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Mergers combine two separate businesses into a single new legal entity. True mergers are uncommon because it's rare for two equal companies to mutually benefit from combining resources and staff, including their CEOs.
A merger essentially involves one corporation becoming part of another ?surviving? corporation; all assets, liabilities, and activities of the merging corporations vest in the surviving corporation by operation of law.
A merger, or acquisition, is when two companies combine to form one to take advantage of synergies. A merger typically occurs when one company purchases another company by buying a certain amount of its stock in exchange for its own stock.
Although a merger is typically thought of as an equal split in which each side maintains 50 percent of the new company, that's not always the case. In some mergers, one of the original entities gets a larger percentage of ownership of the new company.
In a merger, the stockholders of the acquired corporation typically receive cash, stock of the surviving corporation or some combination of stock and cash.