A merger is achieved when two or more firms join together and under common ownership. Also, merger is a controversial method of running business, because it can lead the consequence to both good and bad ways. Two companies merge together may cause the incorporative company growth, or make the company take a bad turn. There are reasons why do firms do merger, such as to achieve profit maximization, gain more market share and be able to benefit from long run average costs (economies of scale). In this essay, merger between Three and O2 will be evaluated.
In the UK, there are top four telecommunications companies which are O2, EE, Vodafone, and Three. A Hong Kong entrepreneur Li Ka-shing who owns Hong Kong-based Hutchison Whampoa, and Three company belongs to his
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Also, the market share could increase from 29 %( O2) and Three (12) to 41 %( O2 & Three). So the European commission has to scrutinize this plan, because this subject will increase the power of monopoly.
Advantages of Three and O2 merger
Firstly, merger will lead to economies of scale (unit costs fall as output rises). If Three and O2 finished merged, it will be the largest telecommunications company in the UK, and figure 1 shows that the incorporated company will own 41% of market share. According to the law in the UK, it defines if a firm owns more than 25% of market share, the firm will become monopoly. Therefore, Three and O2 merger becomes monopoly. The figure 2 shows before point Q3, as quantity increases from Q1 to Q2, the average costs are decreasing from AC1 to AC2. As a result of this, the consumer of this company will increase sharply, that could reduce the average cost per unit. Equally important, the 3 stages, at the beginning the average costs will decrease dramatically, then at stage2 the average costs still decrease but the rate also decrease, and the stage3 is constant returns to scale. It means lower
In the year of 2005, the companies eventually found a way to make it easier for the companies to combine without having any major issues or problems. Unfortunately, around the year of 20010 the merging com...
I am interest in the study of this topic because I am curious about the financial effects of such a merger.
Many people turn to the AT&T and T-Mobile takeover that was turned down and do not understand why the Comcast and Time Warner merger would be allowed. The main reason this is allowed, is because the cable providers service different areas as shown in exhibit 2. Comcast and Time Warner will have control of their region, but they will not be taking away business from the other cable providers. Cell phone service providers service the entire country and have overlapping markets. If AT&T took over T-Mobile, they would gain more power and take away business from Verizon and Sprint. The merger had different implications and this is one of the reasons why Comcast and Time Warner can actually pull off this merger. The VP of Comcast stated “This transaction has the potential to slow the increase in prices. ... Consumers are going to be the big winners (Reuters 2)."
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
Before granting merger forms The Bureau of Competition was committed to ensuring that involved companies do not create a monopoly in the market and hence reduce competition that may also affect the integrity of the services provided. In most cases the bureau controlling the start and the running of mergers uses the Hart-Scott-Rodino amendments to the Clayton Act (Clark, 2011). Before becoming a part of the merger it is important that FTC does an analysis of the merger to evaluate the effects the merger may have on the businesses. In addition, it is important that FTC gets to have a clear picture of the situation and how it is expected to affect the relations...
The purpose of this paper is to attempt to recompile information about the merger of two corporations; one of many taking places i...
In January 2000, Time Warner, Inc. (TW) announced its plans to merge with America Online (AOL) and upon completion in 2001, it had become the largest merger in U.S. corporate history. AOL had a pre-merger value of $163 billion and Time Warner had a preannouncement value of $100 billion, in 2001, the value of the combined firm was stated at $165 billion. While many saw an opportunity to create a synergy out of the two media giants, the overall firm saw little success as a combined entity and has since faced several challenges. Michael R. Baye addresses several issues for discussion concerning the merger in his textbook Managerial Economics and Business Strategy, through the usage of hypothetical memos issued within Time Warner. Memo 4 discusses the possible acquisition of Fox News to increase revenues, bolster subscriptions, and expand their international market. The purpose of this paper is to address the specific problems Time Warner faces by acquiring Fox News and to provide strategic moves that best capitalize on Time Warner's current situation.
...dditionally, the merger can take place in smaller phases. For instance the first phase may include change of the physical look of the branches and the signage - – so as to convey a consistent view and experience for its customers. This phase may also include effective communication to the employees to educate them about the merger, ensure them of their positions and encourage them to participate in the merger. Second, the firm can totally combine the bank’s technology and the information systems which will allow the merged firm to operate as a single entity and to become fully operational. The management should implement the merger with care and prudence, aiming for minimal disruption for the customers and should communicate extensively to ensure all its stakeholders are kept fully informed as they make changes.
Monopoly and oligopoly are two economic market conditions. Both of them are likely to co-exist in our world and they differentiate from each other. In this written paper, I will describe the two market conditions. I will describe the characteristics of each one of them in terms of number of suppliers, product differentiation, advantages and disadvantages and the most challenging types of barriers to entry that exist in both of the market structures.
The following report will analyse Vodafone and their current position in the international market. This report will cover the competitive strategy of Vodafone and their influence of products and services in relation to the demand of the market.
Companies merge and acquire other companies for a lot of strategic reasons with different degree of success. The success of a merger is measured by whether the value of the acquiring firm is enhanced by it. The impact of mergers and acquisitions on organization can be small and big in other cases.
Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.
A merger happens when two companies decide to combine into one entity or when one company acquires another. One plus one makes three: this equation is the special outcome of a merger or an acquisition. Two companies together are more valuable than two separate companies - at least, that's the reasoning behind merging. A merger can also happen when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place.
In fact, some of the biggest threats to the company’s growth are the government’s regulation that increases the risk to the underlying business. In addition, the risk of losing the exclusive contract for the iPhone would be a major loss for AT&T. Most of the consumers choose AT&T because of their exclusive contract for the iPhone. Hence, this loss of business will significantly influence the AT&T's profitability and revenue. Moreover, the antitrust authorities play an important role on approved the merger of AT&T.
In this following report I will discuss the phone industry and analysed it in great detail. I will analysis the market structure and try and understand why the mobile industry falls to heavily oligopoly structure. I will highlight all the structures, however I will discuss in detail how, for example Vodafone can be incorporated in the porter’s five forces method to show how the mobile industry has devolved over the years and to understand if consumers are driven by the actual technology of the phone but if it driven more by style.