Merger and acquistion are important information for share holders. Merger or acquisiton announcement released by a company will affect share price of target company. This research of merger and acquisition with payment method aims to test the effect due to the event.Their reaction depends on early announcement and how a company fund the merger and acquisition. Hypothesis for this research are whether there is positive abnormal return during the announcement date of merger and acquisition, and whether Average abnormal return Merger and acquisition announcements using cash as a method of payment is greater than the announcement Mergers and acquisitions using stock as a method of payment. The method of research used in this study is a method of verificative and descriptive event study approach. The samples used in this research are companies listed on the Indonesia Stock Exchange that announced their mergers and acquisitions in the year 2005-2011 and acquired 20 companies to 10 companies using cash payments and 10 companies using the stock payments. The method of analysis used in this study is event study method, which is to observe the company's stock price and then calculate the average abnormal return before and after the merger issue. Result shows that there is positive abnormal positive return during the announcement date of merger and acquisition, there is a significant AAR prior to the announcement of mergers and acquisitions. And for the payment method, Average abnormal return on the announcement of the merger and acquisition using cash is not greater than the average abnormal return to the stock as a payment method to undertake mergers and acquisitions.