What Are The Advantages And Disadvantages Of Mergers And Acquisitions

778 WordsNov 16, 20174 Pages
Mergers and acquisitions are practically formed when two or more companies agree to form a new firm or corporation. However, the circumstances surrounding the formation of a merger or an acquisition are what differentiate the two. In mergers, companies are engaged in negotiations to become one while in acquisitions companies do not need to hold prior negotiations since the acquirer buys the shares of the target. Further, acquisitions involve the acquirer wholly absorbing the target company and may be hostile or friendly. Mergers and acquisitions enable the involved companies to benefit from staff reductions thus cutting costs to boost profitability. They also enable the acquirer to gain economies of scale thus improving their purchasing…show more content…
At times, these feelings by employees lead to increased disloyalty and turnover as well as lowered productivity and commitment with tendencies of dysfunctional job-related behaviors. Mergers and Acquisitions in the Technology Industry Nokia Acquisition by Microsoft Corporation One of the recent high profile acquisitions in the computers and technology industry involved Microsoft Corporation where it acquired all of Nokia’s services and devices business for US$7.2 billion. In the acquisition, Microsoft wanted to venture and raise its profile in the affordable devices market which is assumed to have a US$50 billion annual income. As a result, Nokia was changed into Microsoft Mobile Oy. In the deal, Nokia reaped more than anticipated since it had less value left and was making losses so selling it at that price was a better deal to its shareholders. However, Nokia retained its mapping business thus turning the acquired business into an infrastructure equipment company. The deal, therefore, benefitted Microsoft by acquiring the control of the whole of Nokia’s supply chain while Nokia gained a stronger and more financially able partner to boost the product life on the Lumia line of smart-phones. The deal also give life to Microsoft’s traditional PC business, which is at the blink of stagnation. Qualcomm and NXP Semiconductor Another deal in the technology industry involved Qualcomm and NXP Semiconductor whereby the former
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