Most of the coston M&Ashave their attentionon the value of an individual deal (synergies, price, integration issues). We aim to describe how supervisors' choices to make an acquisition and to determine the acquisition price will likely be affected by the merger activity in their own sector and their adversaries' actions.
Driven by stockholder’s pressure to put attention ontheir portfolios, fine chemicals players and leading specialty for example Degussa, Clariant and Rhodia entered into major fine chemicals acquisition in 2000 and overpaid. Afterwards, this led to falling stock prices and financial turmoil. The fact that the other companies overpaid, despite signals that are publicly available from stock markets indicating the overpayment, and the nature of management and the chemicals industry, are clear indicators for irrational herd behavior.
PUBLICATION DATE: January 05, 2006 PRODUCT #: INS424-HCB-ENG
This is just an excerpt. This case is about STRATEGY about STRATEGY & EXECUTION
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