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Tuesday, 21 June 2011

Define the Amalgamation and Merger

AMALGAMATION :-
Amalgamation comes into existence when two or more than two established joint stock companies combine themselves into a large one. After amalgamation each company loses, its separate entity. New combination company generally take over all the assets and obligations of old companies. Main purpose of a new company is to enlarge a business to obtain the benefits of large scale.

MERGER :-
When a joint stock company absorbs one or more than one company is called merger. Each firm which is absorbed loses its identity.
It eliminate the competition and obtains the monopoly profit it reduces the cost and obtain the tax advantages.

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