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Concepts related to M&A – merger, acquisition and some forms of current M&A
M&A is an abbreviation of "Merger and Acquisition". M&A has done through the corporate merger format, returning part or all of the shares of the target company to purchase the checking rights.
Concepts related to M&A
M&A is an abbreviation of “Merger and Acquisition”. M&A has done through the corporate merger format, returning part or all of the shares of the target company to purchase the checking rights.
Currently, in the Vietnamese market, M&A activities are also taking place very actively. Foreign enterprises are often the main participants in M&A activities in Vietnam. Some prominent M&A deals in the past year 2021 can be mentioned such as: Sumitomo Mitsui Corporation (SMBC) bought 49% of FE Credit, Ayudhya Public Bank Limited (Krungsri) of Thailand acquired the entire Bank. Saigon – Hanoi Commercial Joint Stock Company (SHB), … In recent times, Vietnamese enterprises have also gradually actively participated in many M&A activities, such as: Vinhomes Joint Stock Company announced the purchase of an urban area Dai An market with a scale of 300 hectares in Hung Yen province or Indo Tran Forwarding and Shipping Joint Stock Company bought 54 million STG shares of Nam Logistics Joint Stock Company (Sotrans), …
Here are the relevant information to Merger and Acquisition to help us easily understand the difference between these two forms:
| Merger | Acquisition | |
| Define | Merger is an activity where two companies want to establish a completely new company without maintaining the ownership and operations of the component company. | Acquisition is a form in which one business seeks to gain control of another by acquiring all or part of the total shares or assets of the acquired business. |
| Subjects participating in the transaction | Entities participating in merger transactions are enterprises. | The participants can be businesses or individuals. |
| Stock | When conducting a merger, the stock of the two old companies will be deleted and new securities will be issued. | The parties will not issue new stock and will maintain the old stock of the acquired company. |
| Property and Liability | The property and liabilities of the newly formed company will be held by that company. | As for the property and liabilities for the acquired business, it will be decided by the acquirer. |
Some forms of the Merger and Acquisiton:
For Merger, based on the business structure, mergers can be divided into types such as: Horizontal mergers; Vertical mergers; Merger to expand the market; Product expansion mergers; Group mergers.
In particular, horizontal merger is a form of merger between businesses with the same product type, the same market and directly competing with each other. Vertical merger is a form of merger between enterprises participating in different stages in the production and market access process. Market expansion merger is a form of merger between two enterprises producing or trading the same product but in two different markets. Product expansion merger is a merger between two businesses that do not produce or trade in the same product but are related in the same market.
For Acquisition, based on the will of the parties involved in the transaction, can be divided into friendly acquisition and unfriendly acquisition.
A friendly takeover is a form of acquisition that is agreed to by the target company, ready to be acquired by another business. An unfriendly takeover is the opposite of a friendly takeover, where the target company does not agree to be acquired by another business. However, the acquirer deliberately approaches the target company’s shareholders to acquire shares or fight for management rights over the target company.
These concepts are all understood according to English scientific research, however, there are differences in Vietnamese legal regulations. We will clarify this difference in the next article.
Recommendations of LS Law Firm and Associates (“LS Law Firm”)
The above is the essential information you need to know about Mergers and acquisitions (M&A) based on the legal regulations at the time of writing the article. If you need advice or are interested in the above services or other related legal services, please contact the experts and lawyers of LS Law Firm immediately at Email: lslawfirm2014@gmail.com for advice and support.
Note: The article is for reference only, all copying uses the article as its own evidence in any case, which is considered not allowed./.
