Merger

A decision by two companies to combine all operations, officers, structure, and other functions of business. Mergers are meant to be mutually beneficial for the parties involved. In the case of two publicly-traded companies. a merger usually involves one company giving shareholders in the other its stock in exchange for surrendering the stock of the first company. See also: Acquisition .

merger

A combination of two or more companies in which the assets and liabilities of the selling firm(s) are absorbed by the buying firm. Although the buying firm may be a considerably different organization after the merger, it retains its original identity. Compare consolidation. See also downstream merger. synergy .

Merger.

When two or more companies consolidate by exchanging common stock, and the resulting single company replaces the old companies, the consolidation is described as a merger.

The shareholders of the old companies receive prorated shares in the new company. A merger is typically a tax-free transaction, meaning that shareholders owe no capital gains or lost taxes on the stock that is being exchanged.

A merger is different from an acquisition, in which one company purchases, or takes over, the assets of another. The acquiring company continues to function and the acquired company ceases to exist. Shareholders of the acquired company receive shares in the new company in exchange for their old shares.

Despite their differences, mergers and acquisitions are invariably linked, often simply described as M&As.

merger

(1) With regard to corporations,a legal joining together of two or more corporations into one entity or an entity with common ownership. A horizontal merger occurs between or among competitors,and a vertical merger occurs when suppliers, shippers, retailers, and such in a common industry join together. (2) With regard to real estate: (a) The joining of two or more interests in real estate into one owner, so that the separate interests,or estates,disappear. If a property owner with a right-of-way easement over her neighbor’s land then purchases the neighbor’s land, the easement is extinguished. If she then sells her first property to another, the new owner cannot now claim the benefit of the old right-of-way easement, because it was merged into land ownership. (b) The concept that a real estate contract becomes merged into the deed, so that provisions in the contract, but not in the deed, are not enforceable. This is almost always a question of intent, which means a jury gets to decide. The better course is to specify in the contract that all representations and warranties and all promises and agreements survive the deed. (c) The concept that negotiations are merged into a final contract and cannot be used to vary the terms of the contract.

Merger

What Does Merger Mean?

When two or more companies combine their businesses into one business entity, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

Investopedia explains Merger

Basically, when two companies become one. This decision is usually mutual between both firms, unlike a forced merger, which is known as a hostile takeover.