Merger vs acquisition is the first question in most deals, and the label matters far less than the legal mechanism underneath it. In a merger, two companies combine and at least one ceases to exist; in an acquisition, a buyer takes control of a target that usually survives as a subsidiary; a takeover is an acquisition of a company, often a listed one, by an offer to its shareholders. The mechanism decides who votes, what happens to liabilities and employees, how the deal is taxed and how long it takes. Four deals we covered this autumn show each route: Fox's two-step merger with Roku, Marvell's all-stock bid for Lumentum, the AkzoNobel and Axalta merger of equals, and Paramount's hostile tender offer that became a merger with Warner Bros. Discovery.
Merger vs Acquisition vs Takeover: 7 Deal Structures, Tax and How to Choose
By The Corporate INTL Newsroom · 10 November 2026
This guide, for business owners, in-house counsel and investors, compares seven structures across the UK, the US and the EU, then explains how to choose.
Merger vs acquisition: the short answer
A merger fuses two legal entities by operation of law; an acquisition transfers ownership of shares or assets by contract or offer, and the target keeps its separate legal personality. Commercially the words are used loosely: many "mergers" in press releases are acquisitions in law, because one company ends up as a subsidiary of the other.
| Issue | Merger | Acquisition | Takeover |
|---|---|---|---|
| What happens legally | Target merges into another entity and ceases to exist (or both form a new one) | Buyer acquires shares or assets; target usually survives | Buyer acquires a company's shares through an offer or court scheme |
| Typical setting | US corporate law (Delaware s251), EU cross-border deals | Private companies everywhere | Listed and public companies, especially in the UK |
| Who decides | Boards, then shareholder votes on both sides in most cases | Seller and buyer by contract | Target shareholders, by accepting or voting |
| Liabilities | Pass automatically to the survivor | Stay in the target (share deal) or are left behind (asset deal) | Stay in the target, which becomes a subsidiary |
| Minority shareholders | Bound by the vote; appraisal or cash exit rights may apply | Not relevant if every owner sells | Bound by a scheme vote, or squeezed out at 90% in an offer |
| Hostile possible? | No: needs both boards | Rarely in private deals | Yes, through an offer made directly to shareholders |
Merger vs acquisition vs takeover: the definitions
The three terms overlap, so the clearest way to define them is by what changes hands and what survives.
- Merger. Two or more companies combine into one. In a merger by absorption the target is absorbed by the survivor; in a consolidation both disappear into a new company. Delaware's statute allows either.
- Acquisition. A buyer acquires control of a target by buying its shares, or buys its business and assets. The target is not dissolved.
- Takeover. An acquisition of a company by an approach to its shareholders. In the UK the Takeover Code regulates offers for public companies, whether made by contractual offer or by scheme of arrangement.
- Merger of equals. A commercial description for a combination of similar-sized companies, not a legal structure. AkzoNobel and Axalta use it, yet AkzoNobel holders will own 55% and Axalta holders 45%.
- Reverse merger. A private company combines with a listed shell so that its owners control the listed vehicle, a route to a listing without an IPO.
So is an acquisition considered a merger? In everyday language often yes; in law, only if a statutory merger is the mechanism.
The 7 deal structures at a glance
Most deals use one of seven structures, each with its own voting threshold, liability rule and timetable.
