AMALGAMATION
Amalgamation refers to the combination of
two or more companies into a single entity, where the assets, liabilities, and
operations of the merging entities are consolidated. This process involves a
legal and financial restructuring, often aimed at achieving synergies,
expanding market presence, or improving operational efficiency. Amalgamation
can be voluntary or court-mandated, and typically requires approval from
shareholders, creditors, and regulatory authorities. It results in the
dissolution of the original entities, with the new entity inheriting their
rights and obligations. Amalgamation is generally undertaken to achieve
strategic advantages such as economies of scale, diversification of products or
services, reduction in competition, or improved financial stability. It allows
companies to combine their resources, expertise, and markets, leading to
enhanced profitability and competitiveness. There are primarily two types of
amalgamation: amalgamation like a merger
and amalgamation like a purchase. In
the first type, the shareholders of the merging companies continue to have a
proportionate share in the new entity, whereas in the second, one company
acquires another, and the shareholders of the acquired company may receive cash
or shares as compensation.