APPENDICES Appendix A: Theoretical model Appendix B: Result of business consulting literature on mergers Appendix C: Independent variables Appendix D:

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APPENDICES

Appendix A: Theoretical model

Appendix B: Result of business consulting literature on mergers

Appendix C: Independent variables

Appendix D:

Regression results after excluding outliers

Appendix E:

Regression results after excluding influential data

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APPENDIX B: Results of business consulting literature on mergers

Selected Results from the Business Consulting Literature on Mergers

and Post-Merger Integration

Sponsor

Selected Results

Sample, Methods,

Comparison Group

KPMG 2001

82% considered successful in executive survey. 30%

added value, 39% no change, 31% lowered value. A focus on synergy attainment increased chances of success by 28% relative to the average deal.

Survey of executives for 118 companies doing 700 cross border deals from 1997-1999. Compares equity price trends relative to industry trend just before and one year after the deal.

KPMG 1999

75% considered successful in executive survey. 17% add value, 30% no change, 53% reduce value. Firms that focused on choosing a strong deal management team and performed in-depth integration planning did 66% better than average. Pursuing synergies vigorously and communicating well improved performance by 45%. A focus on cultural issues improved the chances of success by 26%. Early action was a key for the successful firms.

107 companies surveyed for 1996-1997 cross border deals. Same comparison as above. Basis of certain percentage comparisons are not always fully explained.

Booz-Allen &

Hamilton 2001

53% of deals do not meet expectations; 47% of deals fail to attain the objectives stated in the merger announcement; 55% of same-industry deals met expectations, only 32% of cross industry deals met expectations. 42% of CEOs of disappointing mergers are gone within 2 years vs 16% for successful CEOs.

Methods not fully described.

Business Week/

Mercer 1995,

Sirower BCG

2002

Mercer Mgt 1995 results: 27% increase value, 33% no change, 50% reduce value. Nonacquirers outperformed acquirers, and experienced acquirers outperformed tyros.

Sirower/BCG 2002 results: 61% reduce shareholder value one year later, on average buyers do 4% worse that industry peers and 9% worse than S&P500. The study examined 302 large 1995 to 2001 deals.

Reviews 150 large, 1990-1995 deals. Share value 3 months before versus three months after compared to S&P500. Results regarding types of deals that work best are inconsistently reported. Some comparisons to non-acquiring firms.

Mercer

Consulting

2001

Over half of trans-Atlantic mergers work. Managers of the successful deals credit acquirer and target complementarities, especially careful planning, and speedy, well-directed implementation.

152 trans-Atlantic deals from 1994 to 1999 using 2-year postdeal comparison to industry specific S&P stock price index.

McKinsey 2000,

2001

65%-70% of deals fail to enhance shareholder value; 36% of target firms maintained revenue growth in 1st

post-merger quarter, only 11% by 3rd quarter; revenue

growth 12% below industry peers, 40% of mergers fail to capture cost synergies. In a related study, 42% of acquiring firms had lower growth than industry rivals for 3 years following the merger.

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Selected Results from the Business Consulting Literature on Mergers

and Post-Merger Integration

Sponsor

Selected Results

Sample, Methods,

Comparison Group

PriceWaterhouse

Coopers 2000

Acquirer’s stock 3.7% lower a year after a deal relative to peer group stock changes. 39% of firms reached their cost-cutting goals, while 60-70% achieved their market penetration goals. Success rates were uniformly higher if the firm moved early and quickly with transition teams, communications, and integration. Vast majority (79%) of executives regretted not moving faster in integration.

Survey of executives in 125 companies across a broad range of industries in 1999; 72% of firms were U.S.-based.

Accenture 2000,

2001

39% fully achieved their anticipated gains from alliances in the oil industry. In the finance industry, the best deals improved revenues 14%- 19% and shareholder value 65% above industry share values.

Oil industry and financial industry focus. Financial study reviews 72 deals from the 1990s.

A.T. Kearney

1999

58% of deals reduced shareholder value. Top performing deals were done in closely related businesses & had a higher percentage of assets in the firm’s core areas. 74% of successful deals were run by managers with deep merger experience.

115 large 1993-1996 deals; total

shareholder returns 3 months before versus two years after the deal. No explicit non-merger comparison group - comparisons made to average or quartiles in the sample.

CSC Index

Genesis

1997

Slightly more than 50% beat the benchmark, with

a wide variance in post-deal performance 71 large deals from 1989 to 1993 compared to peer group market value change from one year before to two years after the deals.

MAPI 1999

54% successful, 24% little change, 11% failures Survey of 80 senior executives;

Boston

Consulting

Group 2000,

2001

Doubling of asset size for financial firms leads to 20% reduction in unit cost of servicing accounts. For industrial firms, savings of 10-15% in materials and components are common as a result of scale gains.

