Why do mergers occur?

Question

*When do they tend to increase?
*Do they have to do with the value of assets?
*Could you give me examples of famous mergers?

Answer 1

Mergers occur for a lot of reasons that are often similar to why an individual might take a partner in a small business. Sometimes it is because two companies together have better expertise in an area, are more efficient in an area or are trying to dominate a market. Sometimes mergers occur just for financial reasons (one company wants assets that another company has and it is a way of buying those assets). When AT&T Wireless got together with Cingular, it was mostly because they wanted to be the national leader in cell service. When Time Warner merged with AOL, it thought it was a way of expanding from traditional media to new online media. It probably figured it couldn't just develop that business, so it was easier to buy it (or merge with it). Often, a merger will not result in a better stock price unless the merger has a good reason that leads to better company performance. Even some good mergers lead to a lower stock price because investors don't like them or because the two merged companies don't get along (different corporate cultures). Other famous mergers are: Chrysler with Daimler (Mercedes), HP and Compaq, lots of bank mergers (for ex. Citigroup - Solomon Smith Barney), and many others.

Answer 2

There are many reasons. The biggest reason why is because both companies feel when merged together, they are stronger and in a better position than if they were separate. Another reason may be because the company wants a bigger market share in that particular area/market. Third reason may be because the company being acquired has a product or technology that complements the acquiring company's product. Sometimes a company acquires their supplier or a major customer. That is called vertical integration or a vertical merger.

I know that when my mom worked at Comair, employees were already saying that Comair would be taken over by Delta Airlines because Comair at that time had a lot of cash. A company that has a lot of cash is a good takeover candidate. Ultimately Delta id acquire Comair. Therefore sometimes a merger will have to do with the value of the assets.

Some famous or big mergers would be:

Exxon-Mobil
Procter & Gamble acquiring Gillette
USAirways and America West Airlines
Glaxo-Smith Kline (pharmaceutical merger)

Areas which you see a lot of mergers would be in pharmaceuticals, biotech, telecommunications and banks/financial institutions.

Answer 3

No, fire them. Save the moneys for fighters, not some idiots who think they can make moneys by screaming or try to look cool by wearing sunglasses indoor.