Ah, when two become one. It’s a beautiful thing, Flux fam.
Ah, when two become one. It’s a beautiful thing, Flux fam.
A merger happens when two companies combine (aka merge) to form one big company.
Unlike an acquisition, mergers are generally completely voluntary, and both companies generally come out equally on top.
There are heaps of reasons why companies merge, including:
If Company A and Company B merge to form Company AB, shares of Company AB will be distributed to the existing shareholders of Company A and B.
And generally, shares in Company AB are worth more than shares in the individual company, which actually leaves shareholders better off in the long term.
Remember when TPG merged with Vodafone in 2020 to form TPG Telecom? TPG stood to gain a whole new market segment (mobiles), while Vodafone jagged TPG’s super speedy internet infrastructure.
They also achieved $38 million in “cost synergies”, which are when companies that join together save cash on double-ups (i.e. if both companies have a sales team, and they merge, they will likely lay-off staff as a result and save costs).
TPG shareholders received one share in the new merged company from every share they held in the old company.
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