Conglomerate merger

Conglomerate merger

A conglomerate merger is officially defined as being "any merger that is not horizontal or vertical; in general, it is the combination of firms in different industries or firms operating in different geographic areas". Conglomerate mergers can serve various purposes, including extending corporate territories and extending a product range. One example of a conglomerate merger was the merger between the Walt Disney Company and the American Broadcasting Company.[1][2]

Because a conglomerate merger is one between two strategically unrelated firms, it is unlikely that they economic benefits will be generated for the target or the bidder. As such, conglomerate mergers seldom occur today. However, conglomerate mergers were popular in the U.S. in the 1960s and 1970s. Many conglomerate mergers are divested shortly after they are completed.[3]

References

  1. ^ Campbell R. McConnell and Stanley L. Brue (2005). Economics. McGraw-Hill Professional. pp. 603. ISBN 0072819359. 
  2. ^ John Leslie Livingstone and Theodore Grossman (2001). The Portable MBA in Finance and Accounting. John Wiley and Sons. pp. 563–564. ISBN 0471168564. 
  3. ^ Jay B. Barney and William S. Hesterly (2008). Strategic Management and Competitive Advantages. Pearson Prentice Hall. pp. 313–314. ISBN 0-13-613520-X. 

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  • conglomerate merger — merger in which two companies engaged in completely different industries join together into one company (Economics) …   English contemporary dictionary

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  • merger — The fusion or absorption of one thing or right into another; generally spoken of a case where one of the subjects is of less dignity or importance than the other. Here the less important ceases to have an independent existence. Contract law. The… …   Black's law dictionary

  • Merger — (1) Acquisition in which all assets and liabilities are absorbed by the buyer. (2) More generally, any combination of two companies. The New York Times Financial Glossary * * * merger merg‧er [ˈmɜːdʒə ǁ ˈmɜːrdʒər] noun [countable] FINANCE an… …   Financial and business terms

  • merger — (1) acquisition in which all assets and liabilities ( liability) are absorbed by the buyer. Bloomberg Financial Dictionary (2) More generally, any combination of two companies. The firm s activity in this respect is sometimes called M&A (Merger… …   Financial and business terms

  • conglomerate — con·glom·er·ate /kən glä mə rət/ n: a widely diversified company; esp: a corporation that acquires other companies whose activities are unrelated to the corporation s primary activity Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

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