The chairman of “AdvancePierre” and advisor to the same, Dean Hollis links the aggressive acquisition of company by “LandShire” with the growth in product and innovation and emphasizes on the importance of this acquisition plan as being growth driven both for the customers and strategic partners of AdvancePierre. Even though this is the second time they are being acquired by some other company during last three weeks.
The mergers no doubt are found very effective in many ways, that they help two producers to merge and pool their capabilities in order to enjoy the synergy effect and economies of scope or scale whatever the case may be, because there will be sharing of diversified skills and activities from both companies and will result in closing the gap that was there before the merger.
Such mergers no doubt are also important for key stakeholders of the company which is being acquired as they will be under a larger and safer roof now, and resultantly they will be on a more profitable end.
Further, mergers are also helpful for the economy, this can be said if such acquisitions turn successful they will be making a larger sum of profits now than both the companies were making separately before. Therefore a profitable merger always adds to the economy by displaying positive results which will be a building block in calculating National Income. The other aspect of such mergers is obviously an increased total output of the economy i.e. a higher GDP level.
Besides the merits of merger, there are many disadvantages of such mergers as well, like it may lead to large amount redundancies therefore promoting an increased unemployment level which obviously cuts down the National Income level.
Such mergers may result in cartels and monopolies, if the mergers are at a larger level. The cartels and monopolies are considered unfavorable for society as they charge discretionary prices from the consumers.
If we see the mergers, they are by far beneficial for society and economy as it can; support the weak business, ensure continuity of employment level or an increase therein may be, greater quantity of products and services etc., therefore, if such mergers are regulated for their negative impacts on economy, they can be very helpful for the society and economy.
But there arises a series of questions, when mergers occurred so frequently as was used by ‘AdvancePierre’ would it help growing? Would it not send a message that there may be some risk attached to “Advance Pierre”? And the list of such questions is not exhaustive.