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The Legal and Regulatory Regimes for Mergers and Acquisition in Nigeria

23/07/2020

1.0       Introduction

Mergers and acquisitions are important corporate tools available to companies to achieve a myriad of objectives globally, Nigeria is not an exception. However, the potential triggering of monopolistic or anti-competitive scenarios by some of these transactions requires a comprehensive and robust legal framework. This article explores what mergers and acquisitions are, the legal framework to regulate them in Nigeria, their types and the reasons companies embark on this complex endeavours.  

2.0       Definition/Meaning

A merger refers to any transaction that forms an economic unit from two or more previous ones. This can happen through absorption where one of the companies retains its identity for the newly formed entity or through a consolidation where a completely new identity emerges for the newly formed entity. A scheme of merger of companies contemplates a transfer of properties and liabilities of one or more companies to another, however, such transfer does not include rights and obligations which are not transferable such as contracts of personal service.[1]

On the other hand, an acquisition takes place when a company (usually a larger company) acquires all or substantial interest in another (a smaller) company. In such a situation, the ownership and management of the erstwhile independent enterprises are brought under the control of a single management. An acquisition can be full where 100% stake of the smaller company is acquired or partial where the acquired stake is above 50% but less than 100%.[2]

3.0       Types/Forms of Mergers

Mergers have been categorized based on certain characteristics of the merging companies such as the sector in which they operate and market size.[3] There are generally three (3) types of mergers, namely:

              I.            Horizontal Merger

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