Amalgamation

What Is an Amalgamation?

Amalgamation is when two or more companies come together to form a completely new company, and the original ones no longer exist as separate entities. This new company takes on all the assets and liabilities from the companies involved.

Types of Amalgamation

There are two main types of amalgamation:

Merger-like Amalgamation: In this type, both companies pool their assets and liabilities to form a completely new entity. Shareholders from both companies might continue in the new company, depending on the terms.

Purchase-like Amalgamation: One company buys the assets and liabilities of another, but the shareholders of the company being bought typically do not have a stake in the new entity.

Advantages

Larger Market Reach: By combining, the new company can reach more customers and have more resources.

Cost Savings: Merging can reduce costs by sharing resources and gaining better deals.

Disadvantages

Less Competition: Amalgamations can reduce market competition, leading to monopolies.

Job Losses: The integration process might result in job cuts due to overlapping roles.