Expanded market reach
The firm that Telefonica has acquired certainly enjoys a broad market reach, a factor that is pegged on the fact that Telefonica’s operations are in a wide geographical area. Indeed, a business that has no merger normally operates primarily within its market boundaries internally or externally. However, an acquisition provides it with more room and demographic factors that are very lucrative.
Increased efficiencies and reduced costs
Acquired companies enjoy economies of scale due to reduced costs of operations. This can be due to its larger entity, efficient production, which will be possible in large quantities, and a decrease in expenses when buying goods in bulk.
Legal implications and tax
One of the key advantages of tax implication on an acquired company is the reduced tax liability. This will particularly be beneficial if the company acquired by Telefonica is less profitable. Legally, though the acquired company is not protected from adverse legal action, the acquiring company shares may, to a certain degree, cushion the company from legal harm.