Subject: Company Law (II)

Topic: Merger, Amalmagation, and Takeover

SUBMITTED BY:
DIVYA RAO
B.COM.LL.B. 3RD YEAR
190297

SUBMITTED TO:
Mrs. SHIVANGI
SHARMA
( ASSISTANT PROFESSOR )
Difference Between Merger, Amalgamation, and Takeover
Definition
Merger
A merger is when two or more companies/entities are combined to
form either a new company or an existing company absorbing the
other target companies. It is a process to consolidate multiple
businesses into one business entity.

Amalgamation
Amalgamation is a merger process in which two or more companies
combine their businesses to form an entirely new entity/company.
Amalgamation is an appropriate arrangement wherein two or more
companies operate in the same industry. Thus, amalgamation helps
in reduction in operational costs due to functional synergy.

Takeover
On the other hand, a takeover, or acquisition, is characterized by the
purchase of a smaller company by a much larger one. This combination of
"unequal" can produce the same benefits as a merger, but it does not
necessarily have
to be a mutual decision.
 Takeover Merger

Minimum 2 companies are Minimum 2 companies

Number of Entities required in which one are required for a merger wherein
1
Involved company takes over the shares two companies merge together
or assets of the other company. as one.

Different sizes of companies

Size of the are involved where the larger
2 Both companies are equal in size.
Companies company takeovers smaller
companies.

The acquirer company

Shares of the absorbing company
purchases or takeover more
3 Transfer of Shares are given to the shareholder of the a
than 50% shares of the target
absorbed company.
company.

Company takeover can be A merger is usually voluntarily or

4 Terms
friendly or hostile. friendly.

A takeover is driven by the

acquirer company with or The merger is often driven by the
5 Consolidation
without the consent of the absorbing company.
acquired company.

The acquirer company takes

The assets and liabilities of both
Accounting over all the assets and
6 companies are merged
Treatment liabilities of the target
and consolidated.
company.
 Merger Amalgamation

Amalgamation generally
A similar line of businesses
happens when a bigger
A Meaning merges for gaining
company acquires smaller
advantages and synergy.
ones.

Horizontal, Vertical, Nature of Purchase of

Type
Reverse, and Co- generic. Nature of Merger.

The acquiring company

The acquiring company may
Retaining Identity retains its identity and
retain its identity.
small company losses.

The initiative to merge is Both the companies take

Initiative generally taken by the the initiative to
acquiring company. amalgamate.

The controlling stake can be The controlling stake is

mutually agreed upon and with the acquirer and the
Controlling Stake
discussed between the 2 target company is a
parties under a merger. minority shareholder in it.

Legal formalities are

Legal formalities are
Legal Formalities comparatively less as
comparatively more.
compared to the merger.

The existing company keeps

its assets and liabilities and Assets and liabilities of
Assets and
also takes up the assets and amalgamating companies
Liabilities
liabilities of the other transfer to a new entity.
company.

Assets and liabilities are Assets and liabilities get

Transfer of Assets
consolidated in the merged transferred to the balance
and Liabilities
company. sheet of the new company.

Size of the Companies are bigger in size Target companies are

Company and operations. typically smaller in size.