In finance, a merger is a corporate strategy in which two or more companies combine into a single company, with one of the companies usually absorbing the other. The aim of a merger is to create a larger, more competitive company that can benefit from economies of scale and increased market share.

A merger can take many forms, such as a stock-for-stock merger, in which the shareholders of one company receive shares in the merged company in exchange for their existing shares. Another common form of merger is a cash merger, in which one company pays cash to the shareholders of the other company in exchange for their shares.

A real example of a merger is the acquisition of Time Warner by AT&T. In this case, AT&T agreed to acquire Time Warner for $85 billion in 2016. The merger was intended to create a more vertically integrated company, with AT&T owning the content produced by Time Warner, such as HBO and CNN, as well as the distribution channels through which the content is delivered, such as AT&T’s wireless and satellite TV networks.

Mergers can be beneficial for both companies involved, as they can result in cost savings, increased market power, and access to new markets and technologies. However, mergers can also be risky and complex, as they involve combining the operations and cultures of two or more companies. Additionally, mergers can face regulatory hurdles and opposition from shareholders and other stakeholders.