Merger is when the boards of directors of two companies agree to merge and seek shareholders’ approval and they approve it. The international examples are: in 1998, the Digital Equipment Corporation and Compaq agreed to merge their companies and Compaq absorbed the Digital Equipment Corporation. In 2002, Compaq merged with Hewlett-Packard. CPQ was Compaq’s pre-merger ticker symbol. The present ticker symbol was created by combining this with Hewlett-(HWP) Packard’s ticker symbol (HPQ).
In an acquisition, the acquiring company acquires a majority stake in the acquired company, which retains its name and organisational structure. An international examples is: Manulife Financial Corporation’s acquisition of John Hancock Financial Services in 2004 is an example of this type of deal, in which both companies kept their identities and organisational structures.
Consolidation establishes a new corporation by merging core functions and discarding prior organisational structures. Both companies’ stockholders must approve the merger, after which they will get common equity shares in the new company. The international examples are: Citicorp and Travelers Insurance Group, announced a merger in 1998, resulting in Citigroup.
A tender offer is when one firm offers to buy the outstanding stock of another company for a set price rather than the market price. The purchasing firm informs the other business’s shareholders directly, bypassing management and the board of directors. The international example is Johnson & Johnson, made a $438 million tender offer to purchase Omrix Biopharmaceuticals in 2008. Most tender offers culminate in mergers, even if the acquiring business may continue to exist (especially if there are a few dissenting shareholders).
Purchase of Assets:
In an asset purchase, one company buys the assets of another company’s business out rightly and the corporation/company whose assets are being purchased must obtain its shareholder approval. During bankruptcy procedures, other companies bid on various assets of the bankrupt company, which is liquidated when the assets are transferred to the acquiring firms.
Acquisitions in Management:
A management acquisition, often called a management-led buyout, occurs when a business’ leaders buy a majority share in another company and take it private. In order to assist fund a deal, these former executives frequently team up with a financier or former company officers. The majority of shareholders must approve such merger and acquisition transactions, which are often financed disproportionately with debt. The international example is Dell Corporation, stated in 2013 that it had been acquired by its founder, Michael Dell.