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Merger

(1) Acquisition in which all assets and liabilities are absorbed by the buyer. (2) More generally, any combination of two companies. The firm's activity in this respect is sometimes called M&A (Merger and Acquisition)
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

merger

or

amalgamation

the combining together of two or more firms into a single business on a basis that is mutually agreed by the firms' managements and approved by their shareholders. Mergers are one form of EXTERNAL GROWTH involving firms in expanding in a horizontal, vertical or conglomerate direction:
  1. Horizontal mergers (mergers between firms in the same market) may enable the firms to lower their costs, by taking advantage of the economies of large-scale production and marketing and by increasing the market share of the combined group, thereby putting it on a stronger competitive footing (see HORIZONTAL INTEGRATION);
  2. Vertical mergers (mergers between firms operating at different levels in the same market) may enable the firms to lower their costs by combining together in one operation a number of sequentially linked processes and by cutting stockholding costs, while control of inputs and market outlets gives the firm greater security of supplies and access to distribution channels, often at a competitive advantage over non-integrated rivals (see VERTICAL INTEGRATION);
  3. Conglomerate mergers (mergers between firms engaged in unrelated markets) enable risk to be spread, and provide an opportunity to develop better the resources of each by cross-transference of management, production and marketing expertise and by the targeting of finance to areas of growth potential (see DIVERSIFICATION).

In terms of their wider impact on the functioning of market processes, mergers may, on the one hand, promote greater efficiency in resource use and lower market costs and prices, or, on the other hand, reduce competition and heighten the dangers of monopolistic control over markets. Thus they may simultaneously involve both benefits and detriments. For this reason, in the UK, under the FAIR TRADING ACT, 1973, mergers and TAKEOVERS which create or extend a firm's market share of a particular product in excess of 25%, or where the value of assets combined is over £70 million, can be referred by the OFFICE OF FAIR TRADING to the COMPETITION COMMISSION to determine whether or not they are in the public interest. See MARKET ENTRY, BARRIERS TO ENTRY, CITY CODE ON TAKEOVERS AND MERGERS, DEMERGER, BUSINESS STRATEGY, MERCHANT BANK.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

merger

or

amalgamation

the combining together of two or more firms. Unlike a TAKEOVER, which involves one firm mounting a ‘hostile’ TAKEOVER BID for the other firm without the agreement of the victim firm's management, a merger is usually concluded by mutual agreement. Three broad categories of merger may be identified:
  1. horizontal mergers between firms that are direct competitors in the same market;
  2. vertical mergers between firms that stand in a supplier-customer relationship;
  3. conglomerate mergers between firms that operate in unrelated markets and are seeking to diversify their activities.

From the firm's point of view, a merger may be advantageous because it may enable the firm to reduce production and distribution costs, enable it to expand its existing activities or move into new areas, or remove unwanted competition and increase its market power.

In terms of their wider impact on the operation of market processes, mergers may, on the one hand, promote greater efficiency in resource use or, on the other hand, by reducing competition, lead to a less efficient allocation of resources.

Usually, any benefit that comes from a merger will depend upon the achievement of greater efficiency in some branch of the enlarged firm's operations. Several important sources of greater efficiency may be distinguished. Horizontal mergers frequently allow firms to secure low-cost operation by realizing ECONOMIES OF SCALE in manufacture and distribution and RATIONALIZATION opportunities. In addition, the combined organization may have access to superior technical know-how and financial resources previously available to only one of the firms. Vertical mergers may make possible benefits in efficiency of production by making possible more comprehensive production planning, particularly where successive processes are closely linked, and permit economies in stock holding and distribution of goods. Conglomerate mergers may yield economies in overheads (finance, administration and marketing expenditure) and may lead to an important cross-fertilization of ideas and attitudes, particularly where the acquiring company is notably well managed and cost-conscious.

While mergers may result in greater efficiency, thereby enhancing consumer welfare, they may also serve to increase MONOPOLY power. This is most clearly seen in the case of horizontal and vertical mergers. Horizontal mergers prima facie increase the level of SELLER CONCENTRATION in the market by reducing the number of independent sources of supply. Where the merging firms are already substantial suppliers, this may reduce effective competition and permit the enlarged group more control over the market and discretion over prices. A vertical merger can produce an increase in market power in a variety of ways. If a customer firm, for example, takes over a supplier, and if the supplier is large in relation to other suppliers, other (non-integrated) customers may find themselves forced to buy from the merged supplier and then sell their products in competition with the merged customer firm. This puts the merged group in a powerful position to discriminate in prices and availability of supplies and so ‘squeeze’ the profits of other non-integrated suppliers. Superficially, conglomerate mergers appear to have little relevance to the monopoly power issue, but it is to be noted that the conglomerate may have an opportunity to affect the state of competition in a number of separate markets, by internal transfers of resources, and thus to exercise a larger degree of market power against rival companies than its market share in individual markets would otherwise permit.

In sum, mergers may involve, simultaneously, both benefits and detriments. In the UK, under the FAIR TRADING ACT 1973, mergers that create or extend a firm's market share of a particular product in excess of 25%, or where the value of assets acquired is over £70 million, can be referred by the OFFICE OF FAIR TRADING to the COMPETITION COMMISSION to determine whether or not it is in the public interest. See also COMPETITION POLICY (UK), COMPETITION POLICY (EU), WILLIAMSON TRADEOFF MODEL, HORIZONTAL INTEGRATION, VERTICAL INTEGRATION, DIVERSIFICATION, CITY CODE, DEMERGER.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
McShane, "Probabilistic nature of breakdown at freeway merge junctions," Transportation Research Record: Journal of the Transportation Research Board, vol.
"With an innovative product like Merge Cube, we wanted to expand our support of the dev community to encourage innovation and creativity for all AR/VR platforms," Merge VR Co-founder Andrew Trickett said in a statement.
Merge Mammo(TM) - A multi-modality, vendor-neutral digital mammography workstation, Merge Mammo allows organizations to display images simultaneously from different mammography systems and to read all breast imaging studies from a single station, including images from the newly FDA-approved CR for mammography.
"Merge is very pleased to see highly favorable outcomes from our Referring Practice Portal," says David Noshay, president, Merge eMed.
We now add the merge fields that allow you to personalize the message.
Option 1: Berwick High becomes secondary; middle schools close; Berwick St Mary's merges with Holy Trinity on Berwick Middle site; Lowick becomes a primary with satellite at Holy Island; Horncliffe and Norham merge at Norham; Wooler becomes primary with satellite provision at Milfield; all other first schools become primaries.
Can you afford not to merge? Like many entrepreneurs, my top priority has always been to build profitable, independent businesses.
As SAN and NAS each have drawbacks that counter their many benefits, creative IT and storage administrators are pulling from both storage techniques in order to implement a storage environment that merges the best of both worlds.
Art LaFrance, an attorney working with merger opponents, acknowledges to the Portland Oregonian that many Catholic and non-sectarian hospitals have merged recently but said this case is different because "they propose to merge a public hospital into a private religious system, but to keep the district alive and keep its bonding authority going to support the operation of a Catholic system."
Infocon America Corp., a leader in web solutions for b-to-b publishers, and NewslettersOnline/Impresso Inc., a leader in e-commerce and online delivery systems also for b-to-b publishers, have signed a letter of intent to merge the two companies.
Why should co-ops merge? Are there financial, operating, or other economic benefits associated with an REC merger?
I am pleased to be able to appear here today to offer my thoughts on the proposed legislation to recapitalize the Savings Association Insurance Fund (SAIF), to merge SAIF and the Bank Insurance Fund (BIF), and to merge the thrift and the commercial bank charters.