Mechanism

The reactive intermediate depends on the reaction conditions. Under acidic conditions, the diazonium salt is believed to decompose into aryl cation and nitrogen. The aryl cation is highly reactive and attacked by the aryl ring that leads to cyclization. On the other hand, under neutral and basic conditions, the diazonium salt is reduced by single electron transfer to give aryl radical which proceeds reaction intramolecularly with benzene ring to give the cyclized product.

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Examples:

7.2.3.2 Reduction by Copper(I) Ammonium Ion

Diazotized anthranilic acid with copper(I) ammonium hydroxide gives diphenic acid in 90% yield.