merger

noun merg·er \ ˈmər-jər \
Updated on: 12 Dec 2017

Definition of merger

1 law : the absorption of an estate, a contract, or an interest in another, of a minor offense in a greater, or of a cause of action into a judgment
2 a : the act or process of merging
b : absorption by a corporation of one or more others; also : any of various methods of combining two or more organizations (such as business concerns)

Examples of merger in a Sentence

  1. The law firm announced its $50 million merger with one of its competitors.

  2. If the proposed merger of the two oil companies goes through, it would be bad for the economy.

Recent Examples of merger from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'merger.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of merger

merge + -er (as in waiver)


Financial Definition of MERGER

merger

What It Is

A merger is a corporate strategy of combining different companies into a single company in order to enhance the financial and operational strengths of both organizations.

How It Works

A merger usually involves combining two companies into a single larger company. The combination of the two companies involves a transfer of ownership, either through a stock swap or a cash payment between the two companies. In practice, both companies surrender their stock and issue new stock as a new company.

There are several types of mergers. For example, horizontal mergers may happen between two companies in the same industry, such as banks or steel companies. Vertical mergers occur between two companies in the same industry value chain, such as a supplier or distributor or manufacturer. Mergers between two companies in related, but not the same industry are called concentric mergers. These mergers can use the same technologies or skilled workforce to work in both industry segments, such as banking and leasing. Finally, conglomerate mergers occur between two diversified companies that may share management to improve economies of scale for both companies.

A merger sometimes involves new branding or identity of the merged companies. Otherwise, a merger may lead to a combination of the names of the two companies, capitalizing on the brand identity of both companies.

Why It Matters

Mergers may result in a stronger company with combined assets, competencies, and markets. At the same time, mergers may result in a dilution of the financial strengths of one of the companies, particularly if the new company results in the issuance of more stock across the same asset base of the two merged companies. Finally, mergers often fail because of the clash of corporate cultures between the two companies, a reluctance to restructure redundant management and operations, incompatibilities of the technologies used by the companies, and disruptions in the workforce.

Because mergers are difficult to implement, most ultimately take the form of an acquisition, that is, the purchase of a weaker company by a stronger company.


MERGER Defined for English Language Learners

merger

noun

Definition of merger for English Language Learners

  • : the act or process of combining two or more businesses into one business


MERGER Defined for Kids

merger

noun merg·er \ ˈmər-jər \

Definition of merger for Students

: the combination of two or more businesses into one

Law Dictionary

merger

noun merg·er \ ˈmər-jər \

legal Definition of merger

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 especially when one offense is incidental to or necessarily included in the other
  • a merger of offenses in a statute
  • a 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
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
  • a tender offer to be followed by a cash merger
— see also cash out
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.
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
statutory merger
: a merger performed in accordance with relevant statutes that require specific procedures for the notification and approval of shareholders


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