Merger vs Amalgamation

Difference Between Merger vs Amalgamation

Inorganic growth has become a major part of the business looking to become industry leaders and companies are now days acquiring smaller fish or the taking control of a new line of business in order to enter the market and earn some big fat returns. Merger and amalgamation are two terms which are frequently used in the world of takeovers to grow the business and fetch the returns in the market. In this Merger vs Amalgamation article, we will try and understand the key differences between Merger and Amalgamation in detail.

Head To Head Comparison Between Merger vs Amalgamation (Infographics)

Below is the top 5 difference between Merger vs Amalgamation

Key Differences Between Merger vs Amalgamation

Both Merger vs Amalgamation are popular choices in the market; let us discuss some of the major Difference Between Merger vs Amalgamation

Merger happens when two companies or more companies who have a similar line of business operations decide to merge into each other in order to get synergies out of the business or to enter a whole new different geography or to start a new service line. On the other hand, Amalgamation usually happens when a larger entity of the business having bigger operations in the market acquires smaller companies which much less revenue and operations
A merger can be horizontal, vertical or conglomerate. A horizontal merger takes places in order to reduce the existing competition in the market which eliminate companies of a similar nature. A vertical merger is when a company who is providing raw material and other things to the business get acquired which is also known as backward integration. Forward integration happens when a company who is a vendor to the business gets acquired. A conglomerate merger is entered into with the goal of diversifying the business. On the contrary, amalgamation can be in the nature of a merger or in the nature of the purchase. When amalgamation happens in the nature of purchase when the shareholder acquires of the acquirer company takeover all the shareholding of the acquired company and the company ceases to exist This means the shareholders of the transferor entity no longer have a proportionate share in the combined equity of the parties to the amalgamation, where when amalgamation happens in the nature of merger both entities assets and liabilities of the companies are combined
Amalgamation is less frequent in events when compared with mergers. Amalgamation creates some powerful companies around the globe. The world’s largest steel company Arcelor was created through an amalgamation. On the other hand, mergers also kill competition in an industry and before merging entities the companies need to take approval from the merger control in India
In Merger both the entities that are merged cease to exist and a new company is formed all together with a new shareholding pattern, the new name, and new goals. On the other hand, under amalgamation, the acquiring company retains all his powers and rights of the shareholding and the company which has been acquired is dissolved
Examples of Merger and Amalgamation
- Merger = “Centurion bank of Punjab” is merging with “HDFC bank”
- Amalgamation = Nirma and core health care

merger