Mergers and acquisitions : a Maltese perspective

Abstract

The traditional family run company is still the most prevalent commercial entity in Malta's business community, but recent trends tend to indicate that this might be changing. In the light of the global opportunities available, and our country's' unavoidable integration in the international community, Maltese companies are seeking to expand their operations beyond our shores, besides consolidating their local presence. Achieving the desired expansion involves certain policy decisions which will determine the commercial future of the company concerned. Mergers and acquisitions, although relatively unknown to the Maltese business culture, are bound to be increasingly resorted to as sensible instruments in the quest to achieve the said expansion. The political and economic rationale behind mergers and acquisitions is dealt with in the first chapter. The different options available as well as the pros and cons of these transactions are briefly tackled, together with the commercial considerations which arise. In the second chapter a detailed analysis of the methods and mechanisms involved is carried out, in particular via a close examination of the proposed Maltese Companies Bill as compared to the Third Council Directive of the European Union. Chapter three examines the financing aspects of mergers and acquisitions. The different forms of financing which may be sought, together with the procedures involved, deserve an extensive analysis. The influence of numerous pieces of local legislation is examined, in particular the possibilities available through the Stock Exchange mechanisms. In the eighties and nineties we have witnessed a staggering increase in cross-border mergers and acquisitions. The need to establish the most efficient economies of scale possible, together with the immense competition from the American and Japanese multinationals, has spurred European companies to seek cross-border alliances. The fourth chapter examines the proposal for the tenth council Directive of the European Union, together with the financing and taxation aspects of cross-border transactions. The fifth and final chapter represents the author's conclusions on the future of mergers and acquisitions in the Maltese commercial environment. Malta's survival in the international market, irrespective of our country's membership of the European Union, is dealt with from social, political and economic perspectives. These ultimately determine the legal developments undertaken.