Identifying the acquirer through control

Learning objectives

• Identify the acquirer in a combination by applying the control guidance of IFRS 10.L1, L2
• Explain why a combination always has an acquirer and that the entity issuing the equity interests is not necessarily the acquirer.L1, L2

Normative references

• IFRS 3 §6For each business combination, one of the combining entities shall be identified as the acquirer.
• IFRS 3 §7The acquirer is identified by applying the guidance in IFRS 10 on control: it is the entity that obtains control of the acquiree (paras. 7 and B13); if that guidance does not clearly indicate the acquirer, additional guidance (B14 to B18) applies.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• When the business combination is effected by issuing securities, the entity that issues the securities is identified as the acquirer without any need to analyse control.L1
• For each business combination, one of the combining entities must be identified as the acquirer. On what basis is this identification made in the first place?L1
• Mistral SA acquires 90% of the voting rights of Zéphyr SA, paying in cash. Zéphyr is larger than Mistral in assets and revenue. Case assumption: under the IFRS 10 guidance, Mistral obtains control of Zéphyr. A trainee proposes naming Zéphyr as the acquirer because it is the larger. How should you answer?L2