There is merger when two companies combine into a single business organization. On the other hand, an acquisition refers to the process of purchasing another firm. Acquisitions are also known as takeovers and could be both friendly and hostile.
During acquisitions, the process could be very complicated and time consuming. Investors are highly recommended to consult with a professional Thai lawyer who could help you for accomplished result.
There are many types of mergers. A horizontal merger is when two competing companies with similar products and markets decide to merge. A vertical merger is when a customer acquires with one of its suppliers. A market extension merger is when two companies selling similar products in different markets decide to merge. A product extension merger is a merger between two companies that sell different products in the same market. A conglomeration is when two companies do not have anything in common but decide to merge. Each of these different types of mergers will have effects on their local markets and product competition.
Foreign investment in Thailand is governed by the Foreign Business Act of 1999. The Foreign Business Act restricts foreigners participating in certain businesses and limits foreign ownership in other forms of businesses. The foreign business act will generally limit the possibility of a foreign company absorbing a Thai company in Thailand. Most foreign owned companies in Thailand are restricted from becoming majority owners of a Thai company without government approval.
The Board of Investments and some international treaties allow certain foreign owned businesses to operate in Thailand without the restrictions of the Foreign Business Act. The Board of Investments provides incentives and privileges to foreign companies that start operations in targeted industries. A bilateral treaty between Thailand and a foreign nation sometimes provides special privileges to citizens of the foreign nation like Americans. With certain exemptions, Americans are exempt from the restrictions of the Foreign Business Act.
The Trade Competition Act of 1999 restricts mergers of businesses that may result in a monopoly or unfair competition without special permission by the Trade Competition Commission. The TCA prevents businesses from abusing a dominant position in market share. Companies that individually hold market share of at least 50% or is one of top three companies that collectively hold at least 75% market share are stated to have a dominant position. Dominant businesses are restricted in their business operations including mergers and acquisitions.
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