What is the Difference Between Amalgamation and Merger?

Amalgamation and merger are both business consolidation processes that involve the combination of multiple companies. However, there are key differences between the two:

1. Formation of a new company: Amalgamation results in the formation of an entirely new company, whereas a merger consolidates business entities to create a single joint entity.
2. Number of companies involved: Amalgamation requires a minimum of three companies, while a merger involves a minimum of two companies.
3. Surviving company: In an amalgamation, none of the original companies survive as an independent entity, and a new company is formed with the combined assets and liabilities of the former companies. In a merger, one company usually survives and absorbs the assets and liabilities of the other companies.
4. Drivers for consolidation: Amalgamation is typically driven by the interest of both companies involved, while a merger is usually driven by the absorbing company.
5. Accounting treatment: Both amalgamations and mergers involve the combination of assets and liabilities, but the accounting treatment may differ depending on the specific circumstances and transaction type.

Both amalgamations and mergers aim to achieve synergy, eliminate competition, and provide larger market access, among other potential benefits.

Comparative Table: Amalgamation vs Merger

Here is a table comparing the differences between amalgamation and merger:

In summary, amalgamation involves the combination of two or more companies to form a new entity, with the acquiring company retaining its identity and adding the shareholders of the acquired company to its existing shareholder base. In contrast, a merger involves the consolidation of two or more companies to create a new entity or company, with both companies losing their individual identities and forming a new entity with new shareholders.