Observation

Many candidates were able to attempt the (a) and (b) parts of the question. However, most candidate listed the (c) part of question without explanation as required.
           
The expected responses are.

            (a)     The type of merger is vertical merger.                           
It is a merger where companies in the same line of business and at different levels of production come together to form a new company. / This is when a company producing raw materials merges with the one using the raw materials

             (b)      Reasons that would have necessitated the formation of the merger.

1. The decision to merge could have resulted from the need to achieve economies of scale.
2. There could be the desire by the firms to maintain stable prices.
3. The desire to have regular supply of raw materials could have led to the merger.
4. The merger could also arise due to the need to reduce the cost of production and increase profit.
5. The firms could also merge because of the need to check competition and remove its undesirable consequences. / Achieve large share of the market.
6. Reduction of overhead cost as a result of removal of duplicated staff could have    necessitated the merger.
7. The merger could have resulted from the need to introduction of additional capital to avoid liquidation.

                              
(c)        Sources of finance available to the company.

1. Issue of new shares: This is where a newly formed company calls for subscriptions to shares.
2. Issue of debentures: A debenture is a document conferring a long-term loan to a company. The holder becomes a creditor to the company and he is entitled to a fixed rate of interest whether or not the company makes profit.
3. Bank loan: Banks advance loans to companies that satisfy the conditions for the loan. A loan is payable with interest at regular intervals.
4. Leasing: An equipment or property could be rented for use by the new company for a specific number of years.
5. Hire purchase: This facility is extended to companies to enable them own properties by making a down payment and the balance settled through      installments.
6. Debt factoring: This is a situation where a company sells off its debts to institutions specialized in collection of debts.
7. Overdraft: The new company can arrange with the bank to withdraw more than what it has in the account.