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Merger |
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MergerThe process by which two companies become one. If the companies are listed, the merger may be by agreement, or hostile. A hostile bid is one in which the directors of the target company reject the approach, but it is still possible for the predator company to obtain control if enough of the target's shareholders accept its offer.Similar MatchesStatutory mergerStatutory mergerA merger in which one corporation remains as a legal entity, instead of a new legal entity being formed. Vertical mergerVertical mergerWhen one firm acquires another firm that is in the same industry but at another stage in the production cycle. For example, the firm being acquired serves as a supplier to the firm doing the acquiring. Merger Of TitleMerger Of TitleA lesser interest in real property being merged (absorbed) into a greater interest. For example: A lessee purchases the property being leased. The interest as a lessee is merged into the interest as an owner, thus ending the leasehold interest. Conglomerate mergerConglomerate mergerA merger involving two or more firms that are in unrelated businesses. DemergerDemergerA corporate restructuring in which one part of a company is spun off as a new company, often with quoted status of its own. Examples in the UK include Zeneca which was spun out of ICI, and Argos which was spun out of British American Tobacco.Like their opposite - mergers - demergers tend to go in and out of fashion. When share prices are rising, companies like to use their 'paper' (i.e. shares) to acquire other companies, so their advisers encourage merger activity. In a market of falling prices, mergers and IPOs are less popular, and the merchant banks who earn their fees from corporate activity will start to look at demerger possibilities for their clients.From a tax point of view, when Company A splits into two or more parts, and distributes shares in each part to its original shareholders, there is no disposal for CGT purposes.In a study of 38 demergers, the London School of Economics found that demergers are beneficial to shareholders both at the time of the announcement and in the two years following. Further SuggestionsPanel on Takeovers and MergersFriendly Merger City code on takeovers and mergers Merger Arbitrage Horizontal merger |
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