Merger vs Acquisition in India: Key Differences & Examples

A merger and an acquisition both bring businesses together, but they do not create the same legal or ownership structure.

In a merger, two companies combine into a single corporate structure, with one entity typically surviving or a resulting entity being created. In an acquisition, one company obtains ownership or control of another, while the target may continue to exist as a separate legal entity.

For the broader foundation of mergers and acquisitions, see What Is M&A? This guide goes a step further by looking at how merger and acquisition structures differ in practice, how Indian law treats them, and what those differences mean for the companies and stakeholders involved.

Merger vs Acquisition: What’s the Difference?

A merger combines companies into one corporate structure. An acquisition gives one company ownership or control over another.

The distinction becomes clearer when you look at what happens to the companies after the transaction.

In a merger, the legal identity of one or more companies can change or cease to exist as a separate entity. In an acquisition, the target can remain a separate company, often as a subsidiary of the acquirer.

This distinction also explains why similar-looking transactions can follow different legal and regulatory routes.

What Legally Separates a Merger From an Acquisition?

In India, a statutory merger or amalgamation can be implemented through a scheme under Sections 230 to 232 of the Companies Act, 2013. Depending on the transaction, this can involve the National Company Law Tribunal (NCLT), shareholders, creditors and other regulatory approvals.

An acquisition works differently. A company may obtain ownership or control by purchasing shares, acquiring assets or buying a business. The target company does not automatically lose its separate legal identity.

That is the key difference.

A merger changes the corporate structure. An acquisition primarily changes ownership or control.

This does not mean every acquisition is a simple transaction. Listed-company acquisitions, for example, may involve securities regulations, while transactions meeting applicable competition-law thresholds may require scrutiny by the Competition Commission of India (CCI).

For a wider look at transaction structures, see Types of M&A Transactions.

Merger vs Acquisition: Key Differences

Factor	Merger	Acquisition
Basic structure	Companies combine into one corporate structure	One company obtains ownership or control of another
Legal identity	One entity may cease to exist separately	Target can continue as a separate entity
Control	May be combined or reorganised	Acquirer obtains control or ownership
Common route	Scheme of merger or amalgamation	Share purchase, asset purchase or other acquisition structure
NCLT involvement	Relevant to statutory merger schemes	Not automatically required for a straightforward acquisition
Consideration	Often shares in the surviving or resulting entity	Cash, shares or a combination
Post-deal structure	Combined corporate structure	Target may remain a subsidiary

The distinction is not simply about company size. A merger does not require two companies of equal size, and an acquisition does not necessarily mean that the target disappears.

Merger vs Acquisition Examples in India

HDFC Ltd and HDFC Bank: A Merger

The combination of HDFC Ltd with HDFC Bank is a well-known example of a merger.

The transaction was implemented through a scheme of amalgamation, with HDFC Ltd ultimately ceasing to exist as a separate legal entity. HDFC Ltd shareholders received 42 HDFC Bank shares for every 25 HDFC Ltd shares held.

The important point is not simply that the two businesses came together. The transaction changed the legal structure of the companies themselves.

Zomato and Blinkit: An Acquisition

Zomato’s acquisition of Blink Commerce, which operated the Blinkit business, illustrates a different structure.

The transaction was completed through a share-swap arrangement, with Blinkit continuing as a wholly owned subsidiary of Zomato.

Here, ownership and control changed, but the target continued to exist as a separate legal entity.

This is why calling every business combination a “merger” can be misleading. The legal structure matters.

Why Does the Distinction Matter in Practice?

The difference between a merger and an acquisition can affect approvals, documentation, timelines, ownership and the post-deal corporate structure.

A statutory merger generally follows a formal scheme-based process. A straightforward share acquisition can follow a different route without requiring the full NCLT merger process. However, an acquisition is not automatically free from regulatory requirements. Competition law, securities regulations and other approvals may apply depending on the parties and transaction.

The structure can also influence what happens after closing.

Following an acquisition, the buyer may keep the target as a separate subsidiary, retain its brand or integrate it gradually. A merger produces a different corporate structure from the outset.

This is why the commercial objective alone does not determine the right structure. The legal and regulatory consequences need to be considered alongside it.

For the broader transaction journey, see The M&A Process Explained.

Can a Minority Stake Be an Acquisition?

Yes. An acquisition does not necessarily mean purchasing 100% of a company.

An investor can acquire a minority shareholding and still obtain rights that amount to control or material influence. Shareholding percentage is therefore only one part of the analysis. Board representation, voting rights and special rights can also matter.

This makes the distinction particularly important in investment transactions, where an investor may obtain significant rights without becoming the outright owner of the company.

Is a Hostile Takeover a Merger or an Acquisition?

A hostile takeover is generally an acquisition, not a separate form of merger.

The word “hostile” describes the target company’s response to the proposed acquisition. The underlying transaction still involves an attempt by the acquirer to obtain ownership or control.

Similarly, a friendly acquisition remains an acquisition. Whether the target supports the transaction does not determine its legal classification.

The Difference Becomes Clear When You Look at Legal Structure

The easiest way to understand the merger vs acquisition distinction is to ask one question:

What happens to ownership, control and legal identity after the transaction?

If companies are combined through a restructuring of their corporate identities, the transaction follows a merger or amalgamation structure. If one company obtains ownership or control while the target continues as a separate legal entity, it is an acquisition.

Understanding this distinction makes it easier to interpret major M&A transactions and understand why different deals follow different legal and regulatory routes.

If you want to build a stronger foundation in M&A, explore Master M&A Fundamentals by DealCraft Academy.

Frequently Asked Questions

Is a merger the same as an acquisition?

No. A merger combines companies into a corporate structure, while an acquisition involves one company obtaining ownership or control over another.

Is HDFC Ltd and HDFC Bank a merger or an acquisition?

It was a merger implemented through a scheme of amalgamation, under which HDFC Ltd was combined with HDFC Bank.

Is Zomato’s purchase of Blinkit a merger or an acquisition?

It was an acquisition. Blink Commerce continued as a wholly owned subsidiary of Zomato after the transaction.

Can a minority stake be considered an acquisition?

Yes. A minority investment can constitute an acquisition where the investor obtains ownership, control or relevant influence over the target.

Is an acquisition always a takeover?

Not necessarily. A takeover generally refers to obtaining control, while an acquisition can involve purchasing shares, assets or a business without necessarily resulting in a traditional takeover.

Does every merger require NCLT approval?

Not every form of corporate combination follows the same route. Statutory merger schemes generally involve the applicable NCLT process, while certain other restructuring routes can have different approval requirements.

Can an acquisition later become a merger?

Yes. A company can first acquire control of a target and later combine the two businesses or legal entities through a separate merger or amalgamation transaction.