ABSTRACT 

Mergers are intended to improve the performance and position of a company in competitive globe, mergers help organizations to increase their capital base so as to meet the increasing market demand, diversify to international markets and also to employ the new technologies. The objectives of this study were; to assess the effect of business mergers on employee loyalty in selected companies listed at the Nairobi Stock Exchange. Data was analyzed using SPSS statistical soft ware and descriptive and inferential statistics were the statistical tools used. Primary data and secondary data were used. Primary data was collected using questionnaire method. Secondary data was obtained from various reports such as management reports, sales reports, operations data, Annual reports and Magazines. The target population of the study comprised 441 employees in the management level of five companies listed at the Nairobi Stock Exchange that had embraced mergers between the years of 2002 - 2011. The sample space consisted of top level managers, middle level managers and lower level managers in different departments as per appendix one. In conclusion, the study found that organizational culture, level of communication by employees, organization structure, and stress after merge leads to high rate of employee loyalty in selected companies listed at the Nairobi Stock Exchange.