Mergers

According to the researchers the increased value results from an opportunity to utilize a specialized resources which arises solely as a result of the merger (Jensens & Ruback, 1983; Bradle, Desai and Kim , 1983). For creating operational and financial synergies managers believe that two enterprises will be worth more if merged than if operates as two separate entities. Thus, the two companies, A and B:

What exactly is a merger? Investopedia defines it as follows “A merger is 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.” To break it down in a more simplistic way, a merger is when two companies become one. Majority of the time, if not all the time, the decision to come together is a mutual agreement between both companies. Majority of the time when a merger occurs, the company that has the less rank tends to be the company that loses

Mergers and takeovers are forms of external growth within a business. External growth occurs when one firm decides to expand by joining together with another. A takeover specifically refers to the gaining control of a firm by acquiring a controlling interest in its shares (51%). Merger, on the other hand, means the joining with another firm to form a new combined enterprise, shares in each firm are exchanged for shares in the other.

Merging with another organization has downfalls of destroying wealth from the merger. Considering the buying price is important when merging, spending too much on the merger will impound the value after the merger. Some mergers do not create wealth so capital is lost through the merger. There is no guarantee of financial gain and every formula considered with focus, just as with an acquisition. The final decision dictated by the variables. One company merging with another company takes the debt and losses of those companies in the new formed company.

The grounds for any merger depend on the competitive nature of both firms. If one firm is highly competitive and tries to

Companies do not have the freedom to merge and acquire as they please do. All have to meet the requirements and essentially be approved by regulatory bodies. In the context of regulations, antitrust laws and security laws are commonly referred to by regulator to determine whether a merger or acquisition should be allowed or rejected. Antitrust laws prohibit mergers and acquisitions that impede competition. The point is very simple where antitrust is referred to as competition. The goal is to increase competition because more competition in economics means that consumers get more at a fairer or lower price. Anytime a regulator believes that a merger or acquisition will make an industry or market less competitive, the business transaction might

The main weakness of merging the two companies would be with the staff. There would be cultural changes, disengaged staff and moral decreases (Iveybusinessjournal.com, 2015). Reorganization would need to be done to

Pikula (1999) observes that in merging two or more entities, the management of the companies must adhere to the Sherman Anti-trust Act which was established in 1890. This act was specifically established to prevent mergers from creating monopolies and cartels with an aim to exploit the consumers through determining prevailing market prices. If the merger results in a monopoly, it won’t be approved by the government. Employee contractual agreements must be considered before, during and after mergers. For the merger to go on seamlessly there should be shareholder approval. Initial approval by shareholders for the companies to consolidate their operations helps prevent conflicts from shareholders after the merger. Lastly, regulatory approval should be considered. The management must register the newly formed company. In addition, managers from the merging parties must consider agreements and contracts that the parties are engaging in as these will be transferred to the new company upon the merger.

A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate

In addition, like any other merger between two firms, companies benefit from significant cost synergy during the implementation of an acquisition and/or merger with other company. For example, when two companies combine their strengths to complement each other, they restructure their operations and as a result several offices and sites are closed down which leads to the laying off of employees, consolidating services and software applications. All these changes, result in synergy savings for the new company.

Sharing information and keeping the lines of communication open with the existing employees and new employees is going to be a vital requirement for this merger. Mergers tend to leave employees anxious which create increased stress and lower productivity rates among employees (Bhaskar, n.d.). An effective communication plan can help mitigate this problem and quickly return the company to full production when the merger has been completed. Starting communication lines early also help reduce the amount of speculation employees have. Even with before a merger deal is completed employees might get a sense of what is going on through a number of different channels. This can lead to

When companies combine/merge the whole objective is to gain new opportunities, gain market share, grow the business, to become more innovative and to improve product offerings, utilizing/sharing the existing resources and data. From the case

Mergers are such a complex concept, which can bring about a variety of emotions. I remember learning about the topic while pursuing my MBA. During that time, I reviewed companies that had merged and their history. Some were horrible stories of people losing their jobs and a loss of the mission of the company. I think that in most of these cases (the ones I learned about through MBA) the merger was done out of fear. Their company was struggling to grow, had financial issues, or policy were changing the way they needed to do business. Perhaps this was why there were negative repercussions from the merger.

The concern of the regulator will be to determine if the merger could raise or reduce the welfare of consumers. That is if the reduction in cost measured by the lower average cost would be sufficiently large relative to the rise in price, then the merger would improve welfare of consumers as cost saved will be greater than deadweight loss. But if the rise in price after the merger is sufficiently large relative to the reduction in average cost then the merger lowers welfare (deadweight loss).The antitrust authorities can determine if the merger would enhance welfare or not depending on how reacts to the merger. The goal of competitors is to determine whether the merged firm will provide quality or worse services compared to the combined premerger services provided by the firms engage in the merger. If the quality of services provided by the merged firms falls then competitors will be better off, since demand for their service is likely to increase. The increase in demand for the services of competitors induces them to provide more to the market, but on the net the total quality of service provided in the industry would falls creating higher prices, in that case the merger will not be challenge by the competitors. The higher price resulting from the merger reduces welfare as consumer surplus falls. On the other hand if the new firm provides better quality services

For around 25 shares of Re 1 of CBoP, an investor will get one share of Rs 10 of HDFC Bank. In last two days, share price of CBoP moved from Rs 49.85 on Wednesday to Rs 56.40 on Friday. However, it seems, investors of HDFC Bank did not like the development. The share price of HDFC Bank on Thursday moved up from Rs 1,534.50 to Rs 1,543. But on Friday, it fell sharply to Rs 1,475. Prior to this, in August 2007, CBoP was merged with Lord Krishna Bank.