Merger Performance Evaluation: An Empirical Analysis of a Sample of UK Firms

Governments in the US and the UK since the Second World War have taken a keen interest in competition policy. The Thatcher Government in the UK is no exception, and, indeed, a policy of deregulation of the nationalised industries has been instituted, whilst further legislation aimed at reducing the concentration of British industry is likely in the future. In such a political climate merger activity remains an important focus of concern. In this article the authors investigate the relative corporate profitability of growth by merger, including horizontal, vertical and diversifying acquisitions, as compared with that achieved by the internal acquisition of assets, and report on the results of their empirical analysis conducted from data on 52 UK public companies.