Merger Of Companies

Prepared by Eqbal Habibi 4th Sem (BBM)

*What is Merger?

The combining of two or more companies.

*TYPES OF MERGER.

1. Conglomerate

2. Horizontal Merger

3. Market Extension Mergers

4. Product Extension Mergers

5. Vertical Merger

*Advantages of Merger

Does not require cash.

Accomplished tax-free for both parties.

The company can run out of one headquarters instead of two separate executive offices.

This can save time and money for the new company.

The competition of the companies may face with others throughout the world.

Two companies that merge from the same country can do better at facing international competition than two small companies.

The company may also choose to reduce the amount of staff after the merger.

*Disadvantages of Merger

*Diseconomies of scale if business become too large, which leads to higher unit costs.

*Clashes of culture between different types of businesses can occur.

*May need to make some workers redundant, especially at management levels - this may have an effect on motivation.

*Procedure for Merger

Stage I – Application to the court

Stage II - Direction by the court

Stage III – Notice of compromise and arrangement

Stage IV – Approval of the scheme by creditors/members-

conditions

Stage V – Court to be satisfied that scheme is bonafide.

Stage VI – Sanction of the Scheme

Stage VII – Filing of the order of the court with the Registrar

*Why do Companies Merge?SynergyGrowthIncrease Supply-Chain Pricing PowerEliminate CompetitionImprove Competitive Position

Acquire Resources and Skills

*Thank you…!