Based on B CG internal research.

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APPENDIX C: Independent variables

Gender:

Gen 0 Male 1 Female

Foreigner:

For 0 No 1 Yes

Level of education:

Loe 0 Max Bachelor

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APPENDIX D: Regression results after excluding outliers

_{Excluded Case(s)} Standardize

d Residual N R2 Significance ANOVA

1 day after

completion 12. Libby Inc. -6,78 165 0,18 0,00*

12. Libbey Inc. -5,24

1 m after

completion _{101. Kennametal Inc. -3,53} 164 0,25 0,00*

23. Technitrol Inc. 3,35

3 m after

completion _{101. Kennametal Inc} _3,45 164 0,18 0,00*

6 m after

completion 70. OM Group Inc. 3,86 165 0,09 0,03*

70. OM Group Inc. 3,20 9 m after completion 77. American Oriental Bioengeneering Inc. 5,22 163 0,11 0,01* 12 m after

completion 77. American Oriental Bioengeneering Inc. 3,385 128 0,11 0,06

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APPENDIX E: Regression results after excluding influential data

Excluded Case(s) Cook’s D N R2 _{Sig ANOVA}

7. Newmont Mining Corp. 0,10

9. Huntsman Corperation 0,03

18.The Boeing Comp. 0,06

19.AO Smith Corp. 0,06

38. Imation Corp. 0,05 71. UPS Inc. 0,32 73. Brady Corp. 0,05 97. Citigroup Inc. 0,03 1 day after completion

101.Georgia Gulf Corp. 0,20

156 0,36 0,00*

5.Computer Associated International Inc. 0,05

19. AO Smith Corp. 0,05

51. Champion Enterprise 0,06

70. OM Group Inc. 0,13

71. AO Smith Corp. 0,11

77. American Oriental Bioengeneering Inc. 0,06

91. AES Corporation 0,03

117.Tennant Company 0,07

120. Greif Inc. 0,03

126. FTI Consulting Inc 0,03 1 M after

completion

156. Premiere Global Service Inc. 0,03

152 0,30 0,00*

12. Libbey Inc. 0,08

30. CB Richard Ellis Group Inc. 0,04

70. OM Group Inc. 0,23

71. AO Smith Corp 0,03

98. EnPro Industries Inc. 0,04 3 M after

completion

136. Advanced Micro Devices 0,04

157 0,29 0,00*

13. First Data Corp. 0,07

23 Technitrol Inc. 0,04

30 CB Richard Ellis Group Inc. 0,07

32. HNI Corp. 0,04

77 American Oriental Bioengeneering Inc. 0,14

101 Georgia Gulf Corp. 0,16

136 Advanced Micro Devices 0,04

141. CB Ellis Richard Group Inc. 0,03 6 M after

completion

165. Grant Prideco Inc. 0,03

154 0,19 0,00*

23 Technitrol Inc 0,18

101. Georgia Gulf Corperation 0,14

117. Tennant Company 0,04

131. Total System Service Inc 0,05

156. Premiere Global Service Inc. 0,03

163. Office Depot Inc. 0,04

9 M after completion

165. Grant Prideco Inc. 0,03

152 0,16 0,00*

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APPENDIX F: P-P plot of standardized residual and residual versus predicted values

Figure F1 + F2

P-P plot of standardized residual and residual versus predicted Values for 1 day

after completion regression

0,0 0,2 0,4 0,6 0,8 1,0

Observed Cum Prob

0,0 0,2 0,4 0,6 0,8 1,0 E xp ec te d C um P ro b

Dependent Variable: ST1DAY Normal P-P Plot of Regression Standardized Residual

-3 -2 -1 0 1 2 3 4

Regression Standardized Predicted Value

-4 -3 -2 -1 0 1 2 3 R eg re ss io n S ta nd ar di ze d R es id ua l

Dependent Variable: ST1DAY Scatterplot

Figure F3 + F4

P-P plot of standardized residual and residual versus predicted Values for 1 month

after completion regression

0,0 0,2 0,4 0,6 0,8 1,0

0,0 0,2 0,4 0,6 0,8 1,0 E xp ec te d C um P ro b Dependent Variable: ST1M Normal P-P Plot of Regression Standardized Residual

-4 -2 0 2 4

-4 -3 -2 -1 0 1 2 3 R eg re ss io n S ta nd ar di ze d R es id u al Dependent Variable: ST1M Scatterplot

