 0.0138 -0.0489 -0.0249 -0.0497 -0.0329 -0.0394 -0.0520 -0.0167 0.0664 -0.0579 -0.0560 -0.0944 -0.0469 -0.0642 -0.0665 -0.0349 0.1250

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

-10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 0.0115 0.0293 0.0634 0.0323 -0.0330 -0.0296 -0.0524 -0.0142 -0.0571 -0.0655 -0.0209 0.0883 0.1246 0.2182 0.2044 0.1550 0.1922 0.1220 0.0174 0.0451 -0.0139 0.0438 0.0617 0.0265 0.0129 0.0187 -0.0396 0.0565 -0.0703 0.0000 0.0400 0.1170 0.1966 0.3583 0.3658 0.3607 0.2564 0.2790 0.2249 0.2065 0.2249 0.2334 0.2111 0.1498 0.0597 0.0324 -0.0196 -0.0785 -0.0712 -0.0860 -0.1339 -0.1931 -0.2146 -0.2487 -0.2497 -0.2743 -0.2771 -0.2491 -0.1811 -0.1048 -0.0309 0.0000 0.1097 0.1282 0.1711 0.1570 0.0978 0.1038 0.0902 0.1328 0.1119 0.1191 0.1654 0.2793 0.3241 0.4313 0.4343 0.3827 0.4423 0.3794 0.2837 0.3397 0.3007 0.3774 0.4086 0.3837 0.3944 0.3984 0.3642 0.4809 0.3599 0.4392 0.4818 0.2975 0.3804 0.5583 0.5951 0.6019 0.5039 0.5434 0.4984 0.5174 0.5626 0.5761 0.5635 0.5178 0.4517 0.4533 0.3999 0.3790 0.4001 0.4015 0.4009 0.3758 0.3867 0.3760 0.3937 0.4100 0.4065 0.4750 0.5780 0.6659 0.7562 0.7935

Source: Computed from PROWESS 13. Silicon Valley Infotech Ltd-Pentasoft Technologies Ltd Table 16 tabulates the Cumulative Abnormal Returns (CAR) under the Market Model and the Market Adjusted Model for Silicon Valley Infotech Ltd and Pentasoft Technologies Ltd. The merged companies, namely, Silicon Valley Infotech Ltd (Acquirer) earned negative returns and Pentasoft Technologies Ltd (Target) earned positive returns under both the models, namely, Market Model i.e. -0.2845 and 0.2139 respectively and in Market Adjusted Model i.e. -0.134 and 0.3806 respectively on the event day of zero (0). Analysis of Cumulative Abnormal Returns under Market Model and Market Adjusted Model establishes that the merger triggered negative impact for Silicon Valley Infotech Ltd while for Pentasoft Technologies Ltd, it brought about positive impact. However, Silicon Valley Infotech Ltd under the Market Model earned positive AR during -17 to -15, -13 and -12 days during pre merger and during post merger (on 19 and 20 days), it gained positive AR. The Pentasoft Technologies Ltd recorded negative returns only during -18 to -15. Under the Market Adjusted Model, the

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net acquirer company (Silicon Valley Infotech Ltd) earned negative AR just as it earned similar negative value under the Market Model and recorded positive value for the pre merger period of -17 to -9 and for the post merger period of +15 to +20. Similarly, Pentasoft Technologies Ltd also recorded positive returns under the Market Adjusted Model as well as under the Market Model. This means that the information efficiency favored the investors of target firm and the investors earned excess returns after the day of merger announcement. In conclusion, this study confirms that acquirer firm (Silicon Valley Infotech Ltd) did not receive any positive abnormal returns during the pre and post merger period. The target firm (Pentasoft Technologies Ltd), on the other hand, recorded positive abnormal returns. Table 16 CAR of Silicon Valley Infotech Ltd and Pentasoft Technologies Ltd Before and After Merger Period-Market Model & Market Adjusted Model
Day -20 -19 -18 -17 -16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 Market Model Silicon Valley Pentasoft Infotech Ltd Technologies Ltd -0.0545 0.0768 -0.0268 0.0424 -0.0034 -0.0111 0.0295 -0.0477 0.0670 -0.0630 0.0363 -0.0262 -0.0121 0.0030 0.0327 0.0228 0.0132 0.0284 -0.0480 0.0173 -0.0242 0.0431 -0.0295 0.0842 -0.0767 0.0911 -0.1284 0.0536 -0.1796 0.0839 -0.1337 0.2732 -0.1179 0.4428 -0.1593 0.2358 -0.2204 0.2985 -0.2696 0.2652 -0.2845 0.2139 -0.3395 0.2015 -0.3016 0.2451 -0.3076 0.1827 -0.3621 0.0991 -0.4194 0.0832 -0.4417 0.1051 -0.4936 0.0722 -0.4581 0.0514 -0.4161 0.0313 -0.3757 0.0472 -0.3365 0.0245 Market Adjusted Model Silicon Valley Pentasoft Infotech Ltd Technologies Ltd -0.0545 0.0853 -0.0266 0.0595 0.0062 0.0137 0.0411 -0.0146 0.0799 -0.0214 0.0534 0.0236 0.0055 0.0613 0.0569 0.0891 0.0483 0.1023 -0.0156 0.0999 0.0048 0.1345 0.0078 0.1834 -0.0111 0.1966 -0.0451 0.1661 -0.0958 0.2049 -0.0326 0.4013 0.0014 0.5779 -0.0180 0.3776 -0.0879 0.4496 -0.1244 0.4237 -0.1340 0.3806 -0.1840 0.3763 -0.1369 0.4276 -0.1362 0.3732 -0.1767 0.2971 -0.2352 0.2897 -0.2600 0.3204 -0.3244 0.2970 -0.2968 0.2855 -0.2493 0.2734 -0.2015 0.2973 -0.1660 0.2834

