Merger & Acquisition
Merger and acquisition (M&A) in Malaysia refers to the consolidation of companies or the acquisition of one company by another. It is a significant corporate strategy that allows businesses to expand, gain market share, achieve synergy, and diversify their operations. M&A transactions in Malaysia are subject to various legal, regulatory, and financial considerations
Merger & Acquisition process in Malaysia
- Types of M&A Transactions: M&A transactions in Malaysia can take various forms, including:
- Merger: Two or more companies combine to form a new legal entity, and the original companies cease to exist as separate entities.
- Acquisition: One company purchases the majority stake or all of the shares of another company, making it a subsidiary or wholly-owned entity.
- Takeover: When a company acquires a significant portion of another company’s shares to gain control or management influence.
- Legal and Regulatory Considerations: M&A transactions in Malaysia are regulated by the Companies Act 2016, Securities Commission Malaysia, and Bursa Malaysia (the Malaysian stock exchange). Approval from relevant authorities, such as the Securities Commission or Bursa Malaysia, may be required, depending on the size and nature of the transaction.
- Due Diligence: Before proceeding with an M&A transaction, both the acquiring and target companies typically conduct due diligence. This involves a thorough investigation of the target company’s financial, legal, operational, and commercial aspects to assess potential risks and benefits.
- Valuation: Valuation is a critical aspect of M&A transactions. Both parties must determine the fair value of the target company to negotiate a suitable purchase price.
- Negotiation and Agreement: The acquiring company and the target company negotiate the terms of the transaction, including the purchase price, payment structure, representations and warranties, and other relevant provisions. The terms are documented in a share purchase agreement or asset purchase agreement.
- Shareholder Approval: For public companies, major M&A transactions often require approval from the shareholders of both the acquiring and target companies.
- Post-Merger Integration: After the M&A transaction is completed, the integrating companies must focus on post-merger integration to align business processes, systems, and culture. This is essential for achieving the desired synergies and maximizing the benefits of the transaction.
- Reporting and Disclosure: Companies involved in M&A transactions must comply with reporting and disclosure requirements set by the regulatory authorities to keep investors and the public informed.
M&A transactions in Malaysia can be complex and involve legal, financial, and regulatory challenges. Companies seeking to engage in M&A activities should seek legal and financial advice to ensure compliance with the relevant laws and regulations and to facilitate a successful transaction.