Distinction between Mergers vs. Takeovers
The following are the differences between Mergers and Takeover:
Distinction Mergers Vs Takeover
Mergers: Defined as an arrangement whereby the assets of two companies become vested in, or under the control of, one company (which may or may not be one of the original two companies), which has as its shareholders all, or substantially all, the shareholders of the two companies.
Takeover: Defined as a transaction or series of transactions whereby a person (individual, group of individuals or company) acquires control over the assets of a company, either directly by becoming the owner of those assets or indirectly by obtaining control of the management of the company
Mergers: Effected by the shareholders of one or both of the merging companies exchanging their shares (either voluntarily or as the result of a legal operation) for shares in the other or a third company, the arrangement being frequently effected by means of a takeover bid by one of the companies for the shares of the other, or of a takeover bid by a third company for the shares of both
Takeover: Effected by agreement with the holders of the whole of the share capital of the company being acquired, where the shares are held by the public generally, the takeover may be effected by agreement between the acquirer and the controllers of the acquired company, or by purchases of shares on the Stock Exchange, or by means of a ―takeover
3. Control over assets
Mergers: Shareholding in the combined enterprise will be spread between the shareholders of the two companies
Takeover: Direct or indirect control over the assets of the acquired company passes to the acquirer
Mergers: Bid is generally by the consent of the management of both companies
Takeover: Bid is frequently against the wishes of the management of the offeree company.
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