Mergers Merger is defined as a combination where two or more than two companies combine into one company. In this process one company survives and others lose their corporate existence. The survivor acquires Assets as well as Liabilities of the merged company or companies. In another form of merger one company purchases another company without giving proportionate ownership to the shareholders of the acquired company or without continuing the business of acquired company.

Amalgamation Merger is also defined as Amalgamation, especially in Indian law. For example Section 2(1A) of the Income tax Act, 1961 defines amalgamation as the merger of one or more companies (called amalgamating company or companies) with another company (called amalgamated company) or the merger of two or more companies to form a new company in such a way that all assets and liabilities of the amalgamated company or companies become assets and liabilities of the amalgamating company and shareholders holding not less than nine-tenths in the value of the shares in the amalgamating company or companies become shareholders of the amalgamated company.

Two forms of mergers Absorption Mergers: one company acquires another company. Examples: Tata oil Mills ltd. (TOMCO) with Hindustan lever Ltd(HLL) Tata chemical ltd & Tata fertilizer Ltd. Cosolidation Mergers: Two or more than two companies combine to form a new company. Examples: Merger of Hindustan instruments ltd., Indian software ltd., Indian reprographics ltd. To form a new HCL company.

Mergers Classification Horizontal Mergers: Mergers represents a merger of firms engaged in the same line of business. PHOENIX ELECTRIC (INDIA) merged with PHOENIX LAMPS (INDIA). VIDEOCON NARMADA ELECTRONICS merged with VIDEOCON INTERNATIONAL LTD. BANK of MADURA merged with ICICI. INDIAN AIRLINES merges with AIR INDIA.

Vertical Mergers: it represents a merger of firms engaged at different stages of production. An example can be the combination of a car manufacturing company and the company manufacturing a major component like piston (that is generally bought from others and used by the car manufacturing company). The acquiring company through merger of another company attempts to reduce of inventories of raw material and finished goods, implements its production plans as per the objectives and economizes on working capital requirements.

Conglomerate mergers: it represents a merger of firms engaged in unrelated lines of business. Merging of a cement company, an electronics company, a finance company and a garment manufacturing company. A real life example is Voltas Ltd. Cogeneric mergers: it represents a merger of firms engaged in related lines of business.