The document defines and compares mergers and acquisitions. A merger involves two companies combining to form a new entity, with shared ownership and control. An acquisition is when one company purchases another, taking control of over 51% of its shares. Mergers involve mutual cooperation between similar-sized companies, while acquisitions see a larger company take over a smaller target. Both mergers and acquisitions can provide benefits like tax savings and synergies, but may also create issues like cultural clashes.

1. Merger means “to combine” while Acquisition means “to acquire.” In business
terminology, Merger is a type of Amalgamation where two entities combine
to form a new entity. But, if we talk about Acquisition, it is similar to a takeover,
in which one company acquires another company. In this article, we have
compiled the important differences between Merger and Acquisition.
Definition of Merger
Merger refers to the mutual consolidation of two or more entities to form a new
enterprise with a new name. In a merger, multiple companies of similar size
agree to integrate their operations into a single entity, in which there is shared
ownership, control, and profit. It is a type of amalgamation. For example M Ltd.
and N Ltd. Joined together to form a new company P Ltd.
The reasons for adopting the merger by many companies is that to unite the
resources, strength & weakness of the merging companies along with removing
trade barriers, lessening competition and to gain synergy. The shareholders of the
old companies become shareholders of the new company. The types of Merger
are as under:
 Horizontal
 Vertical
 Congeneric
 Reverse
 Conglomerate
Definition of Acquisition
The purchase of the business of an enterprise by another enterprise is known as
Acquisition. This can be done either by the purchase of the assets of the company
or by the acquiring ownership over 51% of its paid-up share capital.
In acquisition, the firm which acquires another firm is known as Acquiring
company while the company which is being acquired is known as Target
company. The acquiring company is more powerful in terms of size, structure,

2. and operations, which overpower or takes over the weaker company i.e. the target
company.
Most of the firm uses the acquisition strategy for gaining instant growth,
competitiveness in a short notice and expanding their area of operation, market
share, profitability, etc. The types of Acquisition are as under:
 Hostile
 Friendly
 Buyout
Examples of Mergers and Acquisitions in India
 Acquisition of Corus Group by Tata Steel in the year 2006.
 Acquisition of Myntra by Flipkart in the year 2014.
 The merger of Fortis Healthcare India and Fortis Healthcare International.
 Acquisition of Ranbaxy Laboratories by Sun Pharmaceuticals.
 Acquisition of Negma Laboratories by Wockhardt
Conclusion
Nowadays, only a few numbers of mergers can be seen; however, acquisition is
getting popularity due to extreme competition. The merger is a mutual
collaboration between the two enterprises in becoming one while the acquisition
is the takeover of the weaker enterprise by the stronger one. But both of them
gain the advantage of Taxation, Synergy, Financial Benefit, Increase in
Competitiveness and much more which can be beneficial, however sometimes
adverse effect can also be seen like an increase in employee turnover, clashing in
the culture of organizations and others but these are rare to happen.
Key Differences Between Merger and Acquisition
The following are the major differences between Merger and Acquisition:

3. 1. A type of corporate strategy in which two companies amalgamate to form a new
company is known as Merger. A corporate strategy, in which one company
purchases another company and gain control over it, is known as Acquisition.
2. In the merger, the two companies dissolve to form a new enterprise whereas, in
the acquisition, the two companies do not lose their existence.
3. Two companies of the same nature and size go for the merger. Unlike acquisition,
in which the larger company overpowers the smaller company.
4. In a merger, the minimum number of companies involved are three, but in the
acquisition, the minimum number of companies involved is 2.
5. The merger is done voluntarily by the companies while the acquisition is done
either voluntarily or involuntarily.
6. In a merger, there are more legal formalities as compared to the acquisition.