When it comes to the legal definition, the acquisition means that a party would
buy and control the interest in the target company's share capital, assets, and
liabilities. SEBI defined the target company getting acquired directly or
indirectly, especially when it comes to shares or voting rights.
|Acquirer acquires shares and voting rights of the target company directly.
|Acquisition of any company or entity that would allow a person to exercise such
a proportion of voting rights or control directly. Otherwise, it would be
required to make a big statement of an open offer.
For example, ABC, a conglomerate acquires DEF a small company. ABC will then
have control of DEF's voting rights, shares, its trump card, and its short end
of the stick. In other words, their assets and liabilities.
In the Indian context, the Companies Act 2013 has certain provisions surrounding
the acquisition of companies. The restructuring via compromise and arrangement
is mentioned under Section 232 of the said act.
The Competition Act 2002 has certain objectives when it comes to acquiring
- Protect consumer interests:
When the Star Wars Battlefront 2 Scandal was at
its height, many people criticized the publishing company, Electronic Arts for
exploiting consumers by aggressively monetizing the basic game systems. One US
Representative even stated that the game is an online gambling machine that
could prey on impressionable audiences, that is children. The game compels
children to pay real-life money.
- Unhealthy trade practices must be prevented:
In the above-mentioned example,
Electronic Arts, trading practices are mostly for self-interests rather than
people-centric. This is why people are disillusioned with the current state of
the video game industry.
- The Competition act must ensure that the companies do not abuse their
power for personal interests and profits. Companies like Apple, Disney, and
Amazon have made fortunes on the backs of forced laborers.
- The act's main intention is to bring healthy competition in the market
which could improve the economy. It does not want the market economy to be
monopolistic. The act must provide the frameworks for the interests of the
Competition Commission of India. They must investigate any suspicion of foul
play in the companies.
- They must make sure that the companies do not commit any acts that are
considered to be anti-competition. Companies should not remove their
competition through illegal and immoral means. That could destroy the
essence of the free market economy.
This piece will focus on three companies that have made headlines in recent
years, especially about the acquisition of companies. Those three companies are
Sony, Microsoft, and Disney. These three companies are some of the largest
conglomerates in the world. These companies influence technologies and popular
Disney's acquisition of 21st Century Fox
The Walt Disney Company is once known for its creator Walt Disney and his
creation Mickey Mouse. Now the company is viewed differently with its series of
acquisitions of companies and intellectual properties like Marvel, Star Wars,
and Pixar. Disney is one of the biggest companies in the world and has cemented
itself as the global soft power. However, its hegemony is not without its
concerns. Many critics stated the irony of the company's ethics, especially with
the case of its sweatshop operations in China, as well as its constant catering
to its Chinese Political Masters.
The one issue that made it into the news in recent years was its acquisition of
the 21st Century Fox. In March 2019, Disney made the deal of acquisition at the
cost of $71.3 billion. Many say it is one of the largest media mergers of all
time. By acquiring 21st Century Fox, Disney will now have Fox's intellectual
property under its umbrella, especially with movies like the Fantastic Four and
the X-Men franchise respectively.
Some supported the action. They believe that the acquisition will bring new
products with Disney money. Others are concerned regarding Disney's
unprecedented purchase. Many suspects that the company will have more power and
monopoly and it's a possibility that they will misuse it. A CNET article states
that the purchase might be negative for the consumers and it will destroy the
people's ability to choose. Whether the acquisition will have good or bad
effects will always be up for debate.
Microsoft's acquisition of Activision Blizzard.
Tech giant Microsoft shocked the gaming world when it acquired a popular yet
polarized gaming company, Activision Blizzard. The cost of the deal was $70
billion making it one of the biggest purchases of a company in the gaming
industry. Microsoft has already acquired another influential gaming studio
Bethesda at around $7.5 billion. With the purchase of Activision Blizzard,
Microsoft will have gaming franchises like Call of Duty, Overwatch, and World of
Warcraft under their belt.
However, the movie is without its flaws. While some defend the purchase by
stating that it would restructure the company as well as prioritize its X-Box
Game Pass, others believe otherwise. Many people say that Microsoft will have a
monopoly over its competitor and it might be for the right reasons.
Another criticism surrounding the purchase is that the purchase is a desperate
measure by Activision Blizzard to save their skin from a grave controversy last
year. The State of California filed a lawsuit against the company for sexism,
sexual harassment at the workplace, and a suicide of an employee
employees get more privileges than their female counterparts, and the workplace
became a place of toxicity and frat-boy culture. Many people were angry with the
alleged suicide of an employee. The employee was allegedly harassed by her
supervisor on a bus trip and her colleagues shared her explicit images which the
lawsuit claimed is the source of her death.
It is too soon to jump to a conclusion. However, if these allegations turned out
to be accurate, then it could deliver a severe blow to the company, its
reputation, and its people.
Sony's Acquisition of Bungie
(Microsoft owns the X-Box video game consoles whereas Sony owns the PlayStation
video game consoles)
In response to Microsoft's acquisition of Activision Blizzard, a tech giant and
Microsoft's rival Sony decided to buy Bungie. Bungie is the video game
developing company behind popular video game franchises like Halo and Destiny.
It makes sense given that Bungie was once owned by Microsoft and then Activision
Blizzard. The cost of the deal is 3.6 billion dollars.
According to Bungie, the deal will bring them creative and independent
decisions. Many people say that the acquisition will escalate console warfare
between two giants. With two companies acquiring developing studios many are
afraid that they will destroy any sense of competition.
The three companies mentioned in this piece are powerful. They have created a
huge impact on this world stage. While it is good that they give unknown and
underrated companies a chance to make themselves recognizable, it is also a
dangerous step. Many companies will jump the ship to own small companies which
they feel are threatening their dominance. This will destroy any sense of
competition. In Electronic Art's case, it could be just plain anti-consumer
practice. So the people must know about the opportunities and dangers of the
acquisition of the companies.
- How Sony's (SNY) Bungie Acquisition Affects Microsoft's (MSFT) Gaming
- Sony to acquire video game studio Bungie in $3.6 billion deal
- Letters: It's time to unite against sexism in gaming
- Metal Gear Solid: Learning Lessons Of War From Video Games
- Opinion: Why Am I Disillusioned With Internet Edgy And Woke Culture
- Forced Labour in Supply Chain of Fashion Brands
- Disney acquires 21st Century Fox: Good or bad for consumers?
- Explained: Why Microsoft buying Activision Blizzard is not all good news
for the gaming industry
- Microsoft to acquire Activision Blizzard to bring the joy and community
of gaming to everyone, across every device
- Arbitration in the Video Game Industry in Reference to Activision
- Current Issues that Plagued the Video Game Industry
- Acquisition of a Listed Company: The procedure as laid down in the
- Laws regulating mergers and acquisitions in India
My name is Anish Bachchan and I'm a 5th Year Law Student at Amity
Law School, Noida. I have published my various writings in The Los Angeles
Times, The Times of India, Live Wire, Youth Ki Awaaz, Legal Service India, and
Law Corner. I have also published two books i.e.
Written By Anish Bachchan
- Patent 101 Level 1: Understanding Patent of Aggressive Monetization of
- Contempt of Court with References to Media Trials