An analysis of the amalgamation and merger procedure in South African company law
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Prior to 2010, as a result of a sluggish global economy, the amalgamation and merger procedure in South Africa was active although it was at an all-time low.1 However, in 2010, there was an increase in amalgamation and merger activity in South Africa which was more pronounced in cross-border deals in South Africa and general corporate restructurings.2 As a result of this, as well as the developed infrastructure that was placed in preparation for the FIFA 2010 World Cup, the country attracted more and more foreign markets to invest in South Africa which contributed to the increasing rate of amalgamations and mergers.3 Nevertheless, the global recession has also contributed to the increase in amalgamations and merger activity as many companies in South Africa have merged to buck the negative trend that most companies find themselves in, increase their revenue and work with each other to advance the position of the company on a par with those of its competitors. However, there are various other reasons as to why companies consolidate their assets and liabilities. Recently, Tiso Blackstar, a merged investment holding company, consolidated their assets, liabilities and skills between Blackstar Plc and Tiso Investment Holdings to expand its operations and to seek investment opportunities in Africa which is boasting with economic growth.4 The company was of the opinion that the merger would not only enhance its scale and profitability, but it would also put the group on a new growth path.5 There are many benefits in which companies may reap from amalgamations and mergers, but elucidating them is beyond the scope of this research.