STRATEGIC FINANCE
ASSIGNMENT # 1
MERGERS AND ACQUISITIONS
PREPARED By
Vivek mishra
ROLL NO. 63
SUBMITTED TO SUBMISSION DATE
PROF. PUSHPENDRA SINGH 12th DEC’08
Meaning and Definition
Merger refers to the process of combination of two companies, whereby a new company is formed.
Technically, Merger is a financial tool that is used for enhancing long-term profitability by expanding their operations. Mergers occur when the merging companies have their mutual consent as different from acquisitions, which can take the form of a hostile takeover.
Rationale Behind M&As
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 M&A.
This rationale is particularly appealing to companies when times are tough. Strong companies will act to buy other companies to create a more competitive, cost-efficient company. The companies will come together ...