Due to a large number of mergers, an investment fund has been created to allow investors to benefit from mergers. The fund records the spread or the amount remaining between the offer price and the trading price. The Westchester Capital Funds merger fund has been in existence since 1989. The fund invests in companies that have publicly announced a merger or acquisition. To invest in the fund, you need a minimum of $2,000 with an effort rate of 2.01%. Since its inception in 1989, the Fund has repaid 6.1% per year on April 29, 2020. The total value of mergers and acquisitions increased for the third consecutive year in 2018 to more than $3.89 trillion. Ambev merged with Interbrew and brought together the number three and five of the world`s largest breweries. When Ambev and Anheuser-Busch merged, it combined the number one and two of the world`s largest brewers. This example is both a horizontal merger and a broadening of the market, since it was a consolidation of the industry, but also an extension of the international reach of all the brands of the combined company. A merger is an agreement that brings two existing companies together into a new entity. There are different types of mergers and also several reasons why companies enter into mergers. Mergers and acquisitions are often carried out in order to broaden the scope of a business, expand into new segments or gain market share.
All of this is done to increase shareholder value. Often, during a merger, companies have a non-shop clause to prevent purchases or mergers by other companies. An ingenious fusion is also called product extension fusion. It is a combination of two or more companies operating in the same market or sector with overlapping factors, such as technology, marketing, production processes and research and development (R -D). A product extension merger is achieved when a new line of products from one company is added to an existing product line of the other company. If two companies become a business as part of a product extension, they can have access to more consumers and, therefore, a greater market share. An example of an ingenious merger is Citigroup`s 1998 union with Travelers Insurance, two companies with complementary products. A merger is the voluntary merger of two companies on largely identical terms into a new legal entity. Companies that accept a merger are about the same in terms of size, customer base and scope of operation. This is why the term “merger of equals” is sometimes used.
Acquisitions, unlike mergers, or generally non-voluntary and involve one active buying company of another. When two companies manufacture product fusion parts or services, the union is called vertical merger. A vertical merger occurs when two companies operating at different levels within the supply chain of the same sector combine their activities. Such mergers are carried out in order to increase synergies resulting from the cost reduction resulting from the merger with one or more utility companies. One of the best-known examples of vertical merger occurred in 2000, when Internet service provider America Online (AOL) merged with media group Time Warner. One of the factors that determines the success of negotiating a merger agreement is that companies merge only in the absence of overlapping factors, i.e. when companies are able to create synergies, including increased value, performance and cost savings.