Merger and Acquisition always involves two companies.
Merger: The board of directors of both companies have to seek shareholders' approval for a merger. After the merger, the acquired company will cease to exist and becomes part of the acquiring company.
Acquisition: The acquiring company obtains the majority shares of the acquired firm. The acquired firm does not change its name or legal structure.
For the acquiring company, the process is known as a takeover.
For the acquired company, the process is known as a reverse takeover.
How Does It Work?For the acquiring company, existing shareholders are often involved in the following:
A general meeting will take place to vote for or against the acquisition. If the existing shareholders are absent during the meeting, their voting rights are voided.If the acquiring company raises capital via right issue to fund the acquisition. You can view the post on...