A merger occurs when two or more companies combine into one while all parties involved mutually agree to the terms of the merge.
The merge usually occurs when one company surrenders its stock to the other.
If a company undergoes a merger, it may indicate to shareholders that the company has confidence in its ability to take on more responsibilities.
On the other hand, a merger could also indicate a shrinking industry in which smaller companies are being combined with larger corporations. A reverse merger can also occur.
This happens when a private company acquires an already publicly-listed company (albeit one that is not successful).
The private company in essence turns into the publicly-traded company to gain trading status without having to go through the tedious process of the initial public offering.
Thus, the private company merges with the public company, which is usually a shell at the time of the merger, and usually changes its name and issues new shares.

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