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net

12 13 14 15 16 17 18 19 20 -0.2928 -0.2486 -0.2055 -0.1665 -0.1248 -0.0818 -0.0410 0.0000 0.0407 0.0467 0.1118 0.1190 0.1462 0.1562 0.1096 0.0608 0.0174 0.0000 -0.1159 -0.0581 -0.0103 0.0295 0.0784 0.1222 0.1647 0.2135 0.2663 0.3135 0.3861 0.4015 0.4371 0.4550 0.4169 0.3765 0.3410 0.3311

Source: Computed from PROWESS From the above analysis, it is inferred that most of the sample acquirer companies reacted positively to the merger announcement under the market model and the market adjusted model. But target companies failed to react positively. The overall performance of all the sample companies shows that acquirer benefited from merger and targets firms failed to improve their performance after merger with respect to market performance. Thus the null hypothesis, Mergers do not increase the share price of the acquirer and target companies listed in BSE surrounding the announcement period, is partially proved. It means that most of the acquirer companies share prices increased but target companies failed to make it. 9. Findings of the Study The following are the major findings of the present study. 1. The liberalization policy witnessed an unprecedented number of mergers and acquisitions in India. 2. After merger between Asahi India Glass Ltd-Floatglass India, the acquirer company received negative abnormal returns and target company ended up with positive abnormal returns. 3. It is found from the analysis that among all sample companies, acquirer companies earned positive abnormal returns and target companies received negative abnormal returns only in the case of Sundram Fasteners Ltd-T V S Autolec, Eastern Silk Inds Ltd-Sstella Silks and Oriental Bank Of Commerce-Global Trust Bank. 4. In the thirteen sample mergers, eight mergers between J K Tyre & Inds Ltd-Vikrant Tyres, Tata Chemicals Ltd-Hind Lever Chemicals, Supreme Industries Ltd-Siltap Chemicals, Gujarat Ambuja Exports Ltd-Jupiter Biotech, T V S Motor Co. Ltd-Lakshmi Auto Components, Glaxosmithkline Pharmaceuticals Ltd-Burroughs Wellcome (India), Matrix Laboratories Ltd-Fine Drugs & Chemicals and Ricoh India Ltd-Gestetner (India) experienced positive abnormal returns, both by acquirer and target companies. 5. One sample merger, namely, Silicon Valley Infotech Ltd-Pentasoft Technologies Ltd, obtained negative abnormal returns for both acquiring and target companies. 6. From the overall results of abnormal returns during announcement date, (among thirteen mergers) it is found that there were two mergers, namely, Asahi India Glass Ltd-Floatglass India and Matrix Laboratories Ltd-Fine Drugs & Chemicals, in which the acquirer companies received negative abnormal returns and target companies received positive abnormal returns, three mergers in which the acquirer companies had positive abnormal returns and target companies received negative abnormal

