What are some potential benefits of merger activities on shareholders' wealth and at the public at large?

Question

What are some potential benefits of merger activities on shareholders' wealth and at the public at large?

Answer 1

When one company purchases another, it typically does so at a premium, meaning a higher price per share than the current price.  This increases shareholder's wealth.

The new, merged company can usually achieve synergies from economies of scale, scope, etc., allowing it to operate more efficiently and pass its cost savings to the public in the form of lower prices.