Mergers and acquisitions

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Mergers & Acquisitions (abbr. M&A) are the financial transactions which aim is to create a company with the assets value increasing the total value of assets of two companies that are taking part in the transaction.


When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded.


It is the combination of two companies of about the same size into the larger one. They agree to go forward as a single company rather than remain separately owned and operated. Such combinations are commonly known as "merger of equal". Both companies' stocks are surrendered and new company stock is issued in its place

Types of M&A transactions

  • vertical * occurs when firms in industries at different stages of bringing a good to the final consumer, i.e. extractive, manufacturing or distribution, join together.
  • horizontal * occurs when the firms are in the same industry.
  • conglomerate * is an amalgamation of firms with dissimilar activities.

World's 10 largest M&A deals

Rank Year Purchaser Purchased Transaction value (in mil. USD)
1 1999 Vodafone Airtouch PLC Mannesmann 172,200
2 2008 BHP Billiton Rio Tinto 147,400
3 2000 America Online Time Warner 112,100
4 1999 Pfizer Warner-Lambert 118,900
5 2006 AT&T BellSouth 101,900
6 2007 Royal Bank of Scotland; Fortis; Banco Santander ABN AMRO 95,600
7 1998 EXXON MOBIL 85,600
8 2000 Glaxo Wellcome SmithKline Beecham 79,600
9 1998 SBC Communications Ameritech 76,200
10 1998 Bell Atlantic Corp GTE 74,600

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Author: Piotr Lusiński