PART I

Definition
A merger can be defined as a fusion between two of one or more enterprises where
the identity of one is lost and the result is a single enterprise. The takeover of one
enterprise by another usually involves the purchase of all or a sufficient amount of
shares of another enterprise to enable it to exercise control and it may take place
without the consent of the former.

Companies may go into different types of mergers for example;

Horizontal mergers which is the consolidation of firms that are direct rivals--i.e.
firms that sell substitutable products or services within the same geographic market.

Vertical Mergers which is the consolidation of firms that have potential or actual
buyer-seller relationships.

Conglomerate Mergers which is where consolidated firms may share marketing and
distribution channels and perhaps production processes; or they may be wholly
unrelated.

Congeneric mergers occur where two merging firms are in the same general industry,
but they have no mutual buyer/customer or supplier relationship, such as a merger
between a bank and a leasing company.

A merger can add considerable value to a business, and over the years in Uganda
there have some companies that have under gone mergers, for example;

INFOCOM an internet service provider and e-mail to fax service, in Kampala,

Uganda was formed after a merger. INFOMAIL and STARCOM where Uganda’s
internet pioneers however the two companies merged in 1995 to form INFOCOM.
INFOCOM now has over 8 years of experience in providing Internet services in
Uganda after a successful merger.
UGANDA ON LINE- internet service provider
Computer frontiers international {CFI} merged with the Ugandan Solution Provider
for internet services and formed UGANDA ONLINE.

UNAPD- Uganda National Action on Physical Disability

{UNAPD} Uganda National Action on Physical Disability and {UNAPPD } Uganda
National Association of People with Physical Disabilities had the same goals,
ambitions and were providing the same services so they merged to form { UNAPD} –
Uganda National Action on Physical Disability.

HOFOKAM
HOFOKAM in Western Uganda is an excellent local example of a merger.
HOFOKAM is a result of a merger of three diocesan MFI programmes the first
having started in 1994 with technical support from CRS. It is a credit only MFI
registered in July 2003 as a company limited by guarantee of three Bishops in western
Uganda.

MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT.

Ministry of Finance merged with the Ministry of Planning and Economic
Development to form Ministry of Finance, Planning and economic Development.

{MUBS} Makerere University Business School

Faculty of Commerce in Makerere University merged with National college of
Business studies to form MUBS.

KYAMBOGO UNIVERSITY
Kyambogo University is a result of a merger of Uganda Polytechnic Kyambogo
{UPK}, The Institute of Teacher Education, Kyambogo {ITEK} and the Uganda
National Institute of Special Education {UNISE}

Uganda Communications Commission {UCC} and the Broadcasting Council merged

in to one regulatory body that will oversee both the communication and broadcasting
matters in the country.
Amalgamated Transport and General Workers’ Union {ATGWU-Uganda}
ATGWU was re-registered in 1974 after merging with other unions. The ATGWU
merged with other unions. It is affiliated to global Union Federations. These are the
International Transport Workers Federation {ITF}, Union Network International
{UNI} and National Organisation of Trade Union Uganda [NOTU}.

UTL{ Uganda Tele Communication}

The new company is Uganda Telecom Mobile, which is a merger between the
Uganda Telecommunications Landline section owned by Government and Mango
brand of UTL-GSM owned by Orascom.

MATTS
Gailey and Roberts who were dealing in General Machinery merged with MATTS
who were dealing in tractor sales and decided on a name as MATTS.

BANK PHB
Orient bank merged with a Nigerian bank, Bank PHB to form BANK PHB. Early
next year, orient bank will soon adopt Bank PHB as its new face of business (re brand
to BANK PHB)

MMAKS Masembe, Makubuya, Adriko, Karugaba & Ssekatawa

Advocates (MMAKS Advocates)
MMAKS ADVOCATES (founded in 2005) is a merger of three leading law firms in
Uganda namely, Mugerwa & Masembe Advocates [founded in 1978], Adriko &
Karugaba Advocates [founded in 2000] and Central Law Offices [founded in 1999].
The merger, the first of its kind in Uganda, places the firm amongst the top law firms
in the country. The new firm brings together three well-established and respected law
firms with a strong legal heritage and well-developed client base.

The firm specializes in the field of corporate and commercial law and litigation and
represents many local and international entitles including Barclays Bank, Stanbic
bank, MTN, and the Bank of Uganda. As a member of Africa Legal Network, the
depth of resources and strengthened skills base of the new firm will go a long way in
improving association's ability to serve its clients in the East African region.
PART II

Mergers are a growing trend, as the current business environment encourages

streamlined operations and synergies. By partnering with other companies, and
transferring technology and resources, even small players can survive (and even
thrive). Therefore mergers should be encouraged in different sectors of the Ugandan
economy. These include private and government sectors, manufacturing, education
sector, agriculture sector, health sector, economic sector, construction sector as
discussed below

MICRO FINANCE INSTITUTIONS

Every micro finance institution dreams of a future of growth, expansion and

prosperity, offering its products to increasing number of customers. There fore, these
institutions are finding that the best way to attain those goals is through some sort of
consolidation. These are motivated by the following factors;
- There are too many micro-finance institutions offering the same services and
the market can not support all the MFI, so the choice to join with others. It is
therefore prudent that the existing MFI’s merge with each other in order to
increase their competitiveness in the face of increasing competition from
commercial banks and other bigger financial institutions that are increasingly
venturing into the services originally a preserve of MFI’s .
- The regulatory constraints to these MFIs lead them to merge with others as a
way to meet minimum capital requirements and profitability.
- According to Paul Rippey FSDU {financial sector deepening Project
Uganda}, he says, ‘’with a number of banks providing the same services to the
same customers as the MFIs, competition is stiff and increasing. To get out of
the competitive financial service field and concentrate on other things, these
MFIs should choose to merge.’’

