Double Dummy Mergers: U.S. Federal Tax Treatment

Summary

This practice note provides a tax overview of a corporate acquisition structure commonly referred to as a double dummy merger. Double dummy mergers are commonly used in friendly public company acquisitions. The acquiring corporation usually intends to acquire the target corporation using both stock and cash (but other scenarios exist, e.g., all stock deals). Depending on the facts, a double dummy merger can be structured as completely tax-free, partially tax-free, or as a taxable purchase.