Definition : The term ‘merger’ is used to mean the unification of two or more business houses to form an entirely new entity. It leads to the dissolution of more or more entities, to get absorbed into another undertaking, which is relatively bigger in size.
It is a strategy adopted by the company to maximise company’s growth by expanding its production and marketing operations, that results in synergy, increased customer base, reduced competition, introduction to a new market/product segment, etc.
It is a form of amalgamation, wherein the assets and liabilities of the companies undergoing amalgamation becomes the assets and liabilities of the amalgamated company. Likewise, the shareholders of the old company, also get their part ownership in the new company.