Mergers, Acquisitions & Joint Ventures

a.         Mergers

A merger, in its general definition, means the joining of two or more businesses into a new or existing business. Mergers that lead to an entirely new business means that all the parties to the merger lose their unique legal personalities.

b.        Acquisitions

An acquisition refers to one business acquiring assets or shares to gain control of whole or a part of another business. In contrast to mergers, businesses do not necessarily lose their legal personalities.

c.        Joint ventures

Joint ventures are collaborative arrangements in which two or more businesses devote their resources to pursue a common objective that involves joint control, shared ownership, functioning as an autonomous entity, and for a lasting basis may also be assessed under the scope of mergers/acquisitions and their impact on competition.

Merger Notification Thresholds

Pakistan has a mandatory pre-merger clearance regime. A pre-merger application to the Commission is necessary when the following thresholds are met:
(A) One party has assets of PKR 300 million or the parties have a cumulative asset base of PKR 1 billion, or
(B) One party has an annual revenue of PKR 500 million or the parties have a cumulative revenue of PKR 1 billion
AND
(C) The transaction value is PKR 100 million or more, or
(D) One party acquires 10% or more voting rights in another party through the acquisition of shares.
If any one of the first two thresholds is met, the Commission looks at whether any of the third or fourth thresholds is met. If yes, i.e., A or B and C or D, it is mandatory to file a pre-merger application, provided one or both parties do business in Pakistan.