Thus, the law-study shows that a conglomerate merger
can increase the ability of the merged firm to induce a rival conglomerate that operates in at least one market of both merger partners not to undercut its contrived oligopolistic prices by enabling it to engage in cross-market retaliation and/or to reciprocate to such a conglomerate rival's abstention from undercutting not only in the same market but cross-markets (67) (as well as by creating a merged firm that inherits the reputation for engaging in strategic conduct of the merger partner that has the stronger such reputation).
Matsusaka (1993) takes a deep look at the astonishingly high pre-merger profit rates of target companies during the conglomerate merger
Finally, if a transaction is neither horizontal nor vertical, it is classified as a conglomerate merger
A pure financial rationale for the conglomerate merger
She reiterates that, for companies which undertake a vertical merger, it is a question of acquiring a supplier (for example, a steel manufacturer acquiring a supplier of iron ore), while a conglomerate merger
concerns companies whose activities are complementary (for example, a company producing razors buying a company producing shaving foam).
Catalyst in the Transnational Conglomerate Merger
Debate, 37 NEW ENG.
Ever since the conglomerate merger
wave of the 1960s, economists have tried to understand the efficiency properties of conglomerates.
During the heyday of the conglomerate merger
wave of the 1960s, for example, venerable "experts" advised Congressional committees, as well as Fortune 500 corporations, that conglomerates were the wave of the future.
The estimated coefficient for the different types of mergers support the hypothesis that workers are least likely to belong to a union if employed in industries with greater levels of conglomerate merger
Under the Reagan administration's Baxter guidelines, conglomerate merger
activity quickened again in the flush 1980s.
In section IV we use the model as a framework to analyze two hypothetical situations, the first being entry into a supply agreement containing a most-favored-customer clause, and the second being a conglomerate merger
that may enable bundling.
Palia, 1999, "A Reexamination of the Conglomerate Merger
Wave in the 1960s: An Internal Capital Markets View," Journal of Finance 54, 1131-1152.