horizontal merger
Quick Summary
A horizontal merger occurs when two companies that produce the same product or service for the same market combine into a single enterprise. This type of merger is often done to eliminate a competitor, increase efficiency, or diversify products and markets. Companies can merge by one purchasing the other's assets or stock, or by exchanging their own stock for shares in the acquired firm. The goal is typically for the combined entity to be more valuable than the sum of its individual parts. Merger activity tends to increase during periods of economic prosperity.12
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