| Structure | Where used | Approval threshold | Result |
|---|---|---|---|
| 1. Statutory merger (direct) | US states, e.g. Delaware s251 | Board approval, then a majority of the outstanding voting stock of each constituent corporation | Target merges into the buyer and ceases to exist |
| 2. Triangular merger (forward or reverse) | US | As for a statutory merger; buyer itself often does not vote | Target merges with a buyer subsidiary; buyer's shares or cash are paid |
| 3. Tender offer plus second-step merger | US (Delaware s251(h)) | Offer must reach the percentage otherwise needed to adopt the merger | Buyer acquires the remainder without a vote |
| 4. Share purchase | Private companies everywhere | Contract with the selling shareholders | Target becomes a subsidiary with all its history |
| 5. Asset purchase | Carve-outs, distressed sales | Contract with the target company | Buyer takes chosen assets; seller keeps the company |
| 6. Scheme of arrangement | UK public companies | Majority in number and 75% in value of those voting, plus court sanction | Binds every shareholder; buyer gets 100% |
| 7. Takeover offer | UK public companies, hostile bids | Acceptances above 50%; 90% to squeeze out | Control, then compulsory acquisition of the rest |
Statutory mergers in the US: Delaware s251 and triangular mergers
In the US a merger is a statutory event: once the certificate of merger is filed, the target's separate existence ends and its assets and liabilities vest in the survivor.
Under section 251 of the Delaware General Corporation Law, each board adopts a resolution approving the merger agreement and declaring it advisable. Stockholders receive at least 20 days' notice, and the agreement is adopted if "a majority of the outstanding stock of the corporation entitled to vote thereon" votes in favour: a majority of all shares, not just of those voting. Section 251(f) lets a survivor skip its own vote where its charter is unchanged and new common stock does not exceed 20% of its shares outstanding. Section 259 attaches all "debts, liabilities and duties" of the merging corporations to the survivor, and section 262 lets dissenting holders ask the Court of Chancery to appraise the "fair value" of their shares.
Buyers rarely merge a target straight into the parent. In a forward triangular merger the target merges into a buyer subsidiary; in a reverse triangular merger a buyer subsidiary merges into the target, which survives as a wholly owned subsidiary and keeps its contracts and licences. Section 368 of the Internal Revenue Code accommodates both, with the reverse version requiring target holders to exchange "control", at least 80% of voting power, for parent voting stock. The Fox Roku deal used both steps: a Fox subsidiary merged into Roku, and Roku then merged into a second Fox subsidiary. Section 251(h) offers a faster route for listed targets: if a tender offer brings in the shares that would otherwise be needed to adopt the merger, the merger follows without a stockholder vote. US specialists are listed in our United States directory.
Share purchase and asset purchase: the private-company route
For private companies an acquisition is usually a share purchase, buying the company, or an asset purchase, buying the business and leaving the company behind. In a share purchase the target's contracts, permits, staff and every historic liability stay where they are, so buyers rely on due diligence, warranties and indemnities. In an asset purchase the buyer picks what it takes, but contracts must be transferred, often with consent, and UK employees move under TUPE. We compare the two in detail, including tax and warranty insurance, in our share sale vs asset sale guide. Neither is a merger: the target survives either as a subsidiary or as a shell owned by the seller.
UK public deals: scheme of arrangement vs takeover offer
UK company law has no general statutory merger of the US kind, so takeovers of UK public companies proceed by a court-approved scheme of arrangement or a contractual takeover offer, both governed by the Takeover Code.
Scheme of arrangement
Under section 899 of the Companies Act 2006, if "a majority in number representing 75% in value" of the members present and voting at the court-convened meeting agree, the court may sanction the scheme, which then binds all members once the order is delivered to the registrar. That certainty of 100% on a fixed date is why schemes dominate recommended deals. Under Appendix 7 of the Takeover Code, a recommended scheme circular must normally go out within 28 days of the firm offer announcement, shareholder meetings are held at least 21 days after it, and the bidder may switch between scheme and offer with the Panel's consent.
Contractual takeover offer
An offer goes directly to shareholders, who choose whether to accept. The Takeover Code requires an acceptance condition above 50% of the voting rights under Rule 10, and under section 979 of the Companies Act 2006 an offeror holding 90% in value of the shares offered for, and 90% of their voting rights, can compulsorily buy out the rest. Offers suit hostile bids because they need no cooperation from the target. Two more Code rules shape every UK deal: Rule 2.6 gives a named potential bidder 28 days to "put up or shut up", and Rule 9.1 requires anyone reaching 30% of the voting rights to make a mandatory offer. Advisers are in our UK corporate and M&A directory.
