Bala ltd acquired the business of bello ltd and caused the separate existence of the latter company to terminate.
- conversion
- dissolution
-
merger
- absorption
The correct answer is: C
Explanation
A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers and are commonly done to expand a company’s reach, expand into new segments, or gain market share. All of these are done to please shareholders and create value.
A merger is the voluntary fusion of two companies on broadly equal terms into one new legal entity. The firms that agree to merge are roughly equal in terms of size, customers, scale of operations, etc. For this reason, the term "merger of equals" is sometimes used. Acquisitions, unlike mergers, or generally not voluntary and involve one company actively purchasing another.
Mergers are most commonly done to gain market share, reduce costs of operations, expand to new territories, unite common products, grow revenues, and increase profits—all of which should benefit the firms' shareholders. After a merger, shares of the new company are distributed to existing shareholders of both original businesses.
Due to a large number of mergers, a mutual fund emerged, giving investors a chance to profit from merger deals. The fund captures the spread or amount left between the offer price and trading price. The Merger Fund from Westchester Capital Funds has been around since 1989. The fund invests in companies that have publicly announced a merger or takeover. To invest in the fund, a minimum amount of $2,000 is required, with a 1.91% . As of March 2, 2019, the fund has returned 6.1% annually since inception in 1989.