ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Mergers, Acquisitions and Development

WEEKLYECONOMIC AND POLITICAL Mergers, Acquisitions and Development International production has expanded rapidly over the past two decades. The gross product associated with international production now constitutes about 10 per cent of global GDP, compared with 5 per cent at the beginning of the 1980s. The ratio of world FDI inflows to global gross domestic capital formation was 14 per cent in 1999 compared with 2 per cent 20 years ago. Of course, not all countries have been involved in the increasing globalisation of firms as FDI is concentrated in a few countries. In 1999, according to the World Investment Report 2000 (WIR), 10 countries received 74 per cent of global FDI flows and of total FDI flows to the developing world, just 10 countries appropriated 80 per cent. Most of the growth in international production over the past decade has been via cross-border mergers and acquisitions rather than greenfield investment. The global environment has made it important for firms to enhance their competitiveness through mergers and acquisitions. The growing list of large and successful firms that have entered into merger and acquisition deals in the recent past bears witness to this. Daimler-Chrysler, Chase-J P Morgan, SKB-Glaxo, McKinsey- Envision, Credit Suisse-DLJ, AOL-Time Warner, Nestle-Purina and GE-Honeywell are some of the deals that have received wide media coverage. These deals have been part of a large mergers and acquisitions wave since 1995.

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