The financial environment in the UK is very competitive and impossible to predict. It is always changing and developing. Merger and Acquisition as the action of corporate, refers to the aspects of the strategy, finance and management of corporate that can help a company to develop rapidly. Merger and acquisition are developing enduring for more than one hundred year. Because of the recession, many companies in Europe implement merger and acquisition activities to deal with the economic crisis. In this report, take the merger of British Airways and Spain’s national carrier Iberia as an example, the reasons of merger, the influences of the merger will be disabused.
Merger and Acquisition
A corporate merger is the creation of a single firm for two firms and combine their assets and liabilities. Merger tends to be used when the scale of the two enterprises are similar. It common occurs in high return industries. A corporate acquisition is the purchase of the target company by acquiring company. Acquisition tends to occur when the scale of the two companies are not similar, a lager company controls a smaller company, common in low growth industries (Teriesen). Acquiring company refers to the firm which shares are continuing exist, but it may be under a different name, and the target company is referred to the firm whose shares are substituted by the acquiring company.
The merger of BA and Iberia
With the influence of the economic crisis, many industries have a negative effect. T the air transportation in Europe also has a strong hit. The majority of airlines in Europe are facing a difficult trading condition, losing a lot of money, especially in 2008 and 2009. There were many challenges to be faced for the most airline companies, such as the economic slowdown, high fuel prices, and the decline of the passenger numbers. The economic turndown of 2008 affected the level of merger and acquisition activities in UK. But when the economy begins...
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