Chapter: Business Science : Merchant Banking and Financial Services : Other Fee Based Management Introduction
Distinction between Mergers vs. Takeovers
Distinction between
Mergers vs. Takeovers
The
following are the differences between Mergers and Takeover:
Distinction
Mergers Vs Takeover
1.Definition
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
2. Mode
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
4. Bid
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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