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Encyclopedia > Merged
This page deals with the combination of two companies into one. For information about other uses of the word "merge", see merge.

In business or economics a merger is a combination of two companies into one larger company. Such actions are commonly voluntary and involve stock swap or cash payment to the target. Stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal. A merger can resemble a takeover but result in a new company name (often combining the names of the original companies) and in new branding; in some cases, terming the combination a "merger" rather than an acquisition is done purely for political or marketing reasons.

Contents

Classifications of mergers

  • Horizontal mergers take place where the two merging companies produce similar product in the same industry.
  • Vertical mergers occur when two firms, each working at different stages in the production of the same good, combine.
  • Conglomerate mergers take place when the two firms operate in different industries.

A unique type of merger called a reverse merger is used as a way of going public without the expense and time required by an IPO.


Issues

The occurrence of a merger often raises concerns in anti-trust circles. Devices such as the Herfindahl index can analyze the impact of a merger on a market and what, if any, action could prevent it. Regulatory bodies such as the European Commission and the United States Department of Justice may investigate anti-trust cases for monopolies dangers, and have the power to block mergers.


The completion of a merger does not ensure the success of the resulting organization; indeed, many (in some industries, the majority) mergers result in a net loss of value due to problems. Correcting problems caused by incompatibility—whether of technology, equipment, or corporate culture— diverts resources away from new investment, and these problems may be exacerbated by inadequate research or by concealment of losses or liabilities at one of the partners. Overlapping subsidiaries or redundant staff may be allowed to continue, creating inefficiency, and conversely the new management may cut too many operations or personnel, losing expertise and disrupting employee culture. These problems are similar to those encountered in takeovers. For the merger to not be considered a failure, it must increase shareholder value faster than if the companies were separate, or prevent the deterioration of shareholder value more then if the companies were separate.


Major mergers since 1990

United States

Europe

  • Vodafone; with Mannesmann (completed February 2000) ($130 billion) ([13] (http://www.telecomvisions.com/current/man.php))

Japan

See also


  Results from FactBites:
 
Wikipedia:Duplicate articles - Wikipedia, the free encyclopedia (4943 words)
Missed approach should be merged with go around, which is the more general term (the former is more common in North America, with the latter being used worldwide) and probably has most information already.
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FAQs regarding Merged Plans (713 words)
For example, if the merged plan provided for a QJSA (an IRC 411(d)(6) - protected benefit) while the surviving plan did not, the surviving plan must be amended to preserve this option for benefits accrued under the merged plan.
The QJSA provisions of the surviving plan should also apply to the merged plan to the extent necessary to allow the plan to comply with current law prior to its merger into the surviving plan.
For each plan merged out of existence, the latest determination letter received by the plan sponsor with, if necessary, copies of the signed and dated amendments for IRC 401(a)(31) and 401(a)(17), plus a signed and dated copy of the plan document currently in effect.
  More results at FactBites »

 
 

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