Mergers: Simply put, a merger happens when two companies agree to operate together under the same ownership. Ideally, both companies are of similar size. Both companies in this case surrender their shares and new shares are issued.An acquisition happens when a company takes over a company and establishes ownership over that company.The motive of M&As is to help increase synergies.
Demergers: Contrary to M&As, there are often times when a diversified company opts for focusing on its core businesses and transferring its other business operations to a different company. This is the called as Demerger. The spun-off businesses are expected to be worth more as a separate entity than as a part of a larger business. After de-merger, shareholders of parent receive equivalent shares of the new entity.
