Merger

This page deals with the combination of two companies into one. For information about other uses of the word "merge", see merge.

A merger in business or economics refers to the combination of two companies into one larger company. Such actions are commonly voluntary and often involve stock swap. In many instances a merger resembles a takeover but often results in a new company name (often combining the names of the original companies) and in new branding.

Table of contents

1 Classifications of mergers 2 Issues 3 Famous mergers 4 See also

Classifications of mergers

• Horizontal mergers take place where the two merging companies both produce similar product in the same industry.\n* Vertical mergers occur when two firms, each working at different stages in the production of the same good, combine. \n* Conglomerate mergers take place when the two firms operate in different industries.

A unique type of merger called a reverse merger is used as a way of going public without the expense and time required by an IPO.

Issues

The occurrence of a merger often raises concerns in anti-trust circles. Devices such as the Herfindahl index can analyze the impact of a merger on a market and what, if any, action could prevent it. The Department of Justice and the Federal Trade Commission investigates anti-trust cases, monopolies, and approves mergers.

Famous mergers

\n* AOL/Time Warner\n* Bank of America/FleetBoston\n* Chevron/Texaco\n* Citicorp/Travelers Group\n* Daimler/Chrysler\n* Exxon/Mobil\n* Hewlett-Packard/Compaq\n* Pfizer/Pharmacia\n* Total/Petrofina/Elf Aquitaine\n* Vivendi/Universal

See also

\n* Mergers and acquisitions