COMMERCE 3FA3 Chapter Notes - Chapter 23: Tender Offer, Stock Exchange, Joint Venture
10 Feb 2018
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There are three basic legal procedures that one firm can use to acquire another firm: merger or consolidation, acquisition of stock, acquisition of assets. Amalgamations: combinations of firms that have been joined by merger, consolidation, or acquisition. The company that makes an offer to distribute cash or securities to obtain the stock or assets of another company. Target firm: firm that is sought (and perhaps acquired). Consideration: the cash or securities offered to the target firm in the acquisition. Merger: the complete absorption of one company by another, where the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity. Consolidation: a merger in which a new firm is created and both the acquired and acquiring firm cease to exist. Advantages and some disadvantages to using a merger to acquire a firm: a primary advantage is that a merger is legally simple and does not cost as much as other forms of acquisition.
