Economics

1. Introductions:

The major objective of this assignment is to carryout a in depth assessment of the concepts of why mergers and acquit ions take place, and analysis the and distinguish the different in between two types and study the key concepts behind the mergers and acquisitions.

2. Methodology:

2.1 The following methods were employed to carryout the assignment

1. Group discussion about the mergers and acquisitions

2. Referred various text books

3. Cited various websites

4. Carried out interview with key personal of recently acquired companies.

One plus one makes three: this equation is the special alchemy of a merger or an acquisition. The key principle behind buying a company is to create shareholder value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies - at least, that's the reasoning behind mergers and acquisition.

3. Distinction between Mergers and Acquisitions

3.1 Definition of Acquisitions;

When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded. Example ;

3.2 Definition of Mergers;

in the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created.

In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the...