Cross-border mergers in the EU
The EU is the one place where a true merger can cross a border: companies in different member states can merge under the rules in Directive (EU) 2017/1132, rewritten by Directive (EU) 2019/2121, which member states had to transpose by 31 January 2023.
The merging companies publish common draft terms, stating the exchange ratio and any cash payment, at least one month before the approving general meeting, and report to members and employees on the effects on jobs. Creditors unhappy with the safeguards offered can apply to a court or authority within three months. Shareholders who vote against, and would end up holding shares governed by another member state's law, can sell for "adequate cash compensation". A competent authority then issues a pre-merger certificate, normally within three months. Since Brexit, UK companies cannot use the regime, so UK and European combinations are usually share-for-share acquisitions or schemes. The AkzoNobel and Axalta deal is all stock: the Dutch company issues 0.6539 of its shares for each Axalta share, and the group stays domiciled in the Netherlands.
Tax: how the structure changes the bill
The structure largely decides who pays tax, when and on what, so tax advice should come before the label.
- Stock consideration. A US merger that qualifies as a reorganisation under section 368 lets target holders defer gain on the stock they receive. In the Fox Roku deal, the cash was capped so that stock made up at least 40% of the consideration, specifically to qualify under section 368(a).
- Cash acquisitions. Selling shareholders are generally taxed at once, as in Paramount's $31 a share cash deal for Warner Bros. Discovery.
- UK stamp taxes. A buyer of shares in a UK company usually pays stamp duty or stamp duty reserve tax of 0.5% of the price. Asset deals instead raise stamp duty land tax and VAT questions.
- Tax history. In a share deal or merger the target's tax liabilities come too; an asset buyer gets a fresh cost base and leaves the history behind.
Our tax adviser directory lists deal-structuring specialists.
Liabilities, contracts and employees
A merger moves everything automatically, a share purchase leaves everything in place under new ownership, and an asset purchase moves only what the parties choose, subject to consents and employment law.
In a statutory merger, liabilities follow the survivor by force of law. Contracts usually follow too, but change of control and anti-assignment clauses can bite, which is one reason buyers favour a reverse triangular merger that keeps the target alive. In a share purchase, change of control clauses may let counterparties terminate; in an asset purchase each contract must be assigned or novated.
In the UK, a business transfer brings employees with it. Under regulation 4 of the TUPE Regulations 2006, a relevant transfer does not end the contracts of those assigned to the business; they take effect as if made with the buyer, which inherits the employer's rights and liabilities. A share purchase is not a TUPE transfer, because the employer does not change. Who gets laid off first in a merger is a common search; the legal answer is that dismissals connected with a transfer need careful handling, and our Employment Rights Act 2025 checklist sets out the wider protections UK employers now face.
Approvals: shareholder votes, merger control and regulators
Every structure can trigger the same three layers of approval: shareholders, competition authorities and sector or investment regulators, and the regulators usually set the timetable.
Mergers and schemes need target shareholder votes by design. Buyers need their own holders' approval when they issue many new shares or change their charter: Marvell needs its stockholders to approve the share issuance and an increase in authorised shares, and AkzoNobel shareholders approved the Axalta merger on 5 August 2026.
Competition authorities ignore the label. Under the EU Merger Regulation, a deal has an EU dimension where combined worldwide turnover exceeds €5 billion and at least two parties each have EU turnover above €250 million, unless each earns more than two-thirds of it in one member state. It cannot be implemented before clearance. Phase I lasts 25 working days, or 35 with commitments; Phase II runs up to 90 working days, extendable; gun-jumping fines reach 10% of turnover. The AkzoNobel Axalta merger used the full 35 days and was cleared on 6 November 2026 on condition that AkzoNobel sells its European vehicle refinish business; its UK review was still pending on 10 November. In the US, the Hart-Scott-Rodino Act imposes a 30-day waiting period that a second request can extend, as Fox and Roku found. Merger control is tightening elsewhere too, as Australia's mandatory notification regime shows.
