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The topic for this project is Merger and acquisition: A Viable option to corporate Survival. This project shall be a critical appraisal of merger and acquisition between two or more companies. In order to have a direct focus to achieve the objectives of the study, it will be necessary to take into consideration the merger and acquisition of two companies which are Agip Nigeria Plc Lagos, as a case study. This project shall specifically look into the merger and acquisition procedure of the companies (Akpan, 2007).

According Ajayi  (2005) an enterprise merger is the fusing together of two or more companies. Data gathered through the document for the scheme of merger, information from the internet and questionnaires shall be analyses using simple tabulation technique. Findings from the analyses will given analytical explanations; the study will therefore provide a useful insight into the rudiments of merger and acquisition procedures in Agip Nigeria PLC and Unipetrol Nigeria Plc, Lagos.

However, the study cannot be all inclusive but will rather serves as supplement to the contribution made by various author s on the literature relating to merger and acquisition and also will serve as a spring “ board for further researches into this area.


From time immemorial, success is sometimes or oftentimes found on the thousandth step and one is perhaps just a few feet away, mistake of stopping at  the nine  hundred and ninety  – nineth step should not be made. The longest journey begins with the first. Business of this nature is no exception. In periods of boom experienced in the sixteenth century during the oil  boom, many businesses, firms, enterprises and individuals thrived in area of abundance and wastage galore (Augustine, 2007).


In such period, employment, production and income are at their peak.  Likewise, there  were no much complaints and business that did not think of the means of survival and good sustenance. Conclusively, heaven is the limit for business that has access to very cheap credit and investment funds. However, when the hay days were over and down turn took over, the dooms arrived and business failure became the order of the day as a result of adverse macro “economic condition. Success does not count in the beginning, what does count is having a good and winning business idea, strategies and gimmicks. Ray krocs confession had completed the whole issue saying in any successful achievement, nothing happens by chance. Consequently, expansion is hindered even for the surviving films. This is the right time when company executives, government and individual will take into cognizance the word Viability Belt tightening or survival. Such is the predicament Nigeria is facing now since the era of oil glut which Nigeria has been experiencing since the early sixteenth century till date (Augustine, 2007)..

The condition has reached a level that could be tagged ˜economic crisis level This of course, has led to some drastic economic measures and programmes being initiated by each government of the day from on set to keep the nation going in an expected manner. Those measure have come with diverse tag at different times ranging from belt “ tightening of the Shehu Shagari administration via economic emergency of the Buhari/ ldiagbon regime to the structural adjustment programs (SAP). SAP therefore, embodied other sub– phrases such as FEM (Foreign Exchange Market), IFEM (International Foreign Exchange Market), First tier security market, second tier security market, interest rate regulation and Deregulation, debt equity swap, Directorate of Food Road and Rural infrastructure (DFRRI).  National Directorate of Employment (NDE) and the recent measure – Autonomous foreign Exchange Market (AFEM) took its effect towards the end of 1996 which was implemented by late General Sanni Abacha as well as the Gospel according to poverty Alleviation/Eradication Programs of President Olusegun Obasanjo.

The afore “ mentioned economic policies and measures therefore led firms and individual to an extremely hard condition to the point that survival has become paramount. The under listed problems have  thereby persisted under the structural Adjustment programme since its inception to date: Poverty, low aggregate demand, Unemployment, increased  inventory  of workers per head, inadequate of foreign  exchange, foreign exchange earnings, incessant devaluation of currency, balance and balance of payment disequilibrium, to  mention but few of those problems.

It is therefore unfortunate that this predicament has degenerated the growth of enterprises, leading to failure of others, stagnancy and yet many surviving ones are trying to implement quite a lot of survive strategies such as diversification,  massive advertise campaign Re “Organisation/Restructuring, Retrenchment , Merger and  Acquisition and host of others. One wisdom principle says that the proof of desire is Pursuit.  Among these measure however, specifically the merger and acquisition that this project works enters on. Moreover, it is also essential to point out that not in every condition is Merger and acquisition arises due to business failure, but it could be as a result of wilful desire of the shareholders to Merger Company and production of likely products. A very practical analogy to this is the case study under review “ Agip Nigeria Plc with Unipetrol Nigeria Plc.


