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Define the terms acquisition, takeover, merger and amalgamation
The terms acquisition, takeover, merger and amalgamation are explained below −
Acquisition
- Acquisition is a purchase of more than 50% shares/stake of another company.
- Payments can be made in either cash or stock or by both.
- Friendly approaches or hostile approaches are used in acquisition.
- Friendly approach means Boards of directors support the acquisition.
- Hostile approach means Boards of directors will not support the acquisition.
Takeover
- Takeover is transfer/control interest of a company either by friendly or hostile approach.
- Generally, takeover is done by bigger companies.
- It can be done in straight, ownership capture, revival and bailout.
Merger
- Upon approval of management and shareholders (in case of public companies), two companies combine to form a single company.
- After merger, both companies' operations, shares and all the business activities are carried out under a single roof.
- Merger is a tax-free transaction.
Amalgamation
- Amalgamation is a legal process, in which two or more companies are absorbed/blended.
- Companies combine to form a new entity and for the diversification or expansion of activities/services.
Updated on 13-Jul-2021 12:58:03
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