What is circular merger with example?

A circular merger occurs when two companies combine to form a new entity that is owned by a third company, often involving at least one of the merging companies being a subsidiary of the new entity. An example of a circular merger is when Company A acquires Company B, and then Company A merges with Company C, resulting in Company C owning both A and B, thus creating a circular ownership structure. This type of merger can help companies streamline operations and reduce competition in the market.