merger

merger
/merr"jeuhr/, n.
1. a statutory combination of two or more corporations by the transfer of the properties to one surviving corporation.
2. any combination of two or more business enterprises into a single enterprise.
3. an act or instance of merging.
[1720-30; MERGE + -ER1]

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Combination of two or more independent business corporations into a single enterprise, usually involving the absorption of one or more firms by a dominant firm.

The dominant firm may purchase the other firm's assets with cash or securities, purchase the other firm's stock, or issue its own stock to the other firm's stockholders in exchange for their shares in the acquired firm (thus acquiring the other company's assets and liabilities). In horizontal mergers, both firms produce the same commodity or service for the same market. In vertical mergers, a firm acquires either a supplier or a customer. If the merged business is not related to that of the acquiring firm, the new corporation is called a conglomerate. The reasons for mergers are various: the acquiring firm may seek to eliminate a competitor, to increase its efficiency, to diversify its products, services, and markets, or to reduce its taxes.

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      corporate combination of two or more independent business corporations into a single enterprise, usually the absorption of one or more firms by a dominant one. A merger may be accomplished by one firm purchasing the other's assets with cash or its securities or by purchasing the other's shares or stock or by issuing its stock to the other firm's stockholders in exchange for their shares in the acquired firm (thus acquiring the other company's assets and liabilities).

      Mergers are of several different types: horizontal, if both firms produce the same commodity or service for the same market; market-extensional, if the merged firms produce the same commodity or service for different markets; or vertical, if a firm acquires either a supplier or a customer. If the merged business is not related to that of the acquiring firm, the new corporation is called a conglomerate (q.v.).

      The reasons for mergers are various. The acquiring firm may seek to eliminate a competitor; to increase its efficiency; to diversify its products, services, and markets; or to reduce its taxes. Merger activity varies with the business cycle, being higher when business is good.

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Universalium. 2010.

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