A
merger is a business or
economic term referring to the combination of two companies into one larger company. Such actions are commonly voluntary and often involve a
stock swap. In many instances a merger is similar to a
takeover but often results in a new company name (often combining the names of the original companies) and branding.
Mergers may be classified in several ways:
- Horizontal mergers take place where the two merging companies both produce similar product in the same industry.
- Vertical mergers occur when two firms, each working at different stages in the production of the same good, combine.
- Conglomerate mergers take place when the two firms are members of different industries.
The occurrence of a merger often raises concerns in anti-trust circles. Devices such as the Herfindahl index can be used to analyze the impact of a merger on a market and what, if any, action should be taken to prevent it.
Famous mergers include:
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