Economics Assignment Example | Topics and Well Written Essays - 2000 words - 4

Economics - fitting ExampleMerger and Acquisitions includes the target company this is the company which has attracted attention from the acquiring company. The process of acquisition is sometimes hostile and in other times friendly. Therefore, a hostile takeover is when the board of directors objects to acquisitions of a abandoned company based on their analysis that the process might lead to loss of share honor of the shareholders. Moreover, friendly transactions define the acquisition that has been endorsed by the company board of directors as a fat exercise for the company to engage in (Gaughan 1996).Merger and acquisitions take various forms horizontal merger to the erect merger and to conglomerate merger. Horizontal merger involves the buyout of the company in the same industry. This is mostly done to a competitor firm that threat to share a large percentage of the bigger company grocery store share and thus reduce their capability of maximizing on profit (Berk &DeMarzo 2011). Therefore, horizontal merger increases the customer base of the acquiring firm and this guarantee that such an adventure will lead to high shareholder value. An example of a horizontal merger is the buyout of Lucasfilm in 2012 by Walt Disney Company.Moreover, the acquiring company engages in tumid merger. This is the acquisition of industries in the same production line ad producer of raw temporal or customer to the end products. Vertical merger is an essential exercise that ensures that the company controls the supply of its raw material and avoids the disruption that may be compromised by other firms in their pursuit of profit maximization. Vertical integrating also serves to ensure that customers are not exploited by other companies that may be tough in the scattering of company products. In this case, the producing company may acquire control over distribution companies to engage with its customers (Standard and Poors 2003). In addition, vertical merger is done to u nlock