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When two companies combine to form a single new company.
Why It Matters
Mergers reshape industries. When two companies merge, shareholders of both typically receive shares in the new combined entity. The announcement usually pops the stock of the smaller company (acquisition premium) and can move the larger one either way. Famous mergers: Exxon + Mobil, Disney + 21st Century Fox, T-Mobile + Sprint. Not all mergers work out - many destroy value through poor integration.
Key Points
- Merger of equals: both companies combine, often with new name
- Stock often jumps on announcement, then trades near deal price until close
- Regulatory approval can take months or years - some deals get blocked
Related Terms
Common Questions
When two companies combine to form a single new company. Mergers reshape industries. When two companies merge, shareholders of both typically receive shares in the new combined entity.
Mergers reshape industries. When two companies merge, shareholders of both typically receive shares in the new combined entity. The announcement usually pops the stock of the smaller company (acquisition premium) and can move the larger one either way. Famous mergers: Exxon + Mobil, Disney + 21st Century Fox, T-Mobile + Sprint. Not all mergers work out - many destroy value through poor integration.
Merger of equals: both companies combine, often with new name
Stock often jumps on announcement, then trades near deal price until close
Regulatory approval can take months or years - some deals get blocked