Amalgamations - A New Concept

The draft Companies Bill contemplates the introduction of a new concept into the South African law of mergers and acquisitions, namely amalgamations. Although one has always spoken about mergers and acquisitions, the reality is that South African law did not ever permit a merger in the true sense of the word but rather dealt only in acquisitions. The word merger connotes a merging of identities, the idea of two becoming one. An acquisition on the other hand suggests a deal between two distinct parties, an acquirer and a target, in terms of which shares or assets are transferred to the acquirer. Thus, for example, the acquirer may purchase the shares of the target and acquire control over the target; or the acquirer may purchase all or some of the assets of the target which would then have to be transferred to the acquirer. To the extent that an acquirer is to assume any liabilities of the target, this would have be done by way of appropriate contractual arrangements and would, in