merger

merg·er   (mûr'jər)    n.   The act or an instance of merging; union. The union of two or more commercial interests or corporations. Law The absorption of a lesser estate, liability, right, action, or offense into a greater one.

merger

The union of two or more independent corporations under a single ownership. Also known as takeovers, mergers may be friendly or hostile. In the latter case, the buying company, having met with resistance from directors of the targeted company, usually offers an inflated (overmarket) price to persuade stockholders of the targeted company to sell their shares to it. Such mergers often have been financed by junk bonds.

Note: Especially common in the 1980s, hostile takeovers have become highly controversial. Some contend that they bring needed infusions of capital and efficiency to the targeted company. Others argue that, having borrowed heavily to finance the merger, the buyer is forced to sell valuable assets of the targeted company to pay off its debt.

Merger

The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

Investopedia Commentary

Basically, when two companies become one. This decision is usually mutual between both firms.

Related Links

The Basics of Mergers and Acquisitions
The Wacky World of M&As

See also: Acquisition, Acquisition Premium, Demerger, Forward Triangular Merger, Hostile Takeover, Reverse Triangular Merger, Sweetheart Deal, Takeover, Target Firm

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.

Main Entry: merg·er
Pronunciation: 'm&r-j&r
Function: noun
1 : the absorption of a lesser estate or interest into a greater one held by the same person —compare CONFUSION
2 : the incorporation and superseding of one contract by another
3 a : the treatment (as by statute) of two offenses deriving from the same conduct such that a defendant cannot be or is not punished for both esp. when one offense is incidental to or necessarily included in the other merger of offenses in a statute> merger of convictions> b : the doctrine according to which such offenses must be merged —compare DOUBLE JEOPARDY
NOTE: Merger commonly involves the interpretation of statutes and legislative intent in deciding whether two or more offenses deriving from the same conduct remain distinct.
4 : a doctrine in civil litigation: a judgment in favor of a plaintiff incorporates and supersedes the cause of action and any claims based on it and requires that further litigation in the case by the defendant be concerned with the judgment itself —compare BAR 3b estoppel by judgment at ESTOPPEL 2a, RES JUDICATA
5 : the superseding of a prior agreement in a divorce case by the divorce decree
6 a : the act or process of merging b : absorption by one corporation of another; also : any of various methods of combining two or more organizations (as business concerns) —compare CONSOLIDATE

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cash merger
: a merger in which shareholders in the company to be absorbed receive cash for their shares rather than shares in the absorbing company cash merger> —see also CASH OUT

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de facto merger
: a merger that is characterized by the issuance of stock to the corporation to be absorbed rather than an outright purchase of assets for cash, by continued participation of the shareholders, directors, and employees of the absorbed corporation, and by an assumption of liabilities by the absorbing corporation
NOTE: Shareholders in a de facto merger are considered to have the same right to an appraisal of the fair value of their shares as shareholders in a statutory merger.

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short–form merger
: an accelerated statutory merger between a subsidiary and a parent corporation that controls a large specified majority of shares in the subsidiary

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statutory merger
: a merger performed in accordance with relevant statutes that require specific procedures for the notification and approval of shareholders