Merger Of Equals

DEFINITION of 'Merger Of Equals'

The combination of two firms of about the same size to form a single company. In a merger of equals, shareholders from both firms surrender their shares and receive securities issued by the new company.

BREAKING DOWN 'Merger Of Equals'

A merger of equals is the most accurate definition of a merger. Most merger activity, even friendly takeovers, sees one company acquire another. When one company is an acquirer, it is proper to call the transaction an acquisition. Because one company is the purchaser and the other is for sale, such a transaction cannot be viewed as a merger of equals.

For example, the creation of DaimlerChrysler saw both Daimler-Benz and Chrysler cease to exist. Because neither firm acquired the other and a new company was formed, this is considered a merger of equals.

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RELATED FAQS
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    Read about the legal and practical differences between a corporate merger and corporate acquisition, two terms often used ... Read Answer >>
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    Corporate mergers and acquisitions can vary considerably in the time they take to be completed. There are a number of individual ... Read Answer >>
  3. How does a merger affect the shareholders?

    Explore the effect of a merger and understand how the process affects shareholders of the newly merged firm in terms of stock ... Read Answer >>
  4. In M&A how does an all-stock or all-cash deal affect the equity of the buying company? ...

    Mergers and acquisitions (M&A) are forms of corporate restructuring that are becoming increasingly popular in the modern ... Read Answer >>
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