Recent Mergers or Acquisitions

Recent Mergers or Acquisitions

A "merger" or "merger of equals" is often financed by an all stock deal (a stock swap). An all stock deal occurs when all of the owners of the outstanding stock of either company get the same amount (in value) of stock in the new combined company. A merger adds value only if the two companies are worth more together than apart (Wikipedia, Free Encyclopedia, 2006).

An acquisition (of un-equals, one large buying one small) can involve a cash and debt combination, or just cash, or a combination of cash and stock of the purchasing entity, or just stock (Wikipedia, Free Encyclopedia, 2006).

Such actions are commonly voluntary and involve stock swap or cash payment to the target. Stock swap is often used as it allows the shareholders of the two companies to share the risk involved in the deal (Wikipedia, Free Encyclopedia, 2006).

Recent Examples of Mergers or Acquisitions

· Adobe acquired Macromedia

· AT&T merges with SBC

· MCI merges with Verizon

Strategies