Companies often seek growth opportunities by acquiring a company or merging with one either within its borders or internationally. Successful M&As (mergers and acquisitions) have proven to be one of the most effective ways to increase a company’s sales and/or profitability. It is also a method to push competitors outside the picture and take a larger part of the pie. M&As face a long list of challenges when it comes to M&A. But one of the most significant obstacles companies face in the pre-deal stage is government intervention.
Governments tend to intervene and take a deeper look into a proposal. M&A when it senses that the deal would represent a significant risk to consumers. As some of these deals would allow companies to take control of a certain market and spike prices, in turn. Directly hurting consumers. A government would also step in and stop an M&A if it would impact national security in any way.
Mergers, acquisitions, and takeovers have been a part of the business world for centuries. In today’s dynamic economic environment, companies are often faced with decisions concerning these actions with the aim of maximizing shareholder value. Through mergers and acquisitions, a company, in theory, can develop a competitive advantage and ultimately increase shareholder value.
The terms mentioned here and onwards in this report may seem alike but in legal/ corporate terminology. They can be distinguished from each other. The Justice Department is suing as they consider this deal to be a breach of antitrust laws. US President Trump blocked Canyon Bridge Capital Partners, a Chinese-backed private equity firm. Proposing a $1.3 billion purchase of Lattice Semiconductor Corp in 2017 on national security grounds. After learning that the Chinese firm was by state entities. This probed the UK’s Business Department of Business, Energy, and Industrial Strategy to take a deeper look at this same Chinese firm’s proposed acquisition of Imagination Technologies, which is a leading British semiconductor manufacturer.
We also see a similar issue in Chile, where its new government is evaluating whether to block Tianqi Lithium’s, a Chinese firm, proposed partial acquisition of SQM, Chile’s top lithium miner. Corfo, Chile’s Economic Development Agency. Filed a complaint as it views this deal as a threat to the level of competition in the global lithium market. Government intervention/agencies generally intervene in M&As to protect a country from a firm’s personal agenda that can negatively impact a certain industry’s competition, the overall economy, and national security.
