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Merger - absorption
       
 
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Merger - absorption

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Merger - absorption
Operation by which a company transfers the whole of its property to an absorbing company, against the attribution of shares of the latter to the shareholders of the former company, with possibly a balance in Cash.

It is the combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in Exchange for the surrender of their stock.   Basically, when two companies become one. This decision is usually mutual between both firms.
    
Such actions are commonly voluntary and involve stock Swap or Cash payment to the target. Stock Swap is often used as it allows the shareholders of the two companies to share the Risk involved in the deal. A merger can resemble a takeover but result in a new company name (often combining the names of the original companies) and in new branding; in some cases, terming the combination a "merger" rather than an Acquisition is done purely for political or marketing reasons.
Posted by  Opal Financial Group, Opal Financial Group
 
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