vertical merger

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.

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Vertical Merger

A merger between two companies in the same industry but at different stages of the production cycle. A vertical merger can reduce the costs of the two companies by eliminating redundant processes. It also reