Merger happens when two companies, mostly of the same size, agree to go forward as a single new company in the best interest of both. The shareholders of the involved companies often remain as joint proprietors. Both company's stocks are surrendered and a new company stock is issued in its place. For example, both Daimler-Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was created. A merger can bear a resemblance to takeover, but results in a new company name and a new branding.
There are different mergers based business structures. Here are a few types:
Finance based mergers
There are two types of mergers based on the financing. Each has certain implications for the investors: