Merger
A merger in business or economics refers to the combination of two companies into one larger company. Such actions are commonly voluntary and often involve a stock swap. In many instances a merger resembles a takeover but often results in a new company name (often combining the names of the original companies) and in new branding.
Classifications of mergers:
- Horizontal mergers take place where the two merging companies both produce similar product in the same industry.
- Vertical mergers occur when two firms, each working at different stages in the production of the same good, combine.
- Conglomerate mergers take place when the two firms operate in different industries.
The occurrence of a merger often raises concerns in anti-trust circles. Devices such as the Herfindahl index can analyze the impact of a merger on a market and what, if any, action could prevent it. The Department of Justice and the Federal Trade Commission investigates anti-trust cases, monopolies, and approves mergers.
A unique type of merger called a reverse merger is used as a way of going public without the expense and time required by an IPO.
Compare mergers and acquisitions.
Famous mergers include:
A merger in Criminal Law characterises situations where one crime subsumes another. See Doctrine of Merger
Referenced By
EU competition law | Washington Federal Savings
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