Difference Between Mergers and Acquisitions – complete details

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Difference In Between Mergers and Acquisitions

Although they are often uttered in the same sense and used as though they were associated, the terms merger and acquisition indicate slightly various things. Merger and acquisition is typically understood to be a single terminology defined as a process of integrating two or more companies together. The truth remains that the so called single terminologies are different terms utilized under various scenarios. Though there is a thin line difference between the 2 but the impact of the kind of completely various in both the cases.

Let’s have a discussion about this.

Merger:

A merger, in a nutshell, involves 2 corporate entities signing up with forces and becoming a new business entity, with a brand-new name. It typically involves two business of exact same size and stature joining hands. This kind of action is more precisely referred to as a “merger of peers” Both companies’ stocks are given up and new company stock is released in its place. In case of mergers the offer gets settled on friendly terms and both the business share equivalent earnings in the freshly developed entity.

Famous mergers in India throughout 2014:

1. RIL– Network 18 Media and Investments
Reliance Industries Limited (RIL) took over 78% shares in Network 18 in May 2104 forRs 4,000 crores

2. Ranbaxy— Sun Pharmaceuticals
The deal, worth $4 billion, will cause a 16.4 dilution in the equity capital of Sun Pharma.

3. TCS– CMC
Tata Consultancy Solutions (TCS), the $13 billion flagship software application unit of the Tata Group, has actually announced a merger with the noted CMC with itself as part of the group’s restored efforts to combine its IT companies under a single entity.

4. Tata Power– PT Arutmin Indonesia

5. Flipkart– Myntra.

Acquisitions:

an acquisition might be only a little various from a merger. When one company takes control of the other and guidelines all its company operations, it is known as acquisitions. In this process of restructuring, one company overpowers the other company and the decision is generally taken during declines in economy or throughout decreasing revenue margins. Among the two, the one that is economically more powerful and larger in all methods establishes it power. The combined operations then run under the name of the effective entity who also takes over the existing stocks of the other business.

Famous acquisitions:

Tata Group got Corus an United Kingdom based company in2006 Bharti Airtel got Zain Africa a Kenya based company in February2010 Hindalco Industries acquired Novelis a Canada business in February2007

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