In law, MERGER is the combination of two or more business organisations under one management with one firm surviving while the others lose their separate corporate identities. Only the remaining firm retains its original name and charter, acquiring the assets of the others. This technique of business fusion differs from consolidation or acquisition, though they are all business combinations. Consolidation involves the formation of a completely new organisation wherein all participating companies lose their original identities too. However, the implication is that all the parties to the merger have a continuing interest approximately equal to their previous interest. Basically, there are three methods by which a merger occurs as in:
- One company A may buy the assets of another company B, with payment being made either in cash or in securities issued by the purchasing company.
- The purchasing company A may buy B’s stock, becoming a holding company for B, which continues to operate as a separate company.
