Mergers and AcquisitionsIntroductionMergers and Acquisitions or M&A for short. they represent an important part of the world of corporate finance. Every day, Wall Street in the United States, for example, arranges M&A transactions that bring together separate companies to create larger ones. However, in Kuwait there have never been mergers with a single acquisition (example: Kuwait investment company with commercial and contractual investment company). When not creating large corporations from smaller companies, corporate finance deals do the opposite and break up companies through spinoffs, spinoffs, or stock tracking. It's no surprise that these types of actions often make the news. The deals can be worth hundreds of millions or even billions of KD and can dictate the fortunes of the companies involved for years to come. For CEOs, conducting mergers and acquisitions can be the pinnacle of their career. The next time you open the business section of al-Qabas or al-Watan newspaper, there is a good chance that at least one headline will announce some sort of merger and acquisition transaction. Mergers and acquisitions Before delving further we must understand the meaning of both mergers and acquisitions: let's start with the definitions. There are a number of terms used that are often confused, in part due to their similarity in meaning. • The definition (short summary):1. Mergers: Complete union of two previously separate companies or corporations. A true merger in the legal sense occurs when both companies dissolve and transfer their assets and liabilities into a newly created third entity. This involves the creation of a new company, there have never been any company mergers to speak of in Kuwait, however in the US there are quite a few, for example deals between many of the largest and most successful global companies such as Daimler- Chrysler, Chase-JP Morgan, McKinsey-Envision, UBS-Paine Webber, Credit Sussie-DLJ, Celltech-Medeva, SKB-Glaxo, NationsBank-Bank of America, AOL-Time Warner, Pfizer-Warner Lambert, Nestlé-Purina…. etc. 2. Acquisition: Taking possession of another company. Also called a takeover or buyout. The process of acquiring control, possession, or ownership of a private portfolio company by an operating company or conglomerate. • The main idea is: a merger or acquisition. The key principle behind buying a company is to create shareholder value beyond that of the sum of the two companies. Two companies together are worth more than two separate companies: at least this is the reasoning behind mergers and acquisitions. This logic is especially appealing to businesses when times are tough. Strong companies will act to purchase other companies to create a more competitive and cost-efficient company.