YAIR

A PERSPECTIVE OF MERGERS, ACQUISITIONS, AMALGAMATIONS AND

TAKEOVERS.
NATURE AND SIGNIFICANCE
Business combinations, corporate restructuring and corporate
reorganizations are terms used to cover mergers, acquisitions,
amalgamations and takeovers. They are critical to the healthy expansion
of business firms a they evolve through succesive stages of growth and
develompment. The study of these activities is know as the study of the
market for corporate control involving change in the control of one or
more of the firms major assets. The traditionalist view of mergers
focused on the effect of mergers on competition and society while the
modern approach views mergers as vehicles to change the control of the
firms assets. Generally mergers represent a process of allocation and
reallocation of resources by firms in response to changes in economic
conditions and technological innovations.
MERGER, ACQUISITION, AMALGAMATION AND TAKEOVER.
Merger: Merger is a broad term and it denotes the combination of two or
more companies in such a way that only one survives while the other is
dissolved. A merger is an investment in a future growth opportunity. In
merger proposals plant is ready and market acceptance,clear and well
established. When two companies differ significantly in size, they usually
merge. For merger, shareholders representing 75 per cent of the value
of shares (or implicit shareholders approval through the tendering of the
shares) of the target company
JOCE
Must approve. The traditional acquisition is the negotiated acquisition in
wich a willing buyer and a willing seller negotiate the terms under which
an acquisition or merger occurs. From the acquirers point of view,
merger is the least complex and cheapest method of acquisition since it
gives the targets shareholders the best view of the transaction, gives
more time to conduct due diligence and the expense of drafting a
merger proxy statement and mailing it to shareholders is usually less
than that of drafting an offer to purchase and tendering for shares.
Merger however takes significantly longer than tender offer. The acquier
may lose the target company to others meanwhile.

Acquisition: Acquisition refers to a situation where one firm acquires

another and the latter ceases to exist. An acquisition occurs when one
company takes controlling interest in another firm or its legal subsidiary
or selected assets of another firm. A firm that atempts to acquire or
merge with another company is called an acquiring company. The assets
of the dissolved firm would be owned by the acquiring firm.
Amalgamation: Amalgamation is the blending of two or more companies
into one, the shareholders of each blending company becoming
substantially the shareholders of the other company which holds
blended companies. In an amalgamation the assets and liabilities of the
two companies are vested in one which has as its shareholders all or
substantially all the shareholders of the two companies.
Amalgamations are governed by sections 390 to 394 and 396 of the
companies act requiring consent of shareholders and creditors.
Takeover: In addition to the traditional mergers and creditors. (M&A)
involving two willings parties, takeover has gained popularity beginning
in the 1960s. Shares may be purchased from the market tp acquire a
controlling interest and the target company may be maintained as a
subsidiary or division or dissolved to merge. In a takeover, a sellers
management may oppose the acquisition or merger but the buyer
makes a direct bid to the sellers shareholders to acquire sellers shares
and thus gain control of the sellers company.
Takeover is a market route for the acquisition of a compay. If
management of a prospective selling comany is unwilling to negotiate a
transaction whit a prospective buyer, the buyer attempts to accomplish
the acquisiton by a takeover bid, offering to buy shares of