Acquisitions can be very fruitful if both the acquirer (the company to purchase) and target (the company to be sold) are well managed and the way in which the two companies will be combined is well-planned to ensure that synergy is achieved.

Companies merge all the time, but not all of them manage a successful integration. Here we look at the latest corporate pairings.

Tutorial: The Basics Of Mergers and Acquisitions

Google Acquires Admob
In a $750 million deal that just closed, Google (Nasdaq:GOOG), the leader in advertising, plans to acquire the fairly new yet successful mobile advertisement company, Admob, after getting clearance from the Federal Trade Commission (FTC).

The FTC recently granted the clearance for Google to proceed with its acquisition, and dismissed potential illegal competition fears, after investigating for potential antitrust issues. Apple (Nasdaq:AAPL) recently acquired Admob's competition, Quattro Wireless. Thus, the FTC found that the Admob acquisition would not harm competition in the emerging market for mobile advertising. (To find out more about antitrust, read Antitrust Defined.)

Admob has recently found success placing simplified ads on the iPhone.

Yahoo! Takes Over Associated Content
Yahoo (Nasdaq:YHOO) news sector may have a new strategy for building its growing dominance in news and advertising, hoping to take away market share from its competitors and target a wider range of audiences. In May, Yahoo!, based out in Sunnyvale, Calif., has sealed the deal to buy out Associated Content. According to Yahoo!, it purchased Associated Content to increase the amount of information on its site, which it hopes will benefit the site's estimated 600 million users.

Associated Content was founded in 2005 and is headquartered in New York and Denver. Its business strategy involves user-generated content and the site, according to ComScore Inc., gets roughly 16 million unique visitors per month. Freelance writers submit around 50,000 unique pieces of media per month and are compensated for their work based on page views.

Yahoo's purchase of such an established company should generate more revenue. Although it is hard to speculate about either corporation's agenda, the acquisition has certainly put Associated Content's unique business model on the map.

Fairfax Acquires Zenith National
Fairfax Financial Holdings Limited (OTC:FRFHF), a Canadian insurance company, is engaged in property and casualty insurance and reinsurance and investment management through its subsidiaries. Zenith National Insurance Corporation is a holding company focused on workers' compensation headquartered in Woodland Hills, CA.

In late May, Fairfax acquired Zenith's outstanding common stock for $38 per share. This acquisition reflects the company's strategy of investing in well-positioned companies.

Just a Rumor: Best Buy and RadioShack Merger?
Former competitors Best Buy (NYSE:BBY) and RadioShack (NYSE:RSH) are rumored to be joining forces for a $3 billion merger. RadioShack, which was founded in 1921, met its match with Best Buy. But after the initial rumors surfaced in the New York Post, conversation has been left to a minimum as of late.

The move to bring the two companies may be an attempt to stake out some territory in the handheld devices industry, and meet growing demand for these wireless gadgets.

Why M&As Matter
Mergers can allow companies to combine forces and stake out a greater portion of market share. But they often fall through at the last minute - and even when companies do merge, the outcome isn't always a success. Keep an eye on these newly merged companies; it's likely that only a few will achieve the successful corporate pairing they are hoping for.

Catch up on the latest financial news in Water Cooler Finance: Crying Over Spilled Oil, And Buffett Goes To Court.

Related Articles
  1. Investing Basics

    What Does In Specie Mean?

    In specie describes the distribution of an asset in its physical form instead of cash.
  2. Economics

    Calculating Cross Elasticity of Demand

    Cross elasticity of demand measures the quantity demanded of one good in response to a change in price of another.
  3. Stock Analysis

    How UPS Plans to Benefit from Its Coyote Acquisition

    Understand the business models of UPS and Coyote Logistics. Learn about the top four ways in which UPS will benefit from the acquisition of Coyote Logistics.
  4. Fundamental Analysis

    Emerging Markets: Analyzing Colombia's GDP

    With a backdrop of armed rebels and drug cartels, the journey for the Colombian economy has been anything but easy.
  5. Fundamental Analysis

    Top Reasons IPO Valuations Miss The Mark

    The costly services of investment banks don’t necessarily guarantee accuracy in IPO pricing.
  6. Fundamental Analysis

    Emerging Markets: Analyzing Chile's GDP

    Chile has become one of the great economic success stories of Latin America.
  7. Insurance

    All About Impaired Risk Annuites and Insurance

    What are impaired risk insurance products and understanding life insurance rate classes, table ratings and flat extra premiums.
  8. Investing

    Watch Your Duration When Rates Rise

    While recent market volatility is leading investors to look for the nearest exit, here are some suggestions for bond exposure in attractive sectors.
  9. Investing News

    Office Depot and Staples Merger: What You Need to Know

    A major office-supply company merger is now in the works between Office Depot and Staples. First attempted 18 years ago, will this time be the charm?
  10. Economics

    Explaining Capital Flows

    The movement of money for investing, trade or business production, is commonly referred to as capital flows.
  1. Does consumer protection cover my debts?

    The most impactful consumer protection laws and regulations in the United States are overseen by the Federal Trade Commission ... Read Full Answer >>
  2. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  3. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
  4. What are some common accretive transactions?

    The term "accretive" is most often used in reference to mergers and acquisitions (M&A). It refers to a transaction that ... Read Full Answer >>
  5. What are some ways to make a distribution channel more efficient?

    While there are many ways to make a distribution channel more efficient, the three high-level ways to increase the efficiency ... Read Full Answer >>
  6. How can I use a regression to see the correlation between prices and interest rates?

    In statistics, regression analysis is a widely used technique to uncover relationships among variables and determine whether ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!