What are the conditions for a horizontal merger to create value for the shareholders of the...

What are the conditions for a horizontal merger to create value for the shareholders of the acquirer?

Expert Solution

Horizontal mergers means when one company acquires another company in the same industry. In this type of mergers both the compaies operates in the sam industry.

It helps in the value creation of the stakeholders in following manners:-

1. The market share of the acquired company will be absorbed in with the acquirer company resulting in the higher market price of the shares.

2. Exisiting assets of the acquired company can be put to use and the installed capacity of the company will increase resulting in covering hire share of supply in the market.

3. This provides for greater potential synergies in eliminating redundant functions within the two firms and potentially increased pricing power with both vendors and customers.

4.A horizontal merger also helps reduce the threat of competition in the marketplace, thus increasing market price of the newly formed company.

5. It also provide companied to reduce tax burden by setting off the losses of the acquired comapny, which will have a good impact on the share prices of the company.

jeff jeffy answered 3 years ago

a) Differentiate horizontal merger from congeneric merger with suitable example.

Business la chapter 48 1. Was this a horizontal merger, a vertical merger, or a conglomerate...

Business la chapter 48 1. Was this a horizontal merger, a vertical merger, or a conglomerate merger? 2. How is the market defined, in terms of both product or service and geographic area?

1. What is the difference between a horizontal and a vertical merger? 2. Provide a recent...

1. What is the difference between a horizontal and a vertical merger? 2. Provide a recent example of a vertical and a horizontal merger. 3. Which are the two U.S. government entities responsible for overseeing and policing mergers? 4. If price elasticity of demand for chicken is 0.40 in absolute value, when there is a 10 percent decrease in the price of chicken, what happens to the quantity demanded of chicken? 5. In order to check if two goods are...

For the antitrust agencies to consider a “failing firm” defense for a merger, what conditions would...

For the antitrust agencies to consider a “failing firm” defense for a merger, what conditions would need to be present? a. The failing firm is less able to compete effectively b. The failing firm must show that it can’t meet its financial obligations c. The failing firm must show that it has obtained multiple offers from possible buyers d. The failing firm must be at risk of imminent failure

A key way that banks create value for their shareholders? Reduction in asymmetric information through the...

A key way that banks create value for their shareholders? Reduction in asymmetric information through the development of loan relationships Transaction services Federal funds purchased and sold Transmission of monetary policy International activities

If Netflix were to diversify into the telecommunications industry, would it create value for its shareholders?...

If Netflix were to diversify into the telecommunications industry, would it create value for its shareholders? Utilize the appropriate measures found in Chapter 7 that can be applied for Netflix to make up its mind and to justify your answer. Appropriate measures: economies of scope, transaction costs, costs of corporate complexity, diversification, vertical integration and strategic manoeuvring

if a company declare a final dividend to shareholders, under what conditions would such a dividend...

if a company declare a final dividend to shareholders, under what conditions would such a dividend declaration create a liability that would be required to be disclosed in the statement of financial position.

Describe market conditions and a prospective merger such that there is a serious risk of unilateral...

Describe market conditions and a prospective merger such that there is a serious risk of unilateral effects but little risk of coordinated effects. Now describe market conditions and a prospective merger such that there is a serious risk of coordinated effects but little risk of unilateral effects?

QUESTION 2: What are the conditions that create creativity in entrepreneurship

Horizontal growth can be the merger of two companies at similar levels in the production supply...

Horizontal growth can be the merger of two companies at similar levels in the production supply chain. As mentioned, Delta Airlines acquired Northwest Airlines in 2008 to obtain access to Northwest's Asian markets and those American markets that Delta was not then serving. Another example is Facebook and Instagram, in which both operate in the same industry. They share similar services. Facebook sought to strengthen it's position by using Instagram as an opportunity to grow it's market share, reduce competition,...

Question