Mergers and acquisitions play signigicant roles for helping companies achieve certain objectives and financial strategies. Even though different companies have diverse reasons for engaging in mergers and acquisitions, the main purpose is to create shareholders' value and competitive advantages. Both the terms merger and acquisition indicate that a corporate combination of two separate companies to form one company and they are often used synonymously in practice, but there are slightly different meanings between them.(Harrison et al, 2001)
In a merger activity, it usually takes place when two separate firms which have similar size agree to form a new single company. Then both companies' stocks will cease to exist and the newly created company's stock will be issued in its place (Harrison, et al,2001). This kind of activity is often referred as a merger of equals. While in the case of an acquisition, one company is purchased by another one and then no new company is formed subsequently. From a legal point of view, the target company ceases to exist, the acquirer occupies the business of the target firm and the acquirer's stock continues to be traded (Sudarsanam, 2003). In addition, the acquiring firm collects all asset and gains of the target company as well as the liability (Sudarsanam, 2003).
The synergy motive is regarded as the most popular motive for M&A. It refers to acquire or to merge with the resources of two separate firms and thus it contributes to the value of the newly combined firm greater than that of two separate unities (Seth et al., 2000). One important source of synergy is from the transfer of some valuable intangible assets, such as know-how, between targets and acquirers (Seth et al., 2000) Evaluating synergy effects from M&A deals has become one of major tasks of managers. From the perspective of the relationship between targets and total gains, they are positively correlated in synergy motivated M&A. This means that the higher the synergy, the higher the target gains as well as the acquiring firm's shareholders' benefits.
The Lightbox Photos app developed by the 500 Startups company automatically created personal photo blogs from a user's uploads. But now it will be shut down, has already been stripped from Google's Play marketplace. One problem with Instagram was that its content was siloed. Users could only engage with its photos through its apps or on other social networks. There was no mobile site or website where you could comment or Like Instagrams. But Lightbox auto-generates full-featured photo blogs with their own vanity URLs from a user's uploads, so your friends and followers could interact with your photos from any interface. This understanding of the need for wide-accessibility will serve Facebook well. While this acquisition should bolster confidence in Facebook's mobile product, it doesn't answer the question of how it going to turn mobile into a massive revenue stream. Those two go together, though. The better the mobile product, the more mobile ads Facebook can get away with.
Similar to Instagram, Lightbox wasn't just a photosharing app, but also a community where people browsed each other's mini-masterpieces. However, Facebook won't be adding that community to its 500+ million mobile population. Just Lightbox's talent is joining the big blue social network.
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