In the modern business world, the ownership of companies often changes. This can happen in different ways.
· a merger: this is when two companies join together to form a new one
(e.g. Exxon and Mobil, America Online and Time Warner).
· a takeover or acquisition: this is when one company buys another one
(e.g. Vodafone and Mannesmann, Daimler-Benz and Chrysler). This can happen in two ways. Firstly, a company can offer to buy all the shareholders shares at a certain price (higher than the market price) during a limited period of time. This is called a takeover bid. Secondly, a company can buy as many shares as possible on the stock market, hoping to gain a majority. This is called a raid.
Investment banks have mergers and acquisitions (M&A) departments that advise companies involved in mergers and takeovers.
Companies can also work together without a change of ownership. For example, when two or more companies decide to work together for a
specific project or product, this is called a joint venture. An example is Sony Ericsson, which makes mobile phones.