Merger
The combination of two companies into a single new entity.
What is Merger?
A merger is a corporate transaction in which two companies combine to form a single entity. In a true merger of equals, both companies give up their separate identities and a new combined company is formed. More commonly, a larger acquirer absorbs a smaller target. Mergers can be horizontal (same industry), vertical (buyer-supplier relationship), or conglomerate (unrelated industries). They are motivated by synergies — cost reductions, revenue gains, or market power — though research shows many mergers fail to create the projected value. Regulatory approval from agencies like the FTC or DOJ is often required.
Example
The 2015 merger of Kraft Foods and H.J. Heinz (facilitated by 3G Capital and Berkshire Hathaway) created Kraft Heinz, the fifth-largest food company in the world, targeting $1.5 billion in annual cost synergies.
Source: SEC — Merger Filings