This strategic decision bringing the two companies together is a vertical merger
A merger is when two firms come together and one of the firms cease to exist.
Types of merger
1. Horizontal merger : is a type of merger that occurs between two companies that operate in the same industry. The companies are usually competitors.
An example of an horizontal merger is the merger of Mobil and Exxon in 1999.
2. Vertical merger : this is the merger of firms in the same production line. For example, a bakery purchases a pastry distributing company or when a large computer hardware manufacturer purchased a company that develops computer-based software training
3. Conglomerate merger : This occurs when the products of the merging firms were not related in any manner before the merger.
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