Merger

Merger, the combining of two or more companies into a single corporation. In business, a merger is achieved when a company purchases the property of other firms, thus absorbing them into one corporate structure that retains its original identity. This differs from a consolidation, in which several concerns are dissolved in order to form a completely new company. In a merger the purchaser may make an outright payment in cash or in company stock, or may decide on some other arrangement such as the exchange of bonds. The purchaser then acquires the assets and liabilities of the other firms.

Mergers are often accomplished to revive failing businesses, to reduce competition, or to diversify production. In the U.S., however, fairly stringent antitrust laws are enforced to be sure that mergers do not result in monopolies.

See also Business; Monopoly; Trusts.