Various ternary blends of HDPE, PS, and PMMA were prepared in one step using a Brabender mixer. When HDPE is the major component, as in this case, the morphology consists of a HDPE matrix, a PS dispersed phase and PMMA subinclusions within the dispersed PS, as predicted by the spreading coefficients. SEM observation and quantitative characterization were used to show that this complex morphology occurs within the first minutes of mixing and remains stable thereafter. Furthermore, it is shown quantitatively that all the PMMA is present in subinclusion form, It is possible to manipulate the dispersed phase internal structure from small PMMA subinclusions dispersed in a larger PS particle to a PS/PMMA core-shell structure upon decreasing the PS/PMMA composition ratio. Coalescence of composite droplets was also investigated. Upon annealing, these systems clearly experience a dual coalescence process: composite droplet/composite droplet coalescence and coalescence between dispersed subinclusion particles. Although some particle size increase is observed, the main effect of static coalescence is the transition from dispersed subinclusions to a core-shell structure at long times. It is shown that dynamic coalescence is controlled by the thickness of the shell layer. Morphological changes of the composite droplet size were also measured and explained in terms of interfacial tension and viscosity reductions. It is demonstrated that the composite droplet size is controlled by the outer shell thickness.