What Explains Mergers' Success or Failure? : the Role of Organizational Structures, Strategies and External Environments in Mergers - Empirical evidence from two contrasting cases

Abstract

The study of mergers and acquisitions represents a broad interdisciplinary field of research. Mergers and acquisitions are ever present in the corporate world, and they have become an increasingly important part of corporate strategies. However, not all attempts to undertake a merger between two companies are successful: the reported failure rate in mergers and acquisitions is actually high. So, why do some mergers succeed whereas others fail? The literature in this field points to several possible answers to this question. This study intends to open a new research direction in this field by drawing insights from the literature on technological and organizational innovation for the study of the determinants of mergers’ success and failures. The empirical analysis focuses on the comparison of two different mergers, one that was cancelled and one that was successful. The successful case is the merger between Statoil and Hydro in 2007, and the failure case is the attempt to merge made by Telenor and Telia in 1999. The main findings of the thesis are that the main factors explaining the success of a merger are the similarities and complementarities of the two merging companies in terms of their respective organizational structures, business strategies and external policy environment.