What Is an Amalgamation?

🀅An amalgamation is the combination of two or more companies into an entirely new entity. A♊malgamations are distinct from acquisitions in that none of the companies involved in the combination survive as legal entities.

Instead, a completely new ent💫ity, with the combined assets and liabilities of the former companies, is born.

The term amalgamation has fallen out of popular use in the United States. It has been replaced with terms such as merger and 澳洲幸运5开奖号码历史查询:consolidation, with which it can be 🦂synonymous. However, it is still commonly used in certain countries, such as India.

How Amalgamations Work

Amalgamꦏations typically happen between two (or more) companies engaged in the same line of business or that share some similarity in their operati🌃ons.

Usually, the process involves a larger entity, called a "transferee" company, absorbing one or more smaller "澳洲幸运5开奖号码历史查询:transferor" companies before creating the new entity.

The terms of an amalgamation are finalized by the board of directors of each company involved. The 𒆙plan is prepared and submitꦦted to regulators for approval.

In India

In India, for example♎, ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚthat authority resides in the High Court and Securities and Exchange Board of India (SEBI).

Indian tax law defines amalgamation somewhat broadly as "the merger of one or more companies with another company or the merger of two or more companies to form one company."

It refers to the merging companies as "the amalgamating company or companies," while the company they merge with or which is newly formed as a result of the merger is "the amalgamated company."

In Canada

In Canada, amalgamations must be approved by Corporations Canada and the relevant provincial and territorial governments.

Canada defines amalgamation as "when two or more corporations, known as predecessor corporations, combine their businesses to form a new successor corporation."

Once appro✃ved, the new company officially becomes a legal entity and can issue shares of stock in its own name.

The Pros and Cons of Amalgamations

Pros

Amalgamation is a way businesses can:

• Acquire cash resources
• Reach a broader customer base
• Reduce or eliminate competition
• Gain market leverage
• Save on taxes
• Achieve 澳洲幸运5开奖号码历史查询:economies of scale

Amalgamation may also increase shareholder value, reduce risk through 澳洲幸运5开奖号码历史查询:diversification, and improve managerial effectiveness.

The new company may achieve finanꩵcial results and levels of growth that would have been more difficult for its separate predecessor companies to achieve.

Cons

On the other hand, if too much competition is eliminated through amalgamation, a monopoly may result. This can be troublesome f📖or cons🌄umers and the marketplace, and bring about government intervention.

Amalgamation may also cost some in the new company's workforce their jobs, because their positions become redundant.

In addition, it can increase debt, possibly ꧅to a dangerous level. By combining two or mo🎀re companies, the new entity assumes the liabilities of all involved.

Example of Amalgamation

In April 2022, the telecom giant AT&T and the television entertainment company Discovery, Inc. announced that they had finalized a deal to combine AT&T's WarnerMedia business unit with Discovery.

That month, a new entity known as Warner Bros. Discovery Inc. began trading on the Nasdaq stock exchange under the symbol WBD. WarnerMedia and Discover, Inc. ceased to exist.

Amalgamation vs. Acquisition

As explainꦜed, in a typical amalgamation, two or more companies a🌼gree to combine their assets and liabilities and form an entirely new company.

By contrast, in an acquisition, one company purchases another (usually by buying up enough of its stock) and takes on its assets and liabilities, with no new 🔯company being created.

While amalgamations tend to involve voluntary agreements between the different parties, acquisitions can occur without the assent of the acquired company. This is known as a 澳洲幸运5开奖号码历史查询:hostile takeover.

The Bottom Line

Amalgamations are o🀅ne of several ways existing companies can join forces and create an en⛎tirely new company. While the term is rarely heard in the U.S. today, the practice continues both there and elsewhere around the world.

Amalgamation can also refer to the combining of other types of organizations into a single one, such as nonprofit groups and entities in the public sector, including government agencies and municipalities.