vertical merger

Vertical Merger

A merger between two companies producing different goods or services for one specific finished product.

Notes:

By directly merging with suppliers, a company can decrease reliance and increase profitability. An example of a vertical merger is a car manufacturer purchasing a tire company.

See also: Economies of Scale, Horizontal Merger, Hostile Takeover, Merger, Vertical Integration

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Vertical merger

When one firm acquires another firm that is in the same industry but at another stage in the production cycle. For example, the firm being acquired serves as a supplier to the firm doing the acquiring.

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vertical merger

A merger between two firms involved in the same business but on different levels. As an example, an automobile company may purchase a tire manufacturer or a glass company. The merger permits the firm to gain more control of another level of the manufacturing or selling process within that single industry. Compare horizontal merger.