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Two principal ways by which aims may grow are:- Internally, through the acquisition of specific assets which are financed by the retention of earnings and external financing and externally, through the combination with another company which is done by: (a) Merges with and acquisition of other firms. (b) Divesting a division or subsidiary so that industry may need to become more competitive in the world markets. Whether firms amalgamation or merge to form an entirely news enterprise or firms takes over by purchases of the capital assets of others the result is usually a large sized business unit or firm with high capital base. With high capital, mass production of quality products could be achieved to reduce the level of importation of these products from other countries. Some of these locally manufactured goods will be consumed domestically while others could be exported to generate export earning which can be used for the country’s debt-servicing obligation. Many developing countries that are on imported goods usually have the problem of a deficit balance of trade. The revenue from the industries has helped the government to built roads, bridges, communication facilities etc. infrastructure such as transportation needed to move people, materials and finished goods, communication network necessary for efficient commerce, a safe water supply as well as electricity supply that enhance their operations and essential to economic development will be provided by merged firm with high capital base. Business combination helps to revive companies experiencing distress and prevent their being liquidated. The continue existence of these firms is beneficial to the government as it makes possible the continuous flow of taxes, royalties and licenses fees from the companies to the government. The combination of local firms with foreign firms helps to provide training in workers and management skill that come from working with large firms that possess technical knows-how personnel. This helps to enhance the human resource development of the nation. Merged companies with large capital could attract foreign investment i.e. foreigners would like to make investment in them. This project work is proposed to be carried out in partial fulfillment of the requirement for the award of Higher National Diploma (HND in Accountancy).


The Nigeria economic was basically subsistence’s, depending on agricultural production. It was later subjected to colonial influence with the introduction of commercial capitalism and alien economic institution. During the colonial era, the economics was still basically subsistence with some external trade composed of a few agricultural products exchanged with European manufactured goods. After independence, the Nigeria economy still depended on primary production. The economy is characterized by low income, savings and investment, gross income inequalities, poor and in appropriate technology. It is a mixed economy dominated by the public sector, although efforts are being made now to reduce, this influence through privatization of government owned enterprises.

Because of these economic hardships that Nigeria economy is passing through, government has taken measures to eliminate the situation. Such measures includes structural adjustment programme (S.A.P) introduced in 1986, fiscal policy introduced by the given previous administration which has given rise to new economic environment on both private and public companies and corporations. The objectives of these measures are to reduced technological and economic dependence on foreign countries to ensures efficient allocation of resources, to reduce unemployment, to maintain a favourable balance of payment etc.

These policy are however surrounded by uncertainties. The monetary measures which resulted with mopping up excess liquidity and also to check inflation also have affected industries adversely. Loanable funds from bank and other financial institutions have almost disappeared owning to high rate of interest which raised rapidly. These situations have however given rise to low capital for investment and expansion purposes.

To this end, accountants and managers of Business in our country are people with vision options for industrial survival under the new economic realities of S.A.P. as suggested include business combination.


Business combination has been a part of the United States economic scene for very many years ago. The first merger wave occurred in united state between 1890 and 1904 and the second began at the end of First World War and continued through the 1920’s. The third merger wave began in the latter part of the Second World War and continues to the present day. About two thirds of the large corporation in the U.S.A. have merger or amalgamation in their history. In Idia, about 1,180 proposals for amalgamation of corporate bodies involving about 2,400 companies were filed with the high courts during 1976 to 1986.

These formed 6 percent of the 40,600 companies at work at the beginning of 1976. From absence of meaningful merger that will result in solid capitalization necessary for long term funding of real sector of the economy of Nigerian.


The main problems that this research work shall look into are as follows:-

1. Problem of slow growth and profitabilities industries.

2. Problem of poor financial structure for investment and expansion purposes.

3. Problem of under utilization of market power in industries.

4. Problem of inadequate physical and inefficient managerial resources.

5. Problem of slow growth of the economy of Nigeria.


The overall objective of this study is to look into the effect of business combination on the economic revival of Nigeria. The study will specially.

1. Show how business combination can lead to external growth of companies.

2. Determine the basic economic forces that lead to mergers and acquisitions.

3. Show how under utilized physical and managerial resources can be fully utilized with the help of business combination.

4. Ascertain the importance of merger and acquisition on the economy of Nigeria.


On successful completion of this research work, it is expected to be useful to management teams of organizations (corporate bodies) mostly those that are finding it difficult to formulate adequate capital structures for investment and expansion purposes, managers of businesses will find it useful as means of financing company’s diversification in a convenience and expensive manner. The work also be of value to academic scholars and help the researcher to increases his stock of knowledge.


The following research question are formulated by the researcher as a guide to the investigation.

1. Can there be any significant relationship between business combination and firm’s growth and profitability.

2. Is there any relationship between business combination and Nigerian economic development?

3. Can there be any significant relationship between business or share of the merged firm?

4. Is there any significant relationship between business combination and companies capital structure formation adequate for expansion purpose?


The research work has been designed to cover all companies that are in merger or acquisition relationship in Nigeria using Unilever Plc. And Lipton Nigeria Ltd as a case study where relevant data will be collected and processed, whatever, conclusion arrived at shall be sued to infer into the Nigeria economy.

The generalization of this research work will be limited by the questionnaire and sample used in the collection of data for this study. The questionnaire will be designed in accordance to the scope of the study which will surely limit the study generalization. The size of the sample will equally affect the generalization principle of this work.

Paucity of time at the disposal of the researcher also proved to be another major constraint because the student is expected to beat a deadline in the presentation of the project.


Merger: A Merger is a situation where two or more companies or firm that are formally autonomous combine as one.

Acquisitions: This is the practice where one companies obtain control over the asset or management of another company without any combination of companies.

Subsidiary: This is the ownership of enterprise or firm that is being controlled by another.

Control: This is the ownership where one company own more than half the normal value of the share capital of another company or control the composition of the board of directors of another company.

Synergy: Synergy implies a situation where the combine firm is more valuable than the firm of the individual combining firms i.e. a phenomenon where (2 + 2 = 5).

Diversification: This implies growth through combination of firms in unrelated business.

Economic of Scale: This is phenomenon where by an increase involve of production lead to a decline in the per unit cost of production.

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