User:Aswathi Krishnan

An introduction to Merger

A merger is said to occur when two or more companies combine into one company.There is complete amalgamation of assets and liabilities as well as shareholders' interests and businesses of the merging companies.

Mergers may take two forms: 1. Merger through absorption. 2. Merger through consolidation.

Absorption is a combination of two or more companies into an existing company. All companies except one lose their identity in a merger through absorption. example: Tata Fertilizers Ltd by Tata Chemicals Ltd.

Consolidation is a combination of two or more companies into a new company. In this form of merger, all companies are legally dissolved and a new entity is created.

In merger, the target company transfers its assets, liabilities and shares to the new company for cash or exchange of shares in the acquirer company.