Mergers & Acquisitions
Mergers and acquisitions; business alliance is used by companies either to diversify or to grow their businesses. In today’s competitive environment in the market and within the industry, companies are in constant battle to compete successfully and strengthen their position. The companies can improve and strengthen their position as a result of mergers and acquisitions which also allows enterprises to change the nature of their businesses, and grow, diversify, expand, and shrink. An acquisition is one of those effective ways by which the company can strengthen its position and leave behind its major rivals and exceed in the market. As a result of the acquisition and as a larger company access to capital is increased. Whereas in the case of mergers; there will be reduced competition, the new company will have a high market share which can ultimately lead to increased prices for the products and services for customers.
Mergers and Acquisitions in the United Arab Emirates.According to the laws in the UAE, it is possible to merge and acquire a listed company. The mergers and acquisitions in UAE are regulated by the UAE commercial company’s law that decides and clarifies the rules for transformation, mergers, and acquisitions in UAE. The “Securities and Commodities Authority” in UAE issues the corporate governance code which must be observed by the listed companies.
Mergers in UAE
When two companies of usually of comparable size agree to join as one unit; the merger takes place. In UAE following mergers can take place:
Horizontal Mergers: The type of merger that usually takes place between competitors that offer the same products and services in the market. It is done when the intention to have increased market share.
Vertical Mergers: The merger takes place between those two companies or enterprises that produce different goods and services for the same finished product. A vertical merger is one of the efficient business tactics that results in increasing the synergy and be more efficient to perform their operations in the market.
Product Extension Mergers: The product extension merger allows the companies and businesses units access to a bigger set of consumers and to group together their products. This merger takes place between those two business organizations that operate in the same competitive market and their products are related to each other. This step allows access to a larger client base, higher profits, and a large market share.
Market Extension Mergers: Market extension mergers between the companies’ results in a larger client base, as they take place when two companies deal in the same product and services but in the same market. This will allow both companies to get access to different markets and gain higher profit and more consumers.
Acquisition in UAE
The acquisition in UAE is allowed as per law. In acquisition the two entities are important: buyer and the targeted company. The buyer takes over the targeted company and becomes a new owner resulting in the non-existence of the targeted company. As a result, stocks are also stopped being in the trade. The two basic types of acquisition that might take place are the acquisition of assets and the acquisition of stocks.
Acquisition of Stock:
The acquiring firms acquire the stocks of the rival firm by directly dealing with the stockholders without the consent of the company. The slowly require majority of the stocks of the company and ultimately gain control over the firm. It might be time-consuming because many stockholders may hold their stock for a specific period.
Acquisition of Assets
An asset acquisition is a buyout strategy that involves purchasing key assets of the targeted instead of stock or shares. It is done with the aim to acquire the targeted firm if the company is bankrupt and has valuable assets that might be useful to other companies. It is very important to have a strong and sharp knowledge of the market and all its information.
Legal Advice from Attorneys in UAE for Mergers & Acquisitions
There are some legal steps that must be dealt with in UAE for mergers and acquisitions. We have a team of lawyers and experts to help you with that and provide legal services and take care of your legal matters. Our expert team of attorneys helps clients and companies to develop best and appropriate growth strategies and complex process of mergers and acquisitions.
Our Services include:
- Agreement for sales and purchase
- Structuring of agreement and its drafting and reviewing
- Agreement for the sale and purchase
- Agreement for financial advisory
- Advisory for financial and capital matters
- Target screening
- Deal structuring
- Readiness review
- Due diligence
- Readiness for IPO
- Secure approval from governing bodies
- Synergy analysis
- Separation structuring