The aggregate level of U.S. merger activity may be influenced by expectations concerning future economic growth (as proxied by stock prices), current economic conditions, and/or in~erest rates. This paper applies regression analysis to the W. T. Grimm annual merger data from 1963-1986 to determine which of these determinants are significant. It also examines whether the government's antitrust stance influences merger activity. The results indicate that current economic conditions are a significant determinant, while interest rates and the government's antitrust stance appear to have no effect on mergers. The result concerning stock prices was inconclusive and will require more analysis.
International Business Transactions Law
Pure mergers (as opposed to acquisitions), let alone crossborder mergers, have not historically taken place in the UK. However, the Regulations set out a clearer mechanism for the merger of companies across Europe where a UK company is involved and provide an additional tool for companies looking at their options for restructuring. The Regulations provide for three types of merger:
Merger by absorption - where one (or more) companies in an EEA state or states are absorbed by a company in another EEA state.
Merger by absorption of a wholly-owned subsidiary - where an existing EEA company absorbs one or more of its subsidiaries in a different EEA state or states.
Merger by formation of a new company - where a new company absorbs two or more companies in different EEA states.
In each case, the assets and liabilities of the companies being absorbed are transferred to the transferee, and the transferor(s) is dissolved without going into liquidation. Under the Regulations a UK company can be either the transferring company, or the transferee, in which case it would be the surviving entity.
Procedure for merger
The merger is a Court process, run in parallel in the jurisdictions of the transferee and transferor companies. In summary, the process in the UK requires the following to be produced to the Court:
a merger report;
a directors' report; and
an independent expert's report on the merger.
The Court can order shareholder or creditor meetings to be called, if applicable, and the proposed merger is required to be advertised in the press. Employee participation may be required if the UK company is the transferee and, inter alia, there are over 500 employees in the merging company and that company has a system of employee participation, or a UK merging company has a proportion of employee representatives amongst its directors. The transferee and transferor must obtain pre-merger certificates from a Court in their respective jurisdictions. Once the certificates are obtained, the transferor applies to the applicable Court for the sanction of the merger. The assets and liabilities are then transferred and the transferor(s) is dissolved without liquidation.
Advantages of using a cross-border merger
There are a number of reasons why corporate groups may wish to consider this route when contemplating restructuring: No third party consents - the regime is a much cleaner way of effecting a merger as opposed to a traditional transfer of assets and ...