What is mergers and acquisitions

Mergers and Acquisitions (M&A)

What does M&A mean?

M&A stands for Mergers and Acquisitions, and is a collective term that describes the combination of two companies. The idea behind this is that two companies together are more valuable than two separate companies. A merger occurs when two companies become one, usually with a new name, while an acquisition occurs when one company buys another.

Where have you come across the term M&A?

M&A are often in the headlines because the deals they make can be worth millions of dollars. For example, Google has already acquired a number of companies such as YouTube and Android. One of the largest mergers in financial history was that of Glaxo Wellcome and SmithKline Beecham to form GlaxoSmithKline.

What you need to know about M&A ...

M&A can include other types of transactions, such as consolidations, tender offers, and asset purchases.

When a merger or takeover is announced or even speculated about, it usually affects the share price of the two companies involved.

In a takeover, the company that is bought is called the target company. The acquiring company must acquire at least 50% of the target company's share capital in order to gain control over the target company. If you own shares in the target company, you have to decide whether to accept the offer of the bidding company to buy your capital shares.

When companies of roughly the same size merge, new shares may be issued under a new company name.