Mergers and Acquisitions

Mergers & Acquisitions (M & A) is a general term used to refer to the consolidation of companies. Merger is the corporate action where two companies decide to combine their operations. Both the companies involved in the merger cease to exist resulting into a combined new company. On the other hand Acquisition is a corporate action where one company overtakes the operations of other company. The acquired company thus becomes a part of the acquiring company. Acquisition may at some times be without the consent of acquired firm. There are numerous examples of acquisitions and mergers in the current times. Tata Steel acquired Corus in April 2007. Corus ceased to exist independently after that and became a subsidiary of Tata Steel. Two major oil companies Exxon and Mobil decided in 1999 to merge their operations. As a result of the merger, these companies ceased to exist independently and a new entity Exxon Mobil was formed. Locally (in Zambia), Zambeef Products Plc acquired Amanita Ltd and Amanita Ltd ceased to exist independently after that and became a subsidiary of Zambeef Products called Zamanita.
There are basically three types of M & A transactions when viewed from the perspective of value chain, namely: 1. Vertical Integration: A company can backward integrate by acquiring its vendors/suppliers while it can forward integrate by acquiring its business customers/distributors .
2. Horizontal Integration: A company can take M&A route to expand in the same market or to grow/enter in other markets.
3. Diversification: Conglomerates take M&A route to diversify their holdings.

Mergers and acquisitions take place for many strategic business reasons, but the most common reasons for any business combination are economic at their core. Following are some of the various economic reasons:

Increasing capabilities: Increased capabilities may come from expanded research and development opportunities or more robust manufacturing operations (or any range of core

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