Merger Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Merger, written in plain English, along with examples of how it is used.
What is Merger?
(n) Merger is the process by which one corporation or business entity unifies its activities into that of another corporation or business activity where by its operations are continued as that of the merged corporation or business entity.
History and Meaning of Merger
Merger is the process of combining two or more businesses into one entity. The concept has been around for centuries, but the modern version of merger started during the consolidation of industries in the late 1800s and early 1900s, also known as the Gilded Age. This was a time of rapid growth and expansion in the US, and many businesses wanted to increase their power and market share. Mergers allowed them to do this by combining resources, reducing competition, and creating economies of scale.
Examples of Merger
A few examples of merger include:
- The merger of Disney and ABC in 1995, which created a powerful entertainment company that included theme parks, television networks, and movie studios.
- The merger of Exxon and Mobil in 1998, which created the world's largest oil company at the time.
- The merger of AOL and Time Warner in 2000, which was supposed to combine internet and media businesses, but ultimately failed due to cultural clashes and financial losses.
- The merger of Dow Chemical and DuPont in 2015, which combined two large chemical companies to streamline operations and cut costs.
- The pending merger of T-Mobile and Sprint, which would combine two of the largest wireless carriers in the US to create a stronger competitor to Verizon and AT&T.
Legal Terms Similar to Merger
- Acquisition - the process of one company buying another company or its assets.
- Consolidation - the unification of multiple companies into a single entity.
- Joint Venture - a business agreement between two or more parties to create a new entity, usually for a specific project or goal.