One of the ways in which a firm may reconfigure its operations or expand its business within a market is through a merger. A merger may be defined as the process by which two or more firms use to combine their businesses. The purpose of merging businesses may be related to growth in a specific market or establishing footprint in a different market without necessarily starting business afresh in that market. An example of the former is when company A – which specialises in the manufacturing of alcoholic beverages – merges with company B – which specializes in the same market as company A. The purpose of the merger between company A and B is growth within the alcoholic beverages market. An example of the latter is when same company A combines its business with company C, which is in the market of manufacturing of soft beverages. The purpose of this merger is for the two companies to compete in these two different markets without necessarily establishing new companies.
Before companies or firms may merge their businesses, there are several legal hurdles to pass. Amongst these legal hurdles is whether a proposed merger is notifiable in terms of section 13 and section 13A of the Competition Act 89 of 1998, as amended; or whether a proposed merger passes competition muster and the public interest muster.
Are you or is your business thinking of merging with the business of another? Book an appointment with our office and our team will delightfully advise you or your business on all things merger related.