Merger Types with Examples - 903 Words

Merger Types - Various Type of Merger A merger refers to the process whereby at least two companies combine to form one single company. Business firms make use of mergers and acquisitions for consolidation of markets as well as for gaining a competitive edge in the industry. Merger types can be broadly classified into the following five subheads as described below. They are Horizontal Merger, Conglomeration, Vertical Merger, Product-Extension Merger and Market-Extension Merger. 1) Horizontal Merger refers to the merger of two companies who are direct competitors of one another. They serve the same market and sell the same product. Examples: Staples, Inc., a superstore retailer of office supplies, wanted to acquire Office Depot,†¦show more content†¦They also seek to serve a common market. This type of merger enables the new company to go in for a pooling in of their products so as to serve a common market, which was earlier fragmented among them. Example: The acquisition of Mobilink Telecom Inc. by Broadcom is a proper example of product extension merger. Broadcom deals in the manufacturing Bluetooth personal area network hardware systems and chips for IEEE 802.11b wireless LAN. Mobilink Telecom Inc. deals in the manufacturing of product designs meant for handsets that are equipped with the Global System for Mobile Communications technology. It is also in the process of being certified to produce wireless networking chips that have high speed and General Packet Radio Service technology. It is expected that the products of Mobilink Telecom Inc. would be complementing the wireless products of Broadcom. 4) Market-Extension Merger occurs between two companies that sell identical products in different markets. It basically expands the market base of the product. Example of market extension merger is the acquisition of Eagle Bancshares Inc by the RBC Centura. Eagle Bancshares is headquartered at Atlanta, Georgia and has 283 workers. It has almost 90,000 accounts and looks after assets worth US $1.1 billion. Eagle Bancshares also holds the Tucker Federal Bank, which is one of the ten biggest banks in the metropolitan Atlanta region as far as depositShow MoreRelatedHorizontal Mergers907 Words   |  4 PagesMergers occur when one business firm buys or acquires another business firm (the acquired firm) and the combined firm maintains the identity of the acquiring firm. Business firms merge for a variety of reasons, both financial and non-financial. There are a number of types of mergers. Horizontal and non-horizontal are just two of many types. WHAT IS HORIZONTAL MERGER? A merger occurring between companies in the same industry. Horizontal merger is a business consolidation that occurs between firmsRead MoreEconomic: Monopoly and Vertical Merger Essay632 Words   |  3 Pagesvertical, and conglomerate mergers? Provide real-world examples of each type of merger. What policy do you think the US should follow toward mergers? Why? Horizontal mergers take place between companies in the same industry. These companies are rivals who sell the same goods or services. When a merger takes place, a rival is eliminated and potential for gains become higher. A vertical merger is one in which a firm or company combines with a supplier or distributor. For example, if a car making firm isRead MoreWhat Are Mergers And Acquisitions?1562 Words   |  7 PagesWhat are mergers and acquisitions? From a legal point of view, ‘merger’, is a process that leads two or more companies cease to be distinct. (Enterprise act 2002). In other words, companies agree to combine their businesses into one entity for economical, operational or any other reasons on a voluntarily basis. Technically, this involves a foundation of a new firm and its shares issue which substitutes all shares of the merged companies. 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An example of an acquisition is Manulife Financial CorporationRead MoreCost Free Treatment Under Irc Section 368 Essay1405 Words   |  6 Pagesreceived by target shareholders as consideration is deferred rather than avoided altogether. IRC Section 368 recognizes three types of corporate acquisition structures that qualify as tax-free reorganizations: Type â€Å"A† – stock for assets acquisition, which include statutory merger or consolidation; forward triangular merger; and reverse triangular merger In a statutory merger, target shareholders exchange their shares for acquirer stock and up to 60% book. Boot is immediately taxable to target shareholders