In: Finance
Give examples of recent mergers. What are the rights of the shareholders (of both companies) during a merger?
Examples of recent mergers are –
· Amazon/Whole Foods Market – In this merger deal Amazon acquired Whole Foods Market for a sum of $13.7 billion.
· Disney/21st Century Fox – In this merger deal Disney acquired 21st Century Fox for a sum of $52.4 billion.
· CVS/Aetna – In this merger deal CVS purchased health insurer Aetna for $69 billion.
Rights of the shareholders during a merger start with the ‘appraisal right’. This right is created by the state law and is enjoyed by a dissenting shareholder who objects to an extraordinary transaction like a merger or a consolidation. Thus the appraisal rights give the shareholders the right to have his/her shares of the pre-merger corporation appraised or valued. It also gives the shareholders the right to be paid the fair market value of his/her shares by the pre-merger or the pre-consolidated corporation. Shareholders also have voting rights in merger transactions. Shareholder voting plays a central role in corporate governance.