Definition and Types of Merger with Examples – Latest


Merger occur when two or more companies combine to form a new entity or one absorbs the other(s). These strategic moves are undertaken for various reasons, including expanding market share, diversifying product lines, achieving economies of scale, or accessing new markets. Mergers can significantly impact industries, altering competitive dynamics and strategic landscapes.

Types of Mergers

There are several types of mergers, each characterized by the relationship between the merging entities and their business objectives:

Horizontal Merger: This involves companies operating in the same industry and often direct competitors, merging to consolidate market share, reduce competition, and achieve economies of scale. For example, if two smartphone manufacturers merge, they can reduce competition and combine resources for better research and development.

Vertical Merger: It occurs between companies in the same industry but at different stages of the production process. Such mergers aim to secure supply chains or distribution channels, enhancing efficiency and control. An example would be a car manufacturer merging with a tire manufacturer.

  • Conglomerate Merger: This involves companies from unrelated business areas merging. There are two types:
  1. Pure Conglomerate: Completely unrelated businesses.
  2. Mixed Conglomerate: Businesses looking for product or market extensions. An example is a technology company merging with a food company, aiming to diversify its business portfolio.
  • Market-extension Merger: This occurs between companies that offer the same products but in different markets, aiming to access a larger market base. For instance, a US-based electronics company merged with a European electronics company to extend its market presence.
  • Product-extension Merger: Companies dealing in products related to each other but not the same merge to combine their product lines and access a larger customer base. An example would be a computer manufacturer merging with a software company.

Examples of Recent Mergers

  • AstraZeneca and Alexion Pharmaceuticals: A notable horizontal merger in the pharmaceutical industry aimed at expanding AstraZeneca’s portfolio into rare disease treatment sectors.
  • Amazon and MGM: A conglomerate merger where Amazon aimed to bolster its content library for Amazon Prime Video by acquiring MGM, a legendary film studio with a vast catalog of movies and TV shows.
  • T-Mobile and Sprint: This horizontal merger combined two of the United States’ largest telecommunications companies, aiming to enhance their network infrastructure and compete more effectively with other major players in the industry.


Each of these mergers reflects strategic decisions to improve competitive positioning, access new markets, or diversify product and service offerings. The implications of these mergers can be far-reaching, affecting not just the companies involved but also consumers, employees, and industry trends.

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