Understanding M&As
Here is a set of FAQs that will help you understand the why and the how of mergers and acquisitions
What are M&As?
Mergers and acquisitions (M&As) refer to various corporate actions wherein an entity (called the acquirer) purchases another entity (acquiree/target). Although the terms ‘merger’ and ‘acquisition’ are used interchangeably, they actually mean different things. In the case of an acquisition, the acquirer purchases the target but continues to keep the target as a separate legal unit. On the other hand, in the case of a merger, one entity is merged into another entity.
What are the motives behind M&As?
Companies go for mergers and acquisitions due to a number of factors, some of which are as follows:
SECURING RAW MATERIALS: Most companies need some form of raw materials for the smooth functioning of their operations. These raw materials are not only crucial but could also be scarce and sold by a very few entities. Therefore, some companies choose to execute an outright purchase of their suppliers to ensure uninterrupted access to raw materials. This form of M&A is known as ‘backward integration.’ For example, Hindalco acquired Ryker Base in 2021 for ₹323 crore to strengthen its copper-rod manufacturing capacity.
この記事は Wealth Insight の May 2022 版に掲載されています。
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7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。
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