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DEFINITION:
MERGER: The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock. Example: Company A+ Company B= Company C.
ACQUSITION: It also known as a takeover or a buyout, is the buying of one company by another. In acquisition two companies are combine together to form a new company altogether. Example: Company A+ Company B= Company A.
iii.
iv. v.
TYPES OF MERGER:
MERGER
HORIZONTAL
CONGLOM ARATION
MARKET EXTENSION
FORD &BENDIX.
TYPES OF ACQUISITION:
ACQUISITION
HOSTILE
(MICROSOFT FOR
YAHOO,2008,bid offer $44.6 billion)
US carmaker Chrysler and Italian carmaker Fiat merged to create world's sixth largest global auto giant. The non-cash accord called for Fiat to take a 35% stake in the No 3 American carmaker Chrysler in exchange for Fiat's platforms for its fuel-efficient, small and medium-sized compact cars, which will fill a gap in Chrysler's range of models. Fiat in turn would gain access to American auto plants and service centres as well as the reintroduction of several of their models back into America. Fiat like Chrysler was also in a terrible state after a failed merger with General Motors, but is now on its road to recovery.
Europe's auto major Volkswagen is set to become the world's number one, pushing Japan's Toyota to the second place, by taking over sports car manufacturer Porsche. The acquisition ended years of takeover struggle between the two German automobile giants. Porsche, which made an unsuccessful bid to take over Volkswagen earlier this year, is now the 10th brand of the VW family. Volkswagen took 49.9% stake in Porsche for 3.9 billion and the merger will be completed by 2011. Porsche will continue to operate as an independent company within the VW family.