Figure F5 + F6

P-P plot of standardized residual and residual versus predicted Values for 3 months

after completion regression

0,0 0,2 0,4 0,6 0,8 1,0

-3 -2 -1 0 1 2 3 4

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Figure F7 + F8

P-P plot of standardized residual and residual versus predicted Values for 6 months

after completion regression

0,0 0,2 0,4 0,6 0,8 1,0

-3 -2 -1 0 1 2 3 4

-3 -2 -1 0 1 2 3 4 R eg re ss io n S ta nd ar di ze d R es id ua l Dependent Variable: ST6M Scatterplot

Figure F9 + F10

P-P plot of standardized residual and residual versus predicted Values for 9 months

after completion regression

0,0 0,2 0,4 0,6 0,8 1,0

-4 -2 0 2 4

-4 -2 0 2 4 R eg re ss io n S ta nd ar di ze d R es id u al Dependent Variable: ST9M Scatterplot

Figure F11 + F12

P-P plot of Standardized Residual and Residual versus Predicted Values for 12

months after completion regression

0,0 0,2 0,4 0,6 0,8 1,0

-3 -2 -1 0 1 2 3 4

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APPENDIX G: Regession results after robustness analysis

Table G1

Model Summary 1 day after completion

Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson

1 ,596(a) ,355 ,325 ,0431468371 1,985

a Predictors: (Constant), SM1DAY, NATDIV, AGEDIV, GENDIV, TENDIV, LOEDIV, IEDIV b Dependent Variable: ST1DAY

Table G2

ANOVA(b) 1 day after completion

Model Sum of Squares df Mean Square F Sig.

Regressio n ,152 7 ,022 11,638 ,000(a) Residual ,276 148 ,002 1 Total ,427 155

a Predictors: (Constant), SM1DAY, NATDIV, AGEDIV, GENDIV, TENDIV, LOEDIV, IEDIV b Dependent Variable: ST1DAY

Table G3

Coefficients(a) 1 day after completion

Unstandardized

Coefficients Standardized Coefficients

Model B Std. Error Beta t Sig. (Constant ) ,004 ,019 ,204 ,839 GENDIV -,015 ,022 -,046 -,683 ,496 NATDIV -,012 ,022 -,044 -,557 ,578 LOEDIV ,028 ,024 ,085 1,163 ,247 TENDIV -,009 ,021 -,030 -,427 ,670 IEDIV ,002 ,024 ,006 ,084 ,934 AGEDIV ,002 ,022 ,007 ,097 ,923 1 SM1DA Y 1,137 ,128 ,601 8,886 ,000

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Table G4

Model Summary 1 month after completion

Model R R Square Adjusted R Square Std. Error of the Estimate

1 ,549(a) ,301 ,267 ,0720732585

a Predictors: (Constant), SM1M, IEDIV, TENDIV, AGEDIV, LOEDIV, GENDIV, NATDIV

Table G5

ANOVA(b) 1 month after completion

Regressio n ,322 7 ,046 8,863 ,000(a) Residual ,748 144 ,005 1 Total 1,070 151

a Predictors: (Constant), SM1M, IEDIV, TENDIV, AGEDIV, LOEDIV, GENDIV, NATDIV b Dependent Variable: ST1M

Table G6

Coefficients(a) 1 month after completion

Unstandardized

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Table G7

Model Summary 3 months after completion

1 ,536(a) ,288 ,254 ,1042714104

a Predictors: (Constant), SM3M, TENDIV, GENDIV, NATDIV, AGEDIV, LOEDIV, IEDIV

Table G8

ANOVA(b) 3 months after completion

Regressio n ,654 7 ,093 8,593 ,000(a) Residual 1,620 149 ,011 1 Total 2,274 156

a Predictors: (Constant), SM3M, TENDIV, GENDIV, NATDIV, AGEDIV, LOEDIV, IEDIV b Dependent Variable: ST3M

Table G9

Coefficients(a) 3 months after completion

Unstandardized

Model

B Std. Error Beta t Sig.

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Table G10

Model Summary 6 months after completion

1 ,433(a) ,188 ,149 ,1653718227

a Predictors: (Constant), SM6M, NATDIV, TENDIV, AGEDIV, GENDIV, LOEDIV, IEDIV

Table G11

ANOVA(b) 6 months after completion

a Predictors: (Constant), SM6M, NATDIV, TENDIV, AGEDIV, GENDIV, LOEDIV, IEDIV b Dependent Variable: ST6M

Table G12

Coefficients(a) 6 months after completion

Unstandardized

Model

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Table G13

Model Summary 9 months after completion

1 ,403(a) ,163 ,122 ,1838297444

a Predictors: (Constant), SM9M, IEDIV, LOEDIV, AGEDIV, TENDIV, GENDIV, NATDIV

Table G14

ANOVA(b) 9 months after completion

a Predictors: (Constant), SM9M, IEDIV, LOEDIV, AGEDIV, TENDIV, GENDIV, NATDIV b Dependent Variable: ST9M

