merger

The fusion or absorption of one thing or right into another; generally spoken of a case where one of the subjects is of less dignity or importance than the other. Here the less important ceases to have an independent existence.

Contract law.

The extinguishment of one contract by its absorption into another, and is largely a matter of intention of the parties. Caranas v. Jones, Tex.Civ.App., 437 S.W.2d 905, 910.

Corporations.

An amalgamation of two corporations pursuant to statutory provision in which one of the corporations survives and the other disappears. The absorption of one company by another, the former losing its legal identity, and latter retaining its own name and identity and acquiring assets, liabilities, franchises, and powers of former, and absorbed company ceasing to exist as separate business entity. Morris v. Investment Life Ins. Co., 27 Ohio St.2d 26, 272 N.E.2d 105, 108, 109, 56 O.O.2d 14.

It differs from a consolidation wherein all the corporations terminate their existence and become parties to a new one.

The antitrust laws seek not only to control existing monopolies but also to discourage the acquisition of market power. Historically, mergers have provided an important route to positions of market dominance. Accordingly, Congress has required all mergers, whether vertical, horizontal, or conglomerate, to be scrutinized under the provisions of section 7 of the Clayton Act. 15 U.S.C.A. No. 18.

See also Kefauver-Celler Act

- Hart-Scott-Rodino Antitrust Improvement Act.

Accounting methods.

See pooling of interests

- purchase method of accounting.

Criminal law.

When a man commits a major crime which includes a lesser offense, or commits a felony which includes a tort against a private person, the latter is merged in the former.

Divorce law.

Substitution of rights and duties under judgment or decree for those under property settlement agreement. Roesbery v. Roesbery, 88 Idaho 514, 401 P.2d 805, 807.

Judgments.

A valid and personal judgment merges the original claim in the judgment and thereafter suit is brought on the judgment and not on the original claim. Restatement of Judgments No. 45, comment a.

Law and equity.

Under Rules of Civil Procedure, there is now only one form of action, the "civil action," in which the parties may be given both legal and equitable relief. Fed.R.Civil P. 2.

Property interests.

It is a general principle of law that where a greater estate and a less coincide and meet in one and the same person, without any intermediate estate, the less is immediately annihilated, or, in the law phrase, is said to be merged; that is, sunk or drowned, in the greater. Thus, if there be tenant for years, and the reversion in fee-simple descends to or is purchased by him, the term of years is merged in the inheritance, and shall never exist any more. Similarly, a lesser interest in real estate merges into a greater interest when lessee purchases leased property.

Rights.

This term, as applied to rights, is equivalent to "confusio" in the Roman law, and indicates that where the qualities of debtor and creditor become united in the same individual, there arises a confusion of rights which extinguishes both qualities; whence, also, merger is often called "extinguishment."

Rights of action.

In the law relating to rights of action, when a person takes or acquires a remedy or security of a higher nature, in legal estimation, than the one which he already possesses for the same right, then his remedies in respect of the minor right or security merge in those attaching to the higher one; as, for example, where a claim is merged in the judgment recovered upon it.

Sentences.

If a defendant is charged in two duplicitous indictments with commission of two crimes, he may be sentenced on conviction of the more serious crime but not on both indictments, e.g. possession of marihuana and possession of the same marihuana at the same time and place with intent to sell. Kuklis v. Com., 361 Mass. 302, 280 N.E.2d 155. Title.

See property interests, above

@ cash merger

A merger transaction in which certain shareholders or interests in a corporation are required to accept cash for their shares while other shareholders receive shares in the continuing enterprise. Modern statutes generally authorize cash mergers, though courts test such mergers on the basis of fairness and, in some states, business purpose.

@ conglomerate merger

Merger of corporations which are neither competitors nor potential or actual customers or suppliers of each other. U. S. v. General Dynamics Corp., D.C.N.Y., 258 F.Supp. 36, 56.

One in which there are no economic relationships between the acquiring and the acquired firm. Kennecott Copper Corp. v. F. T. C., C.A.Colo., 467 F.2d 67, 75.

A conglomerate merger is one that is neither vertical nor horizontal and can be any of three types.

