Merger and Acquisition
CHAPTER I
INTRODUCTION
1.1 INTRODUCTION TO MERGER AND ACQUISITION (M&A)
Mergers and acquisitions (abbreviated M&A) is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture. The distinction between a "merger" and an "acquisition" has become increasingly blurred in various respects (particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all situations.
An acquisition, also known as a takeover or a buyout, is the buying of one company (the ‘target’) by another. The acquisition process is very complex and various studies shows that only 50% acquisitions are successful. An acquisition may be friendly or hostile. In a friendly takeover a company’s cooperate in negotiations. In the hostile takeover, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover. Although merger and amalgamation mean the same, there is a small difference between the two. In a merger one company acquires the other company and the other company ceases to exist. In an amalgamation, two or more companies come together and form a new business entity.
The Companies Act, 1956 does not define the term 'Merger' or 'Amalgamation'. It deals with schemes of merger/ acquisition which are given in s.390-394 'A', 395,396 and 396 'A'.
1.2 TYPES OF M&A
There are many types of mergers and acquisitions that redefine the business world with new
INTRODUCTION
1.1 INTRODUCTION TO MERGER AND ACQUISITION (M&A)
Mergers and acquisitions (abbreviated M&A) is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture. The distinction between a "merger" and an "acquisition" has become increasingly blurred in various respects (particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all situations.
An acquisition, also known as a takeover or a buyout, is the buying of one company (the ‘target’) by another. The acquisition process is very complex and various studies shows that only 50% acquisitions are successful. An acquisition may be friendly or hostile. In a friendly takeover a company’s cooperate in negotiations. In the hostile takeover, the takeover target is unwilling to be bought or the target's board has no prior knowledge of the offer. Acquisition usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of a larger or longer established company and keep its name for the combined entity. This is known as a reverse takeover. Although merger and amalgamation mean the same, there is a small difference between the two. In a merger one company acquires the other company and the other company ceases to exist. In an amalgamation, two or more companies come together and form a new business entity.
The Companies Act, 1956 does not define the term 'Merger' or 'Amalgamation'. It deals with schemes of merger/ acquisition which are given in s.390-394 'A', 395,396 and 396 'A'.
1.2 TYPES OF M&A
There are many types of mergers and acquisitions that redefine the business world with new