In an acquisition, one business entity buys and takes over another business entity. Legally, the company that was purchased ceases to exist and the buyer absorbs it. Some acquisitions are friendly and some are “hostile”, meaning the company does not want to be bought.
In a merger, two companies join together and proceed as a single entity. Both companies’ stocks are surrendered and new stocks are issued to replace them. This occurs when two similarly-sized companies see advantages in joining forces to improve efficiencies and capabilities or increase sales.