Mergers happen when two companies join to form a new one. Mergers can be done to increase a company’s market share, so the company can have more power in determining the market price. Mergers are also done by companies who make different but complementary products to increase the demand of those two at the same time. Mergers can be horizontal or vertical.
Key Terms:
Horizontal merger: the combining of two or more companies that produce similar products (eg. the Reebok and Adidas merger in 2005)
Vertical merger: the combining of two or more companies involved in different steps of producing or marketing a product (eg. the Shell Oil merger)
Horizontal merger: the combining of two or more companies that produce similar products (eg. the Reebok and Adidas merger in 2005)
Vertical merger: the combining of two or more companies involved in different steps of producing or marketing a product (eg. the Shell Oil merger)