M & A Synergies And Premium

Since 1990, the global Mergers & Acquisitions (hereafter abbreviated as M&A)has grown dramatically in volume, scale and complexity. It showed that M&A hasacted an important role in commercial communication. Undoubtedly, no one strategicaction like M&A could improve company's value in a short time. As the direct motiveof M&A activities, synergy has been commended by professionals from all over theworld. However, many studies indicated that numerous M&A did not actually acquirethe expectant synergy, even damage shareholders' value of acquiring corporation.This paper composed of four chapters. In the first chapter, I retrospect severalwestern and domestic theories about synergy. Then I introduced the concept ofsynergy and relationship between premium and synergy respectively in the next twochapters. In the last part of this paper, I used the Event-Study Methodology to analyzetwo cases: P&G bidding for Gillette and PetroChina bidding for PetroKazakhstan.Based on above case research, I draw my conclusion: M&A can not bring synergyspontaneously and high premium may lead to failure finally.