National security screening and the EU's Foreign Subsidies Regulation apply whatever the structure. The Marvell Lumentum deal covers foreign investment laws, does not expect to close until the first half of 2028, and carries a $3.2 billion fee payable by Marvell if regulators block it. Our competition and antitrust directory lists merger control specialists.
Hostile vs friendly deals
A merger is always friendly, because it needs both boards; only an acquisition by offer to shareholders can be hostile.
A friendly deal is negotiated with the target board, which recommends it and usually agrees protections such as break fees. A hostile bidder goes over the board's head with a tender offer or takeover offer, sometimes alongside a proxy fight. In the UK, the Code requires the target board to give shareholders its opinion and limits action that could frustrate a bid without shareholder approval, so shareholders decide.
Warner Bros. Discovery is the clearest recent example. After it agreed in December 2025 to sell its studios and streaming business to Netflix, Paramount launched a hostile all-cash tender offer at $30 a share, raised to $31 and offered to cover the $2.8 billion Netflix break fee. The boards signed a merger agreement on 27 February 2026, and the deal closed on 6 October 2026, as our account of how the Warner Bros. Paramount merger went through explains. Hostile became friendly, and a tender offer became a merger. Confidentiality matters throughout, as insider trading charges built on M&A files show.
Difference between merger and acquisition with examples from 2026
The four deals below show that the press label rarely matches the legal form.
| Deal | Described as | Legal mechanism | Consideration | Key approvals |
|---|---|---|---|---|
| Fox / Roku (closed 6 November 2026) | Acquisition | Two-step merger into Fox subsidiaries | $95.30 cash plus 0.9799 Fox Class A share per Roku share | Shareholder votes 14 October; HSR second request; DOJ closed its review |
| Marvell / Lumentum (announced 2 November 2026) | Acquisition | Two-step merger, all stock | 4.500 Marvell shares per Lumentum share | Votes on both sides; HSR and other approvals; close expected first half of 2028 |
| AkzoNobel / Axalta (EU cleared 6 November 2026) | Merger of equals | All-stock combination; group stays Dutch | 0.6539 AkzoNobel share per Axalta share | AkzoNobel vote 5 August 2026; EU Phase I with remedy; UK review pending |
| Paramount / Warner Bros. Discovery (closed 6 October 2026) | Merger | Hostile tender offer, then a negotiated merger agreement | $31 per share in cash | Shareholder approval 23 April 2026; US, EU and UK reviews; state settlement |
Each is in substance one company acquiring another. That answers "why merger instead of acquisition": in the US, a statutory merger is simply the most efficient way to acquire 100% of a widely held company. For the regulatory story behind the last deal, see our analysis of its multi-jurisdiction antitrust scrutiny.
Merger vs acquisition: how to choose
Work back from four questions: what you are buying, from whom, where the target is incorporated, and how much certainty you need on timing and ownership.
- Share purchase if the target is private, all its owners will sell, and contracts, licences and staff should stay undisturbed.
- Asset purchase if you want part of a business, or the company carries liabilities you cannot price.
- Statutory or triangular merger if the target is a widely held US corporation; a reverse triangular structure keeps the target and its contracts alive.
- Tender offer with a section 251(h) merger if speed matters for a listed Delaware target with a supportive board.
- UK scheme of arrangement for a recommended bid where you want 100% on a court-fixed date.
- UK contractual offer if the bid is hostile or acceptances will come quickly.
- EU cross-border merger when two EU companies want one legal entity rather than a parent and subsidiary.
Whichever you pick, model the tax, map the approvals and check change of control clauses before the term sheet fixes the structure. Settling merger vs acquisition at the start avoids restructuring a signed deal.
