Conglomerate Mergers

conglomerate Mergers - Types of Conglomerate Mergers, Benefits of Conglomerate Mergers

As per definition, a conglomerate merger is a type of merger whereby the two companies that merge with each other are involved in different sorts of businesses. The importance of the conglomerate mergers lies in the fact that they help the merging companies to be better than before.

Types of Conglomerate Mergers
There are two main types of conglomerate mergers ± the pure conglomerate merger and the mixed conglomerate merger. The pure conglomerate merger is one where the merging companies are doing businesses that are totally unrelated to each other. The mixed conglomerate mergers are ones where the companies that are merging with each other are doing so with the main purpose of gaining access to a wider market and client base or for expanding the range of products and services that are being provided by them There are also some other subdivisions of conglomerate mergers like the financial conglomerates, the concentric companies, and the managerial conglomerates.

Reasons of Conglomerate Mergers
There are several reasons as to why a company may go for a conglomerate merger. Among the more common reasons are adding to the share of the market that is owned by the company and indulging in cross selling. The companies also look to add to their overall synergy and productivity by adopting the method of conglomerate mergers.

Benefits of Conglomerate Mergers
There are several advantages of the conglomerate mergers. One of the major benefits is that conglomerate mergers assist the companies to diversify. As a result of conglomerate mergers the merging companies can also bring down the levels of their exposure to risks.

Implications of Conglomerate Mergers
There are several implications of conglomerate mergers. It has often been seen that companies are going for conglomerate mergers in order to increase their sizes.

at times. Corporate mergers may promote monopolistic practices by reducing costs. there might be significant impact if the acquiring company happens to be a leading company of its market that is not concentrated and has a large number of entry barriers. If we trace back to history. . They are also able to add to their production as well as strengthen the marketing area that ensures better profitability.However. It has normally been seen that a lot of companies that go for conglomerate mergers are able to manage a wide variety of activities in a particular market. For example. It has normally been observed that these companies are not able to perform like they used to before the merger took place. taxes etc.poison pill.Benefits of Mergers and Acquisitions. The business laws in US vary across states and hence the companies have limited options to protect themselves from hostile takeovers. this also. One way a company can protect itself from hostile takeovers is by planning shareholders rights. This was evident in the 1960s when the conglomerate mergers were the general trend. it is observed that very few mergers have actually added to the share value of the acquiring company. which is alternatively known as . Mergersoccur when the merging companies have their mutual consent as different from acquisitions. which can take the form of a hostile takeover. It has been seen from case studies that conglomerate mergers do not affect the structures of the industries. Mergers and Acquisitions . However. The term conglomerate mergers also implies that the two companies that are merging do not even have the same customer base as they are in totally different businesses. International Mergers and Acquisitions Mergers Merger is a financial tool that is used for enhancing long-term profitability by expanding their operations. has adverse effects on the functioning of the new company. these companies can carry out research activities and applied engineering processes.

vertical. In the course of acquisitions the bidder may purchase the share or the assets of the target . conglomerate or congeneric. depending or the nature of the merging companies. Reverse takeover occurs when the target firm is larger than the bidding firm. Hence mergers are regulated d supervised by thegovernment. Mergers may be horizontal. There may be either hostile or friendly takeovers. in US any merger required\s the prior approval of the Federal Trade Commission and the Department of Justice.Such activities may go against public welfare. for instance. In US regulation son mergers began with the Sherman Act in 1890. Acquisitions Acquisitions or takeovers occur between the bidding and the target company.

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