Mergers and Aquisition
[pic] INTRODUCTION The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. In the Indian context, both the term “mergers” & “amalgamation” are used interchangeably. For instance, according to section 2(1A) of the Income tax Act 1961, the term “amalgamation” is define as “the merger of one or more companies with another company or the merger of two or more companies to form a new company.
A Merger is a combination of two companies to form a new company, while an Acquisition is the purchase of one company by another in which no new company is formed.
What Does Merger mean? Recently the FINANCE MINISTER P. CHIDAMBARAM state that the main aim behind of mergers and acquisition is that the combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
Basically, when two companies become one. This decision is usually mutual between both firms.
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CLASSIFICATION OF MERGERS
Horizontal merger
Two or more companies that are in direct competition and share similar product lines and markets. E.g. the merger of Tata oil mills Ltd with the Hindustan Lever ltd is an example of Horizontal merger.
Vertical merger A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker. For instance, where a company that manufactures laptop combined with a company that markets laptops,
Market-extension merger Two companies that sell the same products in different markets.
Product-extension merger
Two companies selling different but
A Merger is a combination of two companies to form a new company, while an Acquisition is the purchase of one company by another in which no new company is formed.
What Does Merger mean? Recently the FINANCE MINISTER P. CHIDAMBARAM state that the main aim behind of mergers and acquisition is that the combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
Basically, when two companies become one. This decision is usually mutual between both firms.
[pic]
CLASSIFICATION OF MERGERS
Horizontal merger
Two or more companies that are in direct competition and share similar product lines and markets. E.g. the merger of Tata oil mills Ltd with the Hindustan Lever ltd is an example of Horizontal merger.
Vertical merger A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker. For instance, where a company that manufactures laptop combined with a company that markets laptops,
Market-extension merger Two companies that sell the same products in different markets.
Product-extension merger
Two companies selling different but