Definition
Merger / Amalgamation
A merger or amalgamation is the combination of two or more companies into one entity, with shareholders of the merged firm receiving shares of the surviving company.
In an amalgamation, one company absorbs another (or both combine into a new one) under a court/NCLT-approved scheme. Shareholders of the absorbed company get shares of the combined entity in a fixed swap ratio based on relative valuations.
A landmark Indian example is the HDFC-HDFC Bank merger (2023). Mergers aim to gain scale, synergies, or market share. SEBI and the NCLT oversee the process, and the swap ratio determines how fair the deal is for each side's shareholders.
Related terms
- DemergerA demerger is when a company splits off a business division into a separate, independently listed company, giving shareholders shares in both.
- DelistingDelisting is the removal of a company's shares from a stock exchange, after which they no longer trade publicly.
- Open OfferAn open offer is a mandatory offer to public shareholders to buy their shares when an acquirer crosses certain ownership thresholds in a company.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.