Financial engineering : Question 1
Could you explain the procedures involved in a merger?
ALL THEMES
- COST OF CAPITAL
- FINANCIAL ANALYSIS
- FINANCIAL ENGINEERING
- FINANCIAL MANAGEMENT
- FINANCIAL POLICY
- VALUATION
A merger generally involves the following three steps:
1. Negotiation of the exchange ratio which will determine the share of each shareholder group in the new entity. The ratio is expressed as a given number of shares in Company A for a given number of shares in Company B.
2. Legal implementation of the link-up drafting of merger agreement, report by special mergers auditor on the fairness of the exchange ratio, holding of EGMs by the shareholders of both companies which must approve the operation by a majority, in France, Russia or Denmark of 66.7% of votes; in the UK, Germany or Belgium of 75% of votes.
3. Implementation of the merger by combining the operations and human resources of the two entities which have now become a single entity.
For more details, see chapter 45 of the Vernimmen.
1. Negotiation of the exchange ratio which will determine the share of each shareholder group in the new entity. The ratio is expressed as a given number of shares in Company A for a given number of shares in Company B.
2. Legal implementation of the link-up drafting of merger agreement, report by special mergers auditor on the fairness of the exchange ratio, holding of EGMs by the shareholders of both companies which must approve the operation by a majority, in France, Russia or Denmark of 66.7% of votes; in the UK, Germany or Belgium of 75% of votes.
3. Implementation of the merger by combining the operations and human resources of the two entities which have now become a single entity.
For more details, see chapter 45 of the Vernimmen.
