Effects of Mergers and Acquisitions on Return on Capital Employed and Dividend per Share Indices of Companies in Nigeria

Abstract

This paper examines the effects of mergers and acquisitions on returns on capital employed and dividend per share of companies in Nigeria. Data were collected from published consolidated financial statements of five of the companies that combined between 1983 and 2003 which had one or two of the companies listed on the floor of the Nigerian Stock Exchange. Data were collected for a period of twenty year, ten years before and ten years after business combination.
Regression analysis and t – test statistic were used to analyze the data. The study reveals that while mergers and acquisitions had significant effect on return on capital employed in 20 percent of the companies, they produced significant effect on dividend per share in 80 percent of the companies studied. The paper concludes that mergers and acquisitions produced varying degrees of effects on some corporate performance indicators. It recommends that mergers and acquisitions could be employed by stakeholders to enhance profitability and dividend per share of their companies in Nigeria.