AIRLINE COMPANIES
Air transport industry is very competitive, the profits involved are very
marginal, and it is difficult to infiltrate because of the huge investment
 required for one to become a top operator in the industry. Therefore, it is
prudent that small Airline operators in Uganda and East Africa merge if they

want to compete favorably with already established air lines in the region.
Many small Airlines such as Air Uganda, Das Air, Victoria Airlines and
Daisy Airlines fail to take on the more competitive routes such as Entebbe-
Nairobi because of huge capital investments required, such as bigger planes,
high numbers of experienced operators and other contingent costs. They
instead concentrate on Entebbe – Juba and other inland flights which provide
little returns.
According to Chief Executive Officer of Kenya Airways, Titus Naikuni,
small Air lines must merge in order to increase their abilities and capacity to
get larger capacity aircrafts and necessary logistics that will enable them to
compete with more established air lines

BANKING SECTOR

According to the US advisor to the Bank of Uganda, the proposed change in

policy which will allow new players (even non-financial institutions) in the trade
of government securities, will see a number of other banks other than the 6
originally accepted, as well other institutions such as insurance companies get on
board. This is going to greatly increase competition in the trading of government
securities a venture highly considered lucrative, risk free and high on returns.
Banks and other financial institutions, he predicts, will have to consider mergers
with institutions already established in this type of business in order to increase
their competitiveness and bargaining power.

AGRICULTURE AND MANUFACTURING INDUSTRY

Some manufacturing industries in Uganda mainly depend on agriculture for raw

materials to feed their operations. These include; Britania which manufactures
biscuits and fruit juices, among others; Phoenix Logistics makes textiles from
organic cotton and other fabrics. These companies can be advised to merge with
the agriculture producers such as fruit growers for Britania and cotton growers for
Phoenix. Some waste products from the industries could be used as manure for
agricultural plantations.
A merger also ensures that the manufacturing industry is directly involved in the
quality production of a raw material critical for its operations and therefore strives
to ensure quality assurance in the farming process. On the other hand the farmer
has assured of a ready market and has full knowledge of the demands and quality
requirements of the manufacturer. It is a win-win.

PHARMACEUTICAL SECTOR
It is becoming increasingly difficult for local pharmaceutical manufacturers to
compete with giant manufacturers in India, China and other parts of the world.
Indian companies enjoy the economies of scale because they manufacture in very
high quantities, easy access to affordable skilled manpower, machines & new
technologies. The local pharmaceutical manufacturers tend to produce the same
products but at a low scale making it more expensive and less competitive.
It is therefore advisable that they merge in order to raise enough capital to put up
bigger facilities with huge capacity so that they produce at a scale that can out
compete the Asian companies.

TELECOMMUNICATIONS SECTOR

The number of mergers in Telecom Sector has been increasing significantly.

Telecommunications industry is one of the most profitable and rapidly developing
industries in Uganda and it is regarded as an indispensable component of the
worldwide utility and services sector.
Telecommunication industry deals with various forms of communication
mediums, for example mobile phones, fixed line phones, as well as Internet and
broadband services.
The aim behind such mergers in Uganda is to attain competitive benefits in the
telecommunications
The majority of telecommunication services providers in Uganda have to
understand that in order to grow economically, strategic alliances and mergers and
acquisitions are the principal devices.
Mergers in Telecom Sector can also have some negative effects, which include
monopolization of the telecommunication products and services, unemployment
and others. However, the government should take appropriate steps to curb these
problems.
 LAW FIRMS

In a bid to harness skills, resources and provide comprehensive legal services, law
firms should be encouraged to merge. There are a number of small legal firms in
Uganda which should merge in order to grow.

Law firms continue to perceive merger as the quickest route to increased competitive
capability. Whether in the short or long term, law firms are likely to face the strategic
choice of expanding through merger or reinforcing the firm’s strengths as a small firm
with local expertise.

The merger route will likely prove most tempting for instant growth and greater
profits. This can be evidenced with MMAKS Advocates which was able to leap to the
top of the table only a year after its merger between Mugerwa Masembe Advocates,
Adriko & Karugaba Advocates and Central Law offices. They now have a strong
banking and finance department at the firm and deal with many reputable clients such
as Central Bank and Barclays.

Conclusion
Experience suggests that merged institutions often follow a J-curve, with their growth
initially slowing whilst they merge their systems, procedures and cultures, and then
growing rapidly, often faster than either partner could have grown separately.
Investments by donors or others in institutional strengthening are not lost in the case
of merger

REFERENCES
• Uganda investment Authority –Research department
• Registrar of companies
• www.hg.org/law-firms/mergers-and-acwuisitions
• allafrica.com/stories
• www.observer.ug/index.php
• www.newvision.co.ug
• Paul Rippey FSDU (Financial Sector Deepening project Uganda) - 2004