What does the merger mean in Turkish law?

When it comes to a merger, we usually come across the following concepts; “merger”, “acquisition”, and “consolidation”. Although these concepts are generally used as synonyms, they basically have some minor differences from each other. As a matter of fact, although these words have different meanings from each other, these words are accepted as a merger in the end.

However, the differences of the words “merger”, “acquisition”, and “consolidation” are subject to an important distinction in themselves. Because we have to refer to these concepts in order to fully describe the merger and acquisition method.

In this case, we can reach the following conclusion. The words “merger”, “acquisition” and “consolidation” generally mean the same and merge. However, these words are different kinds of combinations from each other.

In this case, if we explain consolidation, merger and acquisition in general:

Merger: The main company buys all the shares of the mergered company. Thus, all assets of the mergered company pass to the main company. The mergered company is legally dissolved.

Acquisition: The main company buys some or all of the shares or assets of the acquired company. However, the acquired company does not end legally, it continues to exist.

Consolidation: Two or more companies come together to create a new company. The old companies are legally dissolved and a new company emerges.

What are the mergers and acquisitions types in Turkey?

There are two types of mergers and acquisitions in Turkey. These two types are clearly regulated in the Turkish Commercial Code No. 6102. The definitions made by the law are as follows;

Turkish Commercial Code No. 6102 – ARTICLE 136

Companies;

(1) Acquisition of one company by another, in technical terms “Merger by Acquisition”, or
(2) Their coming together in a new company, in technical terms “Merger by Formation of a New Company”,

through which they can be mergered.

Therefore, with the concept of “Merger by Formation of a New Company” we need to fully understand consolidation, while with the concept of “Merger by Acquisition” we need to understand merger. However, here it is necessary to open a separate parenthesis for the concept of Acquisition.

Acquisition involves the purchase of all or some of the assets or shares of a business. In this respect, it is just like merger. However, while the transferred company loses its legal personality in merger, it does not lose its legal personality in acquisition.

As a result, the definitions of merger and consolidation in the Turkish Commercial Code were highlighted. In other words, the law has bound these two species to certain rules. Provisions of the Turkish Commercial Code will be taken into account for merger and consolidation. In acquisition, on the other hand, all transactions will be made like a normal asset or share purchase.

Is there a different merger and acquisition method other than the law?