Recent Mergers or Acquisitions
A "merger" or "merger of equals" is often financed by an all stock deal (a stock swap). An all stock deal occurs when all of the owners of the outstanding stock of either company get the same amount (in value) of stock in the new combined company. A merger adds value only if the two companies are worth more together than apart (Wikipedia, Free Encyclopedia, 2006). An acquisition (of un-equals, one large buying one small) can involve a cash and debt combination, or just cash, or a combination of cash and stock of the purchasing entity, or just stock (Wikipedia, Free Encyclopedia, 2006). Such actions are commonly voluntary and involve stock swap or cash payment to the target. Stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal (Wikipedia, Free Encyclopedia, 2006). Recent Examples of Mergers or Acquisitions
Adobe acquired Macromedia
AT&T merges with SBC
MCI merges with Verizon
Strategies Employed and Financial Outcome
In case of Adobe and Macromedia, they are building on a shared heritage of redefining the way people and businesses communicate, and the similar vision of enabling the creation and delivery of compelling content and experiences across multiple operating systems, devices, and media. Acquiring Macromedia accelerates Adobe's strategy of delivering an industry-defining technology platform that provides more powerful solutions for engaging people with digital information. This platform meets a broader set of customer needs than either company could address on its own. And, through the enormous reach of Adobe Reader® software and the Macromedia Flash Player, we have access to a larger total addressable market and significant long-term growth opportunities especially in emerging areas such as mobility, the enterprise, and the web (Adobe Press Room, 2005).
The transaction closed on December 3, 2005. Adobe acquired Macromedia in an all-stock...
References: Adobe Press Room, (2005). Adobe completes acquisitions of Macromedia. Retrieved from http://www.adobe.com/aboutadobe/invrelations/ adobeandmacromedia_faq.html#strategy on April 27, 2006.
SBC News Room, (October 27, 2005). SBC Communications to Adopt AT&T Name by San Antonio. Retrieved from http://www.sbc.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=21850&phase=check on April 27, 2006.
Verizon New Release, (January 6, 2006). Verizon and MCI Close Merger, Creating a Stronger Competitor for Advanced Communications Services by Peter Thonis. Retrieved from http://newscenter.verizon.com/proactive/newsroom/release.vtml ?id=93131 on April 27, 2006.
Wikipedia, Free Encyclopedia (2006). Mergers and acquisitions. Retrieved from http://en.wikipedia.org/wiki/Merger on April 27, 2006.
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