A merger happens when two companies combine to become one new company. Imagine if your two favorite ice cream shops decided to join together, sharing their recipes, equipment, and employees to create one bigger ice cream business. That's a merger.

Companies merge for different reasons. Sometimes a small company merges with a larger one to gain resources and reach more customers. Other times, two companies of similar size merge because they believe they'll be stronger together than apart. When Disney merged with Pixar in 2006, the two animation studios combined their talents and technologies to make even better movies together.

A merger differs from one company simply buying another and absorbing it. In a true merger, both companies typically contribute something valuable, and a new name or structure may emerge from the combination. The word can also describe things outside of business: when two schools merge, they combine into one school. You might even hear people joke about a merger when two friend groups start hanging out together and become one larger group.