Growth by Merger - A long-term analysis of GlaxoSmithKline

Abstract

In the present circumstances, the most debatable issue is Merger & Acquisition (M&A) in the corporate sector. In the recent two decades large number of M&A activity has been experienced by various industries including pharmaceutical industry. M&A is a tool for achieving corporate growth and associated synergies. Consolidation of businesses is motivated by gains through expense reduction, economies of scale and increased market power. Recent studies reveal that 60-80 percent of M&As‟ failed to deliver value; which is very critical for the companies and shareholders. The objective of the thesis is to evaluate the performance of GlaxoSmithKline in the context of a merger. It is a study to understand & analyze the growth of merged company. The main purpose is to reveal whether; merger deliver value and achieved expectations? Pre and post merger analysis has been conducted by applying different key performance indicators such as sales & net earnings growth, relationship between revenue & operating expenses, R&D analysis, share price & dividend performance and ratios analysis. In this research, mainly secondary data were used. The research results indicate that there has been continues growth in GSK; but the growth trend is slow as per expectations and not in line with motives of merger set prior to the merger of GlaxoWellcome and SmithKline Beecham.