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I need some assistance with these assignment. merger & acquisitions and the benefit to the shareholders value Thank you in advance for the help!
I need some assistance with these assignment. merger & acquisitions and the benefit to the shareholders value Thank you in advance for the help! Merger and Acquisitions include the target company. this is the company which has attracted attention from the acquiring company. The process of acquisition is sometimes hostile and in other times friendly. Therefore, a hostile takeover is when the board of directors objects to acquisitions of a given company based on their analysis that the process might lead to a loss of share value of the shareholders. Moreover, friendly transactions define the acquisition that has been endorsed by the company board of directors as a profitable exercise for the company to engage in (Gaughan 1996).
Merger and acquisitions take various forms of a horizontal merger to the vertical merger and to the conglomerate merger. The horizontal merger involves the buyout of the company in the same industry. This is mostly done to a competitor firm that threat to share a large percentage of the bigger company market share and thus reduce their capability of maximizing on profit (Berk &DeMarzo 2011). Therefore, horizontal merger increases the customer base of the acquiring firm and this guarantee that such an adventure will lead to high shareholder value. An example of a horizontal merger is the buyout of Lucasfilm in 2012 by Walt Disney Company.
Moreover, the acquiring company engages in a vertical merger. This is the acquisition of industries in the same production line ad producer of raw material or customer to the end products. A vertical merger is an essential exercise that ensures that the company controls the supply of its raw material and avoids the disruption that may be compromised by other firms in their pursuit of profit maximization. Vertical integration also serves to ensure that customers are not exploited by other companies that may be involved in the distribution of company products. In this case, the producing company may acquire control over distribution companies to engage with its customers (Standard and Poor’s 2003). In addition, a vertical merger is done to unlock .hidden value in resources which they acquire in a form that cannot be changed. Therefore, to engage in value addition of resources a company may acquire another company that supplies it’s with production materials. .  .An example of a vertical merger is the acquisition of Motorola Holding by Google in October 2012.