When to bring in an adviser
Bring in corporate counsel before heads of terms, because the structure drives the votes, filings and tax that follow. Cross-border deals need corporate, tax, employment and competition specialists in each country, coordinated by one lead adviser. Our corporate, commercial and M&A directory covers over 150 jurisdictions.
Frequently asked questions
What is the key difference between a merger and an acquisition?
In a merger, two companies combine by operation of law and at least one ceases to exist, its assets and liabilities passing to the survivor. In an acquisition, a buyer takes ownership of a target's shares or assets, and the target usually continues as a subsidiary.
Is an acquisition considered a merger?
Often in everyday language, but not in law. An acquisition becomes a merger only if a statutory merger completes it. Many US acquisitions do exactly that: a buyer subsidiary merges with the target, as in the Fox Roku and Marvell Lumentum deals.
What is the difference between a takeover and an acquisition?
A takeover is an acquisition of a company, usually a listed one, made by an approach to its shareholders. In the UK it means an offer or scheme for a public company under the Takeover Code, with its 30% mandatory offer rule and 28-day put up or shut up deadline.
What is a reverse merger?
A deal in which a private company combines with a listed company, often a shell, so that the private company's owners end up controlling the listed entity. It is a route to a public listing without a traditional initial public offering.
Who pays who in a merger?
The buyer pays the target's shareholders, not the target. Payment can be cash, the buyer's shares or a mix: Roku holders received $95.30 in cash plus Fox shares, Lumentum holders will receive Marvell shares only, and Warner Bros. Discovery holders received $31 in cash.
What approval does a UK scheme of arrangement need?
A majority in number of the shareholders voting, holding at least 75% in value of the shares voted, at a court-convened meeting. The court must then sanction the scheme, which binds all shareholders once the order is delivered to the registrar of companies.
Can a merger be hostile?
No. A statutory merger needs both boards, so it is always negotiated. A hostile bidder instead makes a tender or takeover offer directly to shareholders and may later convert it into an agreed merger, as Paramount did with Warner Bros. Discovery.
How long does a merger or acquisition take?
A private share purchase can complete in weeks. Public deals take months: Fox and Roku signed in June 2026 and closed in November after a US second request, while Marvell and Lumentum expect to close in the first half of 2028.
Sources
- Companies Act 2006, section 899 (court sanction for compromise or arrangement): legislation.gov.uk
- Companies Act 2006, section 979 (right of offeror to buy out minority shareholder): legislation.gov.uk
- The Takeover Panel, The Takeover Code, Appendix 7 (schemes of arrangement): code.thetakeoverpanel.org.uk
- The Takeover Panel, The Takeover Code (Rules 2.6, 9.1 and 10): code.thetakeoverpanel.org.uk
- Delaware Code, Title 8, Chapter 1, Subchapter IX (sections 251, 259 and 262): delcode.delaware.gov
- Directive (EU) 2019/2121 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions: EUR-Lex
- Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings: EUR-Lex
- Transfer of Undertakings (Protection of Employment) Regulations 2006, regulation 4: legislation.gov.uk
- 26 US Code section 368 (definitions relating to corporate reorganizations): Legal Information Institute, Cornell Law School
- GOV.UK, Tax when you buy shares: gov.uk
About this article
This guide was researched and written by The Corporate INTL Newsroom, which covers cross-border legal, regulatory and business developments for lawyers, professional advisers and financiers in over 150 jurisdictions. Every rule has been checked against legislation.gov.uk, the Takeover Code, the Delaware Code, EUR-Lex and the US Code, and the deal examples against our reports on the underlying filings and decisions. It is general information, not legal or tax advice; take advice from a qualified adviser before agreeing terms. Last reviewed 10 November 2026. For more analysis like this, visit the Corporate INTL newsroom or subscribe to Corporate INTL.
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