MERGER & ACQUISITION

When we use the term merger, we are referring to the merging of two companies where one new company will continue to exist. In other words, when the shareholders of more than one company, usually two, decides to pool the resources of the companies under a common entity it is called merger, The merger activity can be categorized into: Amalgamation: As a result of a merger, a new company comes into existence. It is also known as 'triangular merger Absorption: as a result of a merger, one company survives and others lose their independent entity. In India, as per The Accounting Standard AS 14 issued by ICAI termed the whole of the merger transactions as amalgamation

MERGER & ACQUISITION

Amalgamation in the nature of Merger : Amalgamation which satisfies all the following conditions is classified as merger form of amalgamation * All asset and liabilities of Transfer or Company are transferred to Transferee Company *The shareholders who are holding 90% face value of equity shares in Transferor Company becomes the shareholders of Transferee Company Only equity shares are issued in the transferee company as consideration for amalgamation and cash may be paid in respect of fractional shares. After the merger, the transferee company must intend to carry on the business of the transferor company The Assets and liabilities of transferor company, are incorporated into the books of the transferee company.

MERGER & ACQUISITION

Amalgamation in the nature of Purchase If one or more of the conditions relating to merger form of amalgamation is not satisfied, amalgamation takes the form of purchase of company. TAKEOVERS Takeovers may be defined as a transaction or series of transactions whereby an individual or group of individuals or company acquires control over the management of the company by acquiring equity shares carrying majority voting power In takeover, the seller management is un unwilling partner and the purchaser will generally resort to acquire controlling interest in shares with very little advance information to the company which is being bought.

MERGER & ACQUISITION

Take over is a general phenomenon all over the globe and companies whose stock prices are quoted less. As per SEBI guidelines If shares totaling 51% of the total value of capital are held by the acquirer and his associates the takeover is complete and the acquirer gets the status similar to that of a holding company KINDS OF TAKEOVER: There are three ways in which controlling interest can be attained: Friendly takeover : the acquirer will purchase the controlling shares after thorough negotiation and agreement with the seller. Hostile takeover: purchasing the share from the market in small holdings over a period of time. Bailout takeover: these forms of takeover are resorted to bailout the sick companies