Table G15

Coefficients(a) 9 months after completion

Unstandardized

Model

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Table G16

Model Summary 12 months after completion

1 ,375(a) ,141 ,089 ,2435935506

a Predictors: (Constant), SM12M, LOEDIV, GENDIV, IEDIV, TENDIV, AGEDIV, NATDIV

Table G17

ANOVA(b) 12 months after completion

Regressio n 1,119 7 ,160 2,695 ,013(a) Residual 6,824 115 ,059 1 Total 7,943 122

a Predictors: (Constant), SM12M, LOEDIV, GENDIV, IEDIV, TENDIV, AGEDIV, NATDIV b Dependent Variable: ST12M

Table G18

Coefficients(a) 12 months after completion

Unstandardized

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FIGURE 2

TMT strategic capacity: diversity and collective action

Source: Krishnan H.A.; Miller, A.; Judge W.Q. (1997), Diversification and top management

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TABLE 1

Regression results

Regression 1 day after completion Regression 1 month after completion Regression 3 months after completion Regression 6 months after completion Regression 9 months after completion Regression 12 months after completion

Variable B Sig B Sig B Sig B Sig B Sig B Sig

(Constant) _-0,00 _,90 _0,05 _0,24 _-0,00 _0,18 _0,06 _0,50 _0,17 _0,18 _0,20 _0,20 GENDIV 0,00 1,00 0,08 0,17 0,01 0,98 0,02 0,86 0,00 0,98 -0,08 0,64 NATDIV 0,06 0,08 0,08 0,16 -0,06 0,65 -0,00 0,98 -0,06 0,65 0,11 0,53 LOEDIV 0,03 0,41 -0,03 0,60 -0,13 0,43 -0,15 0,21 -0,12 0,43 -0,24 0,16 TENDIV -0,01 0,70 -0,09 0,08 0,29 0,07 -0,02 0,87 -0,23 0,07 -0,14 0,33 IEDIV -0,06 0,13 -0,13 0,03* -,012 0,43 -0,08 0,51 -0,12 0,43 -0,14 0,43 AGEDIV 0,02 0,47 0,07 0,19 0,10 0,44 0,04 0,72 0,10 0,44 0,02 0,93 TOTDIV - - - - SM 0,70 0,00* 0,94 ,00* 1,17 0,00* 0,99 0,00 1,17 0,00* 1,14 0,02* Dependent Variable ST1DAY ST1M ST3M ST6M ST9M ST12M N 166 166 166 166 165 129 R2 _0,12 _0,17 _0,16 _0,08 _0,09 _0,08 Sig ANOVA 0,01* 0,00* 0,00* 0,08 0,04* 0,17

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TABLE 2

Regression results after robustness analysis

Regression 1 day after completion Regression 1 month after completion Regression 3 months after completion Regression 6 months after completion Regression 9 months after completion Regression 12 months after completion

Variable B Sig B Sig B Sig B Sig B Sig B Sig

(Constant) _0,00 _0,84 _0,08 _0,04* _0,02 _0,66 _-0,01 _0,88 _-0,14 _0,19 _-0,04 _0,80 GENDIV -0,02 0,50 0,05 0,17 0,05 0,32 0,08 0,40 0,06 0,58 -0,01 0,93 NATDIV -0,01 0,58 0,04 0,27 0,07 0,18 0,01 0,92 -0,04 0,69 0,17 0,24 LOEDIV 0,03 0,25 -0,07 0,10 -0,13 0,04* -0,11 0,27 -0,09 0,39 -0,33 0,03* TENDIV -0,01 0,67 -0,03 0,56 0,03 0,64 0,13 0,16 0,18 0,10 0,11 0,47 IEDIV 0,00 0,93 -0,09 0,03* -0,09 0,12 -0,01 0,96 0,14 0,19 0,03 0,84 AGEDIV 0,00 0,92 -0,03 0,44 0,03 0,58 -0,11 0,19 -0,04 0,65 -0,05 0,71 SM 1,14 0,00* 1,14 0,00* 1,24 0,00* 1,33 0,00* 1,27 0,00* 1,54 0,00* Dependent Variable ST1DAY ST1M ST3M ST6M ST9M ST12M N 156 152 157 154 152 123 R2 0,36 0,30 0,29 0,19 0,16 0,14 Sig ANOVA 0,00* 0,00* 0,00* 0,00* 0,00* 0,01*