Merger
The combination of two companies into a single entity, typically structured as equals or near-equals.
Full Definition
A merger is the combination of two companies into a single entity. Unlike an acquisition where one company clearly takes over another, mergers are often structured as a combination of equals, though one party typically becomes the legal acquirer.
Types of mergers: 1. Horizontal: Same industry/competitors combining 2. Vertical: Supply chain integration (supplier/customer) 3. Conglomerate: Unrelated businesses combining 4. Market extension: Same products, different markets 5. Product extension: Related products, same market
UK merger structures:
- Scheme of arrangement: Court-approved process for public companies
- Contractual merger: Two private companies combining
- Statutory merger: Cross-border merger under EU regulations
Competition considerations: The Competition and Markets Authority (CMA) reviews mergers where:
- Combined UK turnover exceeds £70 million, or
- Combined share of supply exceeds 25%
Merger vs acquisition distinction: The terms are often used interchangeably, but mergers typically imply:
- More equal combination of parties
- Combined management from both entities
- New brand identity or joint branding
- Shared governance structure
In practice, most "mergers" have an acquirer and a target, with the merger label used for relationship and cultural reasons.