Conglomerate merger


Also found in: Wikipedia.

Conglomerate merger

A merger involving two or more firms that are in unrelated businesses.

Conglomerate Merger

A merger in which the merging firms are in completely different industries. Two companies may complete a conglomerate merger for any number of reasons. Among the most prominent are the desire to expand into new markets and thereby reduce unsystematic risk and a need to eliminate redundant activities by consolidating certain departments (a process known as synergy). Pure conglomerate mergers occur when the parties have absolutely nothing in common, while mixed conglomerate mergers come from the desire of the parties to extend their markets or products. A potential drawback to a conglomerate merger is the fact that a firm may become too big and difficult to operate, resulting in inefficiency.
References in periodicals archive ?
Finally, if a transaction is neither horizontal nor vertical, it is classified as a conglomerate merger.
A pure financial rationale for the conglomerate merger.
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.
In the '50s and '60s, Rogers & Wells defended Procter & Gamble's acquisition of Clorox in the first conglomerate merger attacked by the FTC under amended Section 7 of the Clayton Act.
Palia, 1999, "A Reexamination of the Conglomerate Merger Wave in the 1960s: An Internal Capital Markets View," Journal of Finance 54, 1131-1152.
The attorney goes on to question the witness on a variety of topics, including contestability, predation, and horizontal, vertical, and conglomerate merger policy.
either a top manager of the target firm is dismissed or becomes a lower-level manager) is selected for a conglomerate merger.
Schall, "Corporate Bankruptcy and Conglomerate Merger," Journal of Finance (March 1975), pp.
Conglomerate mergers rarely raise antitrust concerns, and present no peril to competition.
The premier issue includes articles on fund governance, mutual fund governance, alternative structures and strategies for investors, late trading and market timing, an overview of The Martin Act, proxy voting, theories on the rise of conglomerate mergers, and an overview of investor rights.
Primarily focusing on horizontal mergers--although discussing vertical and conglomerate mergers in cases when the producers of complementary goods are involved--the text discusses the economic modeling of mergers in a variety of contexts, ranging from simple cases where symmetric firms selling a homogeneous product have to decide how much to produce to more complicated cases, such as environments in which strategic decisions such as cost reducing investments or advertising are taken by the competing firms or mergers involving sellers of complements.