Week 7: Merger and Acquisition

Mergers and Acquisition

Merger and Acquisition could help the company in increasing their generation for their company’s value, develop their company’s cost efficiency, and increase their market share in the public. Moreover, merger and Acquisition could help the company to generate their tax gains; increase their company’s revenue and cut their capital cost. The activity of merger and acquisition will automatically help the company in generate more shareholders in the company due to the new prospect.

Based on the theory of merger and acquisition, it is very important for the company, which currently suffering numerous problems in their organization and can’t be solved to look after the opportunities of the acquisition. Besides that Merger and acquisition also offer the benefits of joint venture in the form of the generation from cost of efficiency. Since in the joints venture, there will be two-company combining together than automatically the production of the company will increase in larger amount. The increases of the productions will leads to a reduction cost of the production per unit. These are some of the factors of why company will choose to do the merger and acquisition.

In February 2013 CNN money reported that there are three deals of merger activity with the total amount of $56 millions. The biggest merger and acquisition activity is from the Berkshire Hathaway and the 3G with the capital of $28 billion intended to acquire Ketchup giant H.J. Heinz Company with cash. Comcast approved to acquire 49% stake of NBC Universal for $16.7billion.

Freeman & Co was predicted that the bankers in the Virgin/ Liberty deals would get high amount of profit with the fees of $75million. In the other case of the merger deal from Dell Company, the banker will get approximately $100 million. In the case of the acquisition made by the International Exchange acquiring New York Stock Exchange, it makes the shares of New York Stock Exchange grows for almost 38%. Looking from these statements above, it can be concluded that there are lots of parties that will get the benefits from the process of merger and acquisition. For example the in the case of the acquisition between New York Stock Exchange and International Exchange, the buyer, which is the International Exchange get reward in the form of the increases of their company’s share price. To conclude, I think merger and acquisition can give a good opportunities for the strong company to acquire weak company, in the case the strong company could manage and choose the right company for them to acquire.