Economies of Scale in M&A in the Manufacturing Industry in the Czech Republic
Economies of Scale in M&A in the Manufacturing Industry in the Czech Republic

Author(s): Jan Pěta, Mária Režnáková
Subject(s): National Economy, Business Economy / Management, Micro-Economics
Published by: Masarykova univerzita nakladatelství
Keywords: mergers and acquisitions; economies of scale; Mann-Whitney U test; manufacturing;
Summary/Abstract: This paper presents partial results of the research focused on the success of completed M&A transactions in the manufacturing industry in the Czech Republic. The M&A topic has been frequently debated owing to the impossibility of unambiguously determining the associated effects. One of the M&A reasons consists in achieving the economies of scale, which should be reflected in decreasing costs. Our research is based on the sample of 59 transactions taking place in 2004 – 2011. The transactions involved 102 companies. These companies were examined for seven years, i.e. three years before the merger, and three years after the merger. The obtained data on the transactions were analysed separately for the group of successful and unsuccessful transactions. The success of the transactions was assessed by the amount of the achieved sales and the net income in the three years following the transaction. The aim of our research was to determine whether the mergers resulted in achieving economies of scale and in what areas. Testing the indicators was based on the Mann-Whitney U test. The research results have shown that only part of the mergers have been successful. The performed statistical tests confirmed the assumption that in the case of successful M&A transactions, there are savings in labour costs.

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