The modern mantra, Merger and Acquisition has become a prominent objective
of the modern day business to enhance its value immediately in an inorganic
way by creating a synergy among different variables. Due to LPG impact
from late 90s, Indian firms are adopting this strategy to explore opportunities in
expanding their operation overseas as well as in domestic market. From the
standpoint of investors, successful acquisition increases profitability and stock
price. Efficient Market Theory is a separate concept called Random Walk Theory,
as per which the stock prices fluctuate randomly in the market and there is no
special trend of movement of share prices. And all these fluctuations only
depend upon the level of information available. This paper uses an event
study methodology to empirically examine stock market reaction to acquisition
announcements and tries to find out the impact of merger on short term
scrip return.

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