Agip Nigeria Plc was incorporated on Sixth October, 1961, with the primary objective of marketing Petroleum Products. Agip became a public limited in 1978 with Agip petrol. S.P.A having a 60% shares holding Agip petrol lnternationals   B.V (Agip Petrol), while Nigerian shareholders held the balance of 40%. In July 2001, Agip petrol signified its intention to sell its 60% shareholding to a strategic investor, in line with its group strategy of diverting its downstream interest in Africa.

Upon the stream coming into effects, all the assets, liabilities and undertaking including real properties and intellectual property rights of AGIP will be issued, a lot and credited as fully paid to AGIP shareholders in consideration for the transfer since UNIPETROL currently owns 60% of AGIP™s paid up share s capital, it is proposed that 85,300,929 ordinary share of 50 kobo each in UNIPETROL issued to the ordinary shareholder of Agip as provided in the scheme.

Agip is engaged in the marketing and distribution of petroleum products and the manufacture and marketing of lubricants and insecticides. However, the company™s core business is the marketing of Gasoline (Premium Motor spirit Diesel) (Automatic Gas Oil) and Kerosine (Aviation Turbine Kerosine and Dual purpose Kerosine). These products amount for over 95% of the company™s total sales revenue. AGIP also market low fuel oil, liquefied petroleum Gas, and full range of lubricate and greases. The company currently operates through a network of 253 petrol sections located across Nigeria.  Over the years, AGIP has embarked upon various diversification Programmes, aimed at contributing to the growth and development of the petroleum industry in particular and Nigeria in general.


The company has established 6 LPG filling plants in Lagos, Benin, Kano, Jos, Enugu and Abuja respectively. In 1978, the company commissioned multi “ million Naira lubricants Blending Plant located in Kaduna, with a capacity to produce 30,000 metric tones per year of lubricants.  The company also commissioned an aerosol filling plant in Apapa through 50% Joint Ventures with ELF Oil Nigeria Limited (now Total EIF Nigeria Plc).  AGIP has an Ultra “ Modern Head office complex located at Pc 23 Engineering Close, Victoria lsland, Lagos and administrative office in Apapa, lbadan,Akure, Ilorin, Benin city, Port- Harcourt, Enugu, Warri, Makurdi, Kano Kaduna, Jos, Maiduguri, Gussau and Abuja.


Immediately after the incorporation of Agip Nigeria Plc as a Private Limited company on 6th October, 1961, with an initial authorized share capital of #500.000, comprising 500,000 ordinary share of #1 each. The company commenced Operations in 1962 and became a public limited liability company in 197 with an authorized share capital #3, 500,000 comprising 7,000,000 ordinary shares of 50 kobo each issued and fully paid up share capital of # 3,350,000 subdivided into 6,700,000 ordinary shares of 50 kobo each. The following changes have subsequently taken place in the company™s authorized and issued share capitals.


Authorised  (# ˜000) Issued and fully paid

( #™000)

DATE Increase Cummulative      Increase Cummulative
1980 3500 7000 3350 6700 Bonus (1: 1)
1981 1375 8375 1675 8375 Bonus (1 : 4)
1982 2125 10500 2094 10469 Bonus  (1 : 1)
1984 2000 13500 2617 13086 Bonus (1 : 4)
1985 4000 16500 3271 16357 Bonus (1 :4)
1989 8500 25000 8179 24536 Bonus ( 1 : 2)
1990 8000 33000 8179 32715 Bonus (1 :3)
1991 11000 44000 10905 43620 Bonus (1 : 3)
1992 16000 60000 14540 58160 Bonus ( 1:3)
1993 13000 73000 14540 72700 Bonus ( 1: 4)
1994 24000 97000 24233 96933 Bonus (1: 3)
1995 50000 147000 48466 145399 Bonus ( 1:2)
1996 50000 48466 48466 193866 Bonus (1:2)
1997 19500 19387 19387 213525 Bonus (1 :1)



