A business combination can be effected as either an asset acquisition or a stock acquisition.
The acquirer buys some or all of the target’s assets/liabilities directly from the seller. If all assets are acquired, the target is liquidated.
The acquirer buys the target’s stock of from the selling shareholders.
Note that in a stock sale, the sellers are the target’s shareholders (which may be a corporate entity). In an asset sale, the seller is a corporate entity. So, the type of acquisition will determine who pays taxes on the transaction and the amount of taxes to be paid based on the tax rate applicable to the seller.
Do not confuse the type of acquisition with the form of consideration. A buyer may use either cash or stock (or a combination thereof) as consideration in exchange for the assets or stock of the target.