M&A (merger & acquisition) for MAS and AirAsia? Merger A combination of two or more companies in which the assets and liabilities of the selling firm(s) are absorbed by the buying firm. Although the buying firm may be a considerably different organization after the merger, it retains its original identity. The merger of equals between XM and Sirius to form Sirius XM is an example. Acquisition The purchase of an asset such as a plant, a division, or even an entire company. For example, Oracle’s acquisition of Sun Microsystems was a significant technology transaction in 2009. On the surface, this distinction may not really matter, since the net result is often the same: Two companies (or more) that had separate ownership are now operating under the same roof, usually to obtain some strategic or financial objective. Yet the strategic, financial, tax, and even cultural impact of a deal may be very different, depending on the type of transaction. A merger typically refers to two companies joining together (usually through the exchange of shares) as peers to become one. An acquisition typically has one company, the buyer, that purchases the assets or shares of another, the seller, with the form of payment being cash, the securities of the buyer, or other assets that are of value to the seller. In a stock purchase transaction the seller’s shares are not necessarily combined with the buyer’s existing company, but are often kept separate as a new subsidiary or operating division. In an asset purchase transaction the assets conveyed by the seller to the buyer become additional assets of the buyer’s company, with the hope and expectation that over time, the value of the assets purchased will exceed the price paid, thereby enhancing shareholder value as a result of the strategic or financial benefits of the transaction.