+91 98998 29509

MERGER AND AMALGMATION

 

MCA vide notification dated 14th Dec, 2016 has issued rules i.e. The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. These rules will be effective from 15th December, 2016. Consequently, w.e.f. 15.12.2016 all the matters relating to Compromises, Arrangements, and Amalgamations (hereafter read as “CAA”) will be dealt as per provisions of Companies Act, 2013 and The Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016.

 


TYPES OF MERGER AND AMALGMATION


Horizontal merger


A Vertical Merger is a combination of two or more companies which are operating in the same industry but at different stages of production. The acquirer organization picks up a solid position because of the blemished market of its mediator items and furthermore through control over item determinations.

Vertical Merger


A Vertical Merger is a combination of two or more companies which are operating in the same industry but at different stages of production. The acquirer organization picks up a solid position because of the blemished market of its mediator items and furthermore through control over item determinations.

Conglomerate Merger


Conglomerate Merger is an amalgamation of two companies that engaged in unrelated industries. Like horizontal merger, conglomerate merger do not reduce the number of competitors in an industry. It is an expansion of a company. Example of conglomerate merger is merger of Mohana steel Industry Ltd. and Vardhaman Spinning Mills Ltd.

Reverse Merger


Reverse merger is a merging of a profit making company with a loss making company, which is generally a sick company. If a merging company is a sick company under the Sick Industries Companies Act, then such merger should take place through the Board of Industrial and Financial Re- construction (BIFR).



Reason for Merger & Amalgamation



1. Expansion and Diversification

2. Optimum Economic Benefit

3. Risk Strategy

4. Scaling up operations for competitive advantages

5. Increase the Market capitalization

6. Reducing overheads for cost reduction

7. Increasing the efficiencies of operations

8. Tax Benefits

9. Access Foreign Markets