A geographic extension merger occurs when the acquiring firm, by merger, extends its dominance to an adjacent geographic market. See, e.g., United States v. Marine Bancorporation, 418 U.S. 602, 94 S.Ct. 2856, 41 L.Ed.2d 978.

+ conglomerate merger

Merger among firms which operate in separate and distinct markets; e.g. merger of companies with different product lines. A merger in which there are no economic relationships between the acquiring and the acquired firm. Kennecott Copper Corp. v. F. T. C., C.A.10, 467 F.2d 67, 75. A combination of two or more companies in which neither competes directly with the other and no buyer-seller relationship exists. A merger other than a horizontal or vertical merger. U. S. v. International Tel. & Tel. Corp., D.C. Conn., 306 F.Supp. 766, 774.

See also conglomerate

- merger

A product extension merger occurs when the merger joins firms in related product markets. See, e.g., FTC v. Procter & Gamble Co. (Clorox), 386 U.S. 568, 87 S.Ct. 1224, 18 L.Ed.2d 303.

A "pure" conglomerate merger occurs when the two merging firms operate in unrelated markets having no functional economic relationship. See, e.g., United States v. International Tel. & Tel. Corp., 324 F.Supp. 19.

These categories are not mutually exclusive: for example, a merger may have both horizontal and vertical aspects. See, e.g., Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510.

@ geographic extension merger

@ product extension merger

@ pure conglomerate merger

See conglomerate merger

@ defacto merger

A transaction that has the economic effect of a statutory merger but is cast in the form of an acquisition of assets or an acquisition of voting stock and is treated by a court as if it were a statutory merger. Occurs where one corporation is absorbed by another, but without compliance with statutory requirements for a merger. Arnold Graphics Industries, Inc. v. Independent Agent Center, Inc., C.A.N.Y., 775 F.2d 38, 42.

@ down stream merger

@ downstream merger

The merger of a parent corporation into its subsidiary.

@ horizontal merger

Merger between business competitors, such as manufacturers of the same type products or distributors selling competing products in the same market area.

See also vertical merger.

+ horizontal merger

A combination of two or more companies that compete directly with each other. Merger of one company with another company producing same product or similar product and selling it in same geographic market. U.S. v. International Tel. & Tel. Corp., D.C.Conn., 306 F.Supp. 766, 774.

See merger.

Compare vertical merger

@ short form merger

@ shortform merger

@ short-form merger

A number of states provide special rules for the merger of a subsidiary corporation into its parent where the parent owns substantially all of the shares of the subsidiary. This is known as a "short-form" merger.

Short-form mergers under such special statutes may generally be effected by:

(a) adoption of a resolution of merger by the parent corporation,

(b) mailing a copy of the plan of merger to all shareholders of record of the subsidiary, and

(c) filing the executed articles of merger with the secretary of state and his issuance of a certificate of merger.

This type of merger is less expensive and time consuming than the normal type merger.

See e.g. Rev. Model Bus. Corp. Act No. 11.04.

@ triangular merger

A method of amalgamation of two corporations by which the disappearing corporation is merged into a subsidiary of the surviving corporation and the shareholders of the disappearing corporation receive shares of the surviving corporation. In a reverse triangular merger the subsidiary is merged into the disappearing corporation so that it becomes a wholly owned subsidiary of the surviving corporation.

@ up stream merger

@ upstream merger

A merger of a subsidiary corporation into its parent.

See short form merger, above.

@ vertical merger

Union with corporate customer or supplier. U. S. v. General Dynamics Corp., D.C.N.Y., 258 F.Supp. 36, 56.

+ vertical merger

Merger between two business firms that have a buyer-seller relationship; that is, one produces a product that is then sold to the other. U.S. v. First Nat. Bank of Jackson, D.C.Miss., 301 F.Supp. 1161, 1190.

Acquisition of one company which buys product sold by acquiring company or which sells product bought by acquiring company. U.S. v. International Tel. & Tel. Corp., D.C.Conn., 306 F.Supp. 766, 774.

If a producer or wholesaler acquires a retailer, it is a forward merger. If a retailer or distributor acquires its producer, it is a backward merger.

See also merger

Compare horizontal merger

@ merger clause

A provision in a contract to the effect that the written terms may not be varied by prior or oral agreements because all such agreements have been merged into the written document.

See U.C.C. No. 2-202

@