MERGERS AND ACQUISITION

Mergers and Acquisition



Mergers and Acquisition

Defining merger and acquisition

An interchangeable term used to describe the combination of two companies or corporations into one company. Only one of the firms survives, and the other is combined with the surviving firm. This is called a merger. An acquired firm can also be combined with the acquiring firm to form one company. Also, a corporation can acquire another corporation for strategic reasons without combining that corporation with the acquiring corporation. A merger can be distinguished by what happens to the company acquired. A merger will result in the combination of all the assets of the acquired company with those of the acquiring company, and then an entirely new corporation is formed. The acquired company ceases to exist, and the common stock of the acquired company is exchanged for shares in the new company. Thus, the terms merger and acquisitions are used interchangeably. Sometimes the press refers to mergers and acquisitions as takeovers or buyouts.

However, a distinction must be made with the term acquisition. Acquisitions must be seen in light of the type of acquisition being made by the acquiring company. Companies acquire assets for investments purposes. Some companies can acquire the assets or buy a division of another company. For example, IBM sold its computer division to another company. This transaction is an acquisition of IBM's computer division and not a merger (Rosenbaum, 2009). However, if the company had acquired all of IBM's assets and then merged them with its assets, then this would be an example of how the term merger and acquisitions is used. When companies merge, the board of directors of each company generally agrees to the merger. A price is set for the shares of the company being acquired. Then, payment is made by exchanging the shares of the company being acquired for the shares of the acquiring company. Sometimes companies being targeted for acquisition will resist the offer and demand a higher price, or another company may try to acquire another corporation through a hostile takeover by openly buying the shares of the targeted company listed on the stock exchange.

Method of financing

Easy Jet has also delivered a good performance of trading ending year of September 2008. It was highlighted that, in winter bookings for the first quarter of 2009 were ahead of the preceding year, which reflects the cutback in competitive capacity on routes as well as decisions to limits the growth of the seats. It is also verified that the flight values business and leisure passengers. It is also evident that the economic conditions will be very helpful for easy jet and it is planning accordingly, It is focusing on expanding customer base that is by providing them value and controlling extra costs which can be a basis of loss for the company. One of the competitors, Airbus also provides a flexible and a powerful approach to fleet growth.

This fundamental financial performance does not include ...