Assuming that you mean this: http://webhelp.esri.com/arcgisdesktop/9.2/index.cfm?TopicName=Update%20(Analysis) ...then you will likely need a combination of Transformers to achieve the result you need. I'd suggest you take a look at the AreaOnAreaOverlayer in combination with the Dissolver. You'll need some usable feature IDs so if you don't have one use a Counter first as a substitute.

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