23.1 FORMS OF CORPORATE COMBINATIONS

23.1.1 Classification by Corporate Structure

If one classifies corporate combination by corporate structure, there are broadly three types of combination. The first type is known as merger where a firm acquires or purchases another firm. The acquiring firm continues to survive but the acquired firm loses its existence. To make it clear through an example, if Firm A acquires Firm B, the combined firm will be known as Firm A, Firm B has therefore ceased to exist.

In the second type of combination, known as consolidation or amalgamation, all the combining firms lose their identity and a new firm comes into being. For example, if Firm A and Firm B combine to form a new firm, Firm C, this is an amalgamation.

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