Mergers and Acquisitions

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Mergers and Acquisitions Tasha Powers Dr. Michael Laverty Business 508 – Contemporary Business November 17, 2014 A merger or acquisition is a combination of two companies where one corporation is completely absorbed by another corporation. The less essential company loses its identity and becomes part of the more imperative corporation, which retains its identity. A merger extinguishes the merged corporation, and the surviving corporation assumes all the rights, privileges, and liabilities of the merged corporation (Gomes, 2011). A merger is not the same as a consolidation, in which two corporations lose their separate identities and unite to form a completely new…show more content…
The two companies would also create a joint venture, combining their consumer divisions to create a world-leading consumer healthcare business. It appears that the primary reasons to merge were to improve revenue by allowing Novartis access to GSK’s oncology products and to benefit their stock holders (GSK). Novartis and GSK have agreed to create a world-leading consumer healthcare business through a joint venture between Novartis OTC and GSK Consumer Healthcare. Upon completion, Novartis will own a 36.5% share of the joint venture and will have four of eleven seats on the joint venture's Board. Furthermore, Novartis will have customary minority rights and exit rights at a pre-defined, market-based pricing mechanism. It is clear that Novartis will have more control over the company, which could result in many of GSK’s organizational structure being dismantled and/or reorganized. With that being said, it doesn’t appear that the companies’ human resources management practices had to be modified in anyway. This merger was strictly based on revenue and profits – none of which should have affected the employees. The changes strictly involved access to certain products and revolved less around any other aspect of the business. Novartis' acquisition of GSK oncology products is expected to further reinforce its leading Oncology business and improve the growth profile of the combined portfolio. The addition of the GSK products is expected to expand Novartis'

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