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net returns, seven mergers in which both acquirer and target companies experienced positive abnormal returns, and one merger, namely, Silicon Valley Infotech Ltd-Pentasoft Technologies Ltd, resulted in negative abnormal returns for both acquiring and target companies. 10. Suggestions of the Study The following are the major suggestions of the study. 1. Acquirer companies should try to participate in the management as well as provide reasonable returns after the merger. 2. The acquirer companies should take steps to keep the share price of both acquirer and target companies surrounding the merger period, constant or up trend. 3. The creditors and customers have to be informed about the merger by the company before taking the merger decision. 4. It is found that on the day of merger, all the investors of acquirer companies gained positive returns. They utilized the information efficiency. But the target companies investors failed to do so. The regulators (SEBI) should monitor the information leakage of corporate events and do justice to all the investors. 5. The management of the target companies should inform their investors about their decision relating to the restructuring of the management. 6. The law makers as well as stock exchanges should make merger deal transparent and protect the interest of all shareholders. 7. The companies, which initiate corporate restructuring, should enhance the shareholders wealth. 11. Conclusion The process of corporate restructuring through mergers and acquisitions is very relevant in the post-liberalization period. It is found from the share price analysis that the investors of target companies failed to utilize the information efficiency. This clearly implies that mergers did not lead to monopoly effects in terms of increased payment to investors. From the overall analysis, it is found that the shareholders of the acquirer companies, specifically manufacturing companies, increased their share value and returns for the investment after the merger event. The overall conclusion is that the acquirer companies always benefited more than the target companies with respect to Indian stock exchange in the merger event.

References 1. N. Asli Ascioglu Thomas, H. Mclnish and A. Robert Wood, Mergers Announcements and Trading, The Journal of Financial Research XXV (2002) 263-278. 2. B. K. Bhoi, Mergers and Acquisitions: An Indian Experience, Reserve Bank of India occasional papers 21 (2000) 133-166. 3. Bipul Malakar and Rajnarayan Gupta, Determinants of Share Price A System Approach: The Modified Model, Finance India XVI (2002) 1409-1418.

( Word to PDF Converter - Unregistered ) http://www.Word-to-PDF-Converter.net 4. Constantine Manasakis, Shareholder Wealth Effects from Mergers and Acquisitions in the Greek Banking Industry, Working Paper, BE.NE.TeC. Working Paper series, Greece (2006) 5. David Ruppert, Statistics and Finance, Springer (India) Private Limited, New Delhi (2006). 6. Dirk Hackbarth and Erwan Morellec, Stock Returns in Mergers and Acquisitions, www.ssrn.com (2006) 7. J. Fred Weston, S. Chung Kwang and E. Hoag Susan, Mergers, Restructuring, and Corporate Control, Prentice-Hall of India Private Ltd., New Delhi (2000). 8. Gurminder Kaur, Corporate Mergers and Acquisitions, Deep & Deep Publications Pvt. Ltd, New Delhi (2005). 9. M.Jayadev and Rudra Sensarma, Mergers in Indian Banking: An Analysis, South Asian Journal of Management 14 (2006) 20-43. 10. Keisho Komoto, The Effect of Mergers on Corporate Performance and Stock Prices, Discussion Paper, NLI Research Institute (1999) 24-32. 11. Manish Agarwal and Harminder Singh, Merger Announcements and Insider Trading Activity in India: An Empirical Investigation, NSE Research Initiative 8 (2000) 1-36. 12. H. R. Marchiraju, Mergers Acquisitions and Takeovers, New Age International (P) Limited Publishers, New Delhi (2003). 13. A. K. Mishra and Rashmi Goel, Returns to Shareholders from Mergers: The Case of RIL and RPL Merger, IIMB Management Review (2005) 69-79. 14. Prasanna Chandra, Shareholder Wealth Maximization, The ICFAI Journal of Applied Finance 1 (1995) 15-25. 15. Rabi Narayan Kar, Mergers and Acquisitions of Enterprises- Indian and Global Experiences, New Century Publications, New Delhi (2006). 16. F.Robert Halsey, Using the Residual-Income Stock Price Valuation Model to Teach and Learn Ratio Analysis, www.ssrn.com (2000). 17. J .Robert Borghese and F .Paul Borgese, M&A from Planning to Integration Executing Acquisitions and Increasing Shareholder Value, Tata McGraw-Hill Publishing Company Ltd, New Delhi (2004). 18. M. Selvam, Mergers and Acquisitions in the Banking Sector- The Indian Scenario, S.Viswanathan (Printers & Publishers) Pvt. Ltd., Chennai (2007). 19. Shailesh Karnik, Do M&As Create Value for Target companies Shareholders? The ICFAI Journal of Mergers and Acquisitions (2005) 62-76. 20. S. Shiva Ramu, Corporate Growth through Mergers and Acquisitions, Response Books, New Delhi (1998). 21. Subir Kumar Dutta, The Share Price and Its Valuation, The Management Accountant (2004) 274-282 22. Sudi Sudarsanam, Creating Value from Mergers and Acquisitions The Challenge, Pearson Education (Singapore) Pte Ltd, New Delhi (2004).