Definition of Merger

A merger is an agreement undertaken to unite two prevailing organizations into one new entity. There are numerous reasons why a company chooses to unite with another company. The primary reasons for it being to expand the company’s reach, gain market share or expand into new segments. The company conducts these activities to please the shareholders.

After gaining an insight into the meaning of mergers, let’s have a look at the types of mergers.

Types of Mergers       

The five main types of mergers are as follows:

Let us see few examples of merger to understand the concept better.

Examples of Merger


Disney and Pixar

The merger of the very famous Walt Disney and Pixar was a much sought out for and a match made in cartoon heaven. Disney released almost all of Pixar’s movies however the contract was about to run out. Therefore the companies opted for the merger in 2006. The merger benefitted both the companies by giving them some of the highest grossing movies such as Frozen and Tangled.

Exxon and Mobil

Exxon and Mobil signed an $81 billion agreement in 1999 giving birth to ExxonMobil. Post the merger, ExxonMobil became the largest company in the world heading towards monopolization. ExxonMobil is the strongest leader in the oil market internationally and proudly boats dramatic earnings. ExxonMobil is soon heading for another merger in the coming years.

Sirius and XM Radio

Satellite Radio began in 1997 with only two licenses. The condition for the issue of two licenses being that either of the companies could not acquire the other. However, in July 2008, Sirius Satellite Radio and XM radio decided to join forces. Proper paperwork and investigations led to the approval of the merger. This eventually led to massive increases in the revenue of both the companies and thereby giving them a major hold on the market share.


A merger between two entities into a single new entity can have a number of benefits. The new entity holds an increased market share which thereby leads to the firm gaining higher economies of scale and thus higher profits. More importantly, a merger reduces competition in the market and leads to higher prices from consumers.


Last updated on : October 28th, 2017
What’s your view on this? Share it in comments below.

Leave a Reply

  • Reverse Merger
    Reverse Merger
  • Mergers and Acquisitions
    Mergers and Acquisitions
  • Acquisition
  • Characteristics of M&A Transactions
    Characteristics of M&A Transactions
  • Subscribe to Blog via Email

    Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 122 other subscribers

    Recent Posts

    Find us on Facebook

    Related pages

    npv meaningdefine irrsight and usance letter of creditpayback period formulatotal asset turnover exampleadvantages of continuous budgetingdefine credit rationingwacc calculationsaccount receivable turnover ratiodefine costingsimportance of npvdupont model roestockholder vs shareholderdefinition of shares and debenturesfactoring arrangementdefinition of contingent liabilities in accountinggurpreet mannadvantages of flexible budgetingfixed assets turnover formulamovable assets and immovable assetscumulative preferred sharesmeaning of lesseehow to invest in debenturesexamples of capital employedwhat are the similarities between cost accounting and financial accountingexplain rationingifrs impairment of long lived assetsoverdraft interest ratesbi bank dubaidebenture holders definitionaccount payables definitiontypes of factoring servicesfeatures of marginal costingequit definitiondifference between notes payable and accounts payablewaccsaccounting double entry system exampleexample of variable expensesolvency ratio asset basedwhat is redemption of debentureslc clausesdifferential costingdisadvantages of commercial bankssignificance of liquidity ratioscons of budgetingcapital turnover ratio calculationinventory purchases formulacalculation of payback periodlist of indirect expenses in accountingpbp in financedifference between a finance lease and an operating leasewhat are the different types of dividend policiesinventory to cost of goods sold ratiotraditional capital structure theoryadvantages of capital asset pricing modeldifference between zero based budgeting and traditional budgetingnpv for projectwhat is net profit margin ratiofuture value formula compounded annuallyformula for calculating internal rate of returndebentures issued as collateral securityaccounts receivable turnover industry averagedebit and credit definition accountingdebit in hindiwhat is meant by accounting equationmicro and macro environmental factors affecting businesswealth maximisationwacc with preferred stockcapitalized lease definitiondebentures vs bondsdefinition of an overdraftwealth maximisationpayout ratio meaningstock turns calculationdefine profit margin ratioworking capital demand loanmargin of safety calculatordefine bookkeeping in accountingaverage debt collection periodnpv and irr relationshipwhat are asset management ratiosletter to increase credit limit with supplierconvertible bonds accounting