What is a merger in business terms?

A merger in business terms refers to the combination of two companies into one entity, which aligns perfectly with the selected answer. This process typically occurs when two firms decide to join forces to achieve various strategic objectives, such as increasing market share, enhancing operational efficiency, or leveraging complementary strengths.

When two companies merge, they effectively pool their resources, including finances, personnel, and technology, to create a single, more competitive organization. This can lead to increased economies of scale, improved financial performance, and expanded capabilities in the marketplace.

The other options reflect different business activities that do not encapsulate the concept of a merger. For instance, the acquisition of one company by another suggests a takeover, where one company buys another and possibly retains its own identity, rather than the formation of a new single entity. The process of selling a subsidiary describes divestment rather than consolidation, while the expansion of a company's product line involves growth strategies that do not necessitate merging with another firm. Each of these options implies a different strategic approach rather than the specific act of merging.