Merger Is The Merging Of Jds Fitel Inc. And Uniphase Corp

1. Definitions: 1.1. Merger: â€Å"A merger is a combining of two or more companies to form a new company†. An example of a merger is the merging of JDS Fitel Inc. and Uniphase Corp. in 1999 to form JDS Uniphase. 1.2. Acquisition: To acquire another firm, usually through the purchase of shares of the company or to buy assets of the business directly. â€Å"Acquisition is the purchase of one company by another in which no new company is formed†. An example of an acquisition is Manulife Financial Corporation s 2004 acquisition of John Hancock Financial Services Inc. 2. Types of Mergers: 2.1. Horizontal Merger - One company acquires a competing company. After being carefully reviewed it may be deemed as anticompetitive. 2.2. Vertical Merger - When a†¦show more content†¦There are mixed conclusions as to whether mergers have a positive effect on innovation and synergies, research, productivity of the new company. However, mergers and acquisitions appear to have a positive economic effect on the company in the short-term, allowing the company to reduce costs, it can have a negative effect on productivity and innovation longer term. 3. Advantages and disadvantages of mergers: 3.1. Advantages: 3.1.1. Small, biotech firms and university labs can help to plug the innovation gap, and even some mid-size pharmaceutical firms are operating with RD visions and in a therapeutic area to build detailed knowledge. 3.1.2. Other Economies of Scale. All the potential economies of scale that can arise is the main advantage of merger. Example: In a horizontal merger, this could be quite extensive, especially if there are high fixed costs in the industry. Note: if the merger was a vertical merger or Conglomerate Merger, the scope for economies of scale would be lower. 3.1.3. Avoid Duplication. In some industries it makes sense to have a merger to avoid duplication. For example: two bus companies may be competing over the same stretch of roads. Consumers could benefit from a single firm with lower costs. Avoiding duplication would have environmental benefits and help reduce congestion. 3.1.4. Regulation of Monopoly. Monopoly is characterized by an absence of competition, which often results in high prices and