In July, 2001, Agip petrol lnternational B.V (Agip Petrol) signified its intention to sell 60% shareholding in AGIP to strategic Investors, in line with its group strategy of diverting its downstream interests in Africa. Following a competitive tender process, UNIPETROL acquired. Agip petrol 60% share holding and effectively became the majority shareholder in AGIP.

UNIPETROL was incorporated under Nigeria law as ESSO standard Nigeria Limited in August 1969 with an authorised share capital of # 4, 000,000 divided into 200,000 ordinary shares of #20 each. It is engaged in the Marketing of petroleum Products, blending of lubrication oils, insecticides, bitumen and liquefied Petroleum gas (LPG).

Upon the scheme coming into effect, all the assets, liabilities and undertakings, including real properties and intellectual property rights of AGIP, will be transferred to UNIPETROL as stated in the Explanatory statement of the scheme document. UNIPETROL share will be issued, allotted and credited as fully paid to AGIP shareholders in consideration for the transfer. Since Unipetrol currently owns 60% of AGIP™s paid “up share capital, only the 170™601 857 ordinary shares hold by other AGIP shareholders will be involved in the share “ exchange. Consequently it is proposed that 85, 300,929 ordinary shares of 50 kobo each in UNIPETROL be issued and allotted to shareholders of AGIP (other than UNIPETROL) as provided in the scheme.


Under this sub-group topic, it is very important to consider problems that this research aims at examining. In one word, we need to examine the under “listed problems associated with mergers and acquisition.

(1) Low capital base and external reserves of the enterprises.

(2) Inadequacy of skilled and competent staffs

(3) Problems faced in market competition e.g. reduction in demand level

(4) Low level of economic status of business environment

(5) POST“SAP effects on the economic development of business enterprises


H1: `     Mergers and acquisition is a viable option to corporate survival as a result of post SAP effects on the   economic development of business enterprises

H0:        Mergers and acquisition is not a viable option to corporate survival as a result of Post SAP effects on the economic development of a business enterprise


Conceptually, careful examination of mergers and acquisition is eminently important, such that the thorough examination of this  research topic  and its result will not only Uncover the  immense benefit of it to companies™ directors towards preferring mergers and acquisition instead of  winding up but also other corporate labour force.. Beside, the above mentioned significance of mergers and acquisition enables the company to acquire capacity at a much reduced price expansion of production with price reduction gain and spreading risk of diversification.



The proof of desire is pursuit, so says a wisdom principle. The pursuit under this study will extensively base on mergers and acquisition as one of the survival strategies for continues existence of a business enterprise instead of winding “ up. In   addition, the research will take into recognition, its evaluation, types, and reasons for mergers and acquisition with the effects therefore including the problem that could be encountered.


This study might be limited in real practice of its as most merged or acquired business may be reluctant to give the research some vital information needed for the topic under consideration, their excuse may be the fear that those documents are official and confidential, some of them are always afraid of competitors from using the vital information supplied in winning the markets or any other means. And at the same time due to some of their in “ house problems that led to their being merged. Others are lack of sufficient materials. Financial status and time constraints of the research is also inclusive in the limitation of this study.


There are various ways or techniques through which data and information could be gathered in   reaching a reasonable conclusion for the topic under this research assignment. Basically, method that shall be used in this research assignment is questionnaire but, much shall be done through journals and textbooks.


For a better understanding of this research work, the following terminologies are hereby explained:

Merger: Coming together of two organizations to become one.

Acquisition: the process whereby one organization buys over the ownership and control of another organization.

Cash: cash refers to money in the physical form of currency, such as banknotes and coins.

Corporate Survival: the act or fact of surviving, especially under adverse or unusual circumstances.

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