To illustrate, suppose a private company, XYZ, wishes to acquire publicly-traded company ABC in order to become publicly-listed in a cost-effective way. XYZ purchases an increasing number of shares in ABC, eventually making active decisions concerning its management and output. As the de facto owner of ABC, XYZ may superimpose its own name on ABC while retaining its original public listing. The income tax act 1962 has also recognized the such merger under section 72A and provided certain types of benefits to the participated companies.

It is described as reverse because in the more typical merger pattern a public company purchases a private company to expand its business. The reverse merger is an alternative to the traditional IPO (Initial Public Offering) as a method for going public. Reverse merger is a speedy and cheaper way of becoming a public company within a maximum period of 30 days.

A reverse merger transaction (or reverse takeover) generally involves two firms, one publicly listed firm and one private firm seeking public listing The public firm is usually only a “shell” company i.e., it has no or only nominal assets, and is merely listed on an exchange Shells formed from scratch specifically to engage in a merger or acquisitions are called “blank check companies”

In a reverse takeover or reverse merger takeover is the acquisition of a public traded company by a private company. This allows private companies to become publicly traded while avoiding the regulatory and other financial requirements associated with an Initial Public Offer(IPO). The private company buys enough shares to control a publicly traded company. The private company's shareholder then uses their shares in the private company to exchange for shares in the public company. To illustrate, suppose a private company, XYZ, wishes to acquire publicly-traded company ABC in order to become publicly-listed in a cost-effective way. XYZ purchases an increasing number of shares in ABC, eventually making active decisions concerning its management and output. As the de facto owner of ABC, XYZ may superimpose its own name on ABC while retaining its original public listing. The income tax act 1962 has also recognized the such merger under section 72A and provided certain types of benefits to the participated companies. Reverse Mergers are far more popular in the US as there have been around 200 reverse mergers per year since 2004 and China has witnessed around 150 companies getting publicly listed through this route. Real example of reverse merger: 1) ICICI andICICI Bank approved the reverse merger of ICICI, ICICI Personal financial services limited and ICICI Capital services limited into ICICI Bank. 2) Merger of CORUS with TATA. 3) Godrej soaps LTD.(GSL) with Gujarat innovative chemicals limited(GGICL)

Dear Friend > Reverse Merger A reverse merger transaction (or reverse takeover) generally involves two firms, one publicly listed firm and one private firm seeking public listing The public firm is usually only a “shell” company i.e., it has no or only nominal assets, and is merely listed on an exchange Shells formed from scratch specifically to engage in a merger or acquisitions are called “blank check companies” Shells resulting from the sale or liquidation of an operating public company are called “public shells” The private company’s shareholders generally receive between 65% and 95% of the public shell’s stock, gaining a controlling stake The public firm contains the operating assets and liabilities of the private company and retains its stock exchange listing A reverse merger does not raise new capital for either the public shell or the private firm. However, they are structured to raise capital via a simultaneous PIPE financing option With a weak IPO market, a RM is more attractive to middle-market businesses. Thanks

REVERSE MERGER In a reverse merger, investors of the private company acquire a majority of the shares of the public company, which is then merged with the purchasing entity. A reverse merger (also known as a reverse takeover or reverse IPO) is a way for private companies to go public, typically through a simpler, shorter, and less expensive process. Thanks

Reverse Merger -------------- A reverse merger also known as reverse take over refers to an arrangement where private company acquires a public company, by purchasing control of the public company in order to acquire the status of a public company. - It is described as reverse because in the more typical merger pattern a public company purchases a private company to expand its business. - The reverse merger is an alternative to the traditional IPO (Initial Public Offering) as a method for going public. - Reverse merger is a speedy and cheaper way of becoming a public company within a maximum period of 30 days. - Reverse mergers is a complex method where a shell company i.e. a public company that is no longer actively involved in business and has limited assets joins or merges, with a private company. - The private company buys most of the outstanding shares of the shell company, gaining control and seating its own board of directors. - There is some amount of stability risk involved i.e. if public shell's investors sell significant portions of their holdings right after the transaction, this can materially and negatively affect the stock price. **Example** `The merger of ICICI Ltd with ICICI Bank is an example of reverse merger`; that led to the creation of India’s first Universal Bank.