Answer

Economic Impacts of Acquisition & Merger of ship buildings & ship yard companies

Abstract

Mergers and Acquisitions (M & A) are common business strategies that major corporations adopt to expand and grow their businesses globally (Tamosiuniene and Duksaite, 2009). Motivated by the growth of shareholder value such actions not only target formation of new entities but also new economic and social strategies that enable the respective companies to grow rapidly beyond their competitors in the industry ensuring that the weak companies are edged out of business or are acquired (Roberts, Wallace, and Moles, 2016). The shipping industry has faced tough economic challenges since the 2008/9 global economic crises that saw most of the maritime global industries suffer heavy financial losses. Ship building companies and other maritime activities are already burdened by the negative effects of the 2008/9 recession including unsustainable demand for shipping vessels. The oversupply conditions that developed mainly due to the recession global recession has compelled the industry to turn its attention to mergers and acquisitions to remain afloat (Gordon, 2018). Some of the notable M&A include AP Moller-Maersk and Hapag-Lloyd (Wagner, 2015). The adverse effects of fuel prices, low freight rates and the majority of small ship sizes in the industry has propelled most companies in the industry to pool resources together to compete with big liners in the industry. The demand for upgraded ports is also increasing as shipping alliances seek to maximize their returns (Wagner, 2015).  In 2001, top ten shipping liners held only 37.3 percent of the shipping industry internationally but currently due to M & A activities, the top ten shipping companies now control 63% of the global shipping market (Wagner, 2015). This paper evaluates the economic impact of mergers and acquisition to the shipping companies and related ship yard entities.
Sewdas et al.’s (2017) study employed, there are very little room for generalizing the study’s findings.