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Mergers and Acquisitions
Merger
It is normal in an economic perspective for enterprises functioning in the commercial area to come together permanently in order to increase their profits and strengthen their position in the market. After a merger technical information and financial probabilities increase and therefore make it easier to go to different investment areas and sectors which need high investment costs.
Company mergers are regulated between the 146th and the 151st articles of the TTK (Turkish Commercial Code), the special regulations found in the 146/2 article of the TTK are reserved.
A merger is defined as the event where more than one companies under the roof of one of them or under another company which shall be established without liquidating their assets join together and the partners of the merged company get a share from the merged partnership which is defined by the size of the change.
As it may be seen from this definition a merger may be done in two ways. The first is by means of joining a company already established or secondly by means of creating a new company
In order for a merger to take place by joining there has to two or more companies present and one of these companies must join by fusing into the other one. In this situation the company which joins the other company loses its legal entity. In merging by creating a new company two or more companies join under the new roof of a company which will be established. When the merger is completed the companies which have merged are deleted from the Commercial Trade Registry.
The precondition for a merger is that the companies which will merge must be of the same type (kind). In the law this rule has been somewhat lightened and some companies have been accepted as the same type. According to this a collective (unlimited) and a limited company, a joint stock company and share limited company from the point of mergers are accepted as the same type.
The components of a merger:
- Companies which merge, merge along with their assets.
- Merger is a way of ending (dissolving) a company without liquidation. The company which mergers lose their legal entity. As a rule when a company is ending it needs to be liquidated but the liquidation companies which are merging is not needed.
- The partners of the merged company acquire a certain proportion of the shares belonging to the merged company.
The procedure of merging: First of all the authorized bodies of the company which shall merge must each separately give permission for a merger and this decision must be registered and announced (published).
After this the companies which have merged must announce (publish) their balance sheets (financial statements) and also their statements on the reasons for merging and how the companies which will end will pay their debts.
In addition if the permissions for merging have needed to make a change in the company’s main contract then for companies which are subjected to permission must separately get permission from the ministry. Finally the companies which will merge must come together and make a Merger Contract and the merging company’s authority must approve and then register and announce it. At this last stage the right of objection by the claimants is born.
• The decision of merger becomes effective after 3 months has passed since the time of announcement.
• Acquisition
It is possible for one company to completely or partially buy another company. In this case the buyer is in the position of a transferee who takes the company with its actives and passives.
The road which leads to sale shows differences for companies. For example the aim of opening up to the international market and to grow, the aim of renewing, the aim of increasing capacity or to save the company from a bad situation are all reasons which usually leads to buying.
The process of buying develops in this way:
- Determination of a strategy for selling the company
- While the company goes into the process of buying being renewed, prepared and transparent.
- Establishing a first contact and the process of introduction and pre meeting
- The determination of a financial agent establishment or a legal council
- Signing of an Intention letter
- Signing of an exclusive and confidentiality contract
- Making a business plan and debating of commercial matters
- Making a detailed and special enquiry of the company. By this way the potential buyer can come to the same level of information as the company’s management.
- Bargaining, bringing forth the plans for the future of the strategic partnership, creating the conditions for partnership and determining the sale value of the company shares.
- Making of the legal contracts (Partnership contract, share purchase agreement)
- If necessary getting the permissions of the Competition Board and the Capital Markets Board (SPK-Sermaye Piyasasý Kurulu)
- Making the conclusive signatures and the share transfer
- For making a change in the main contract gathering a General Committee Meeting
- Together with the buyer the company which has been sold must make the necessary operations in order to directly and hastily so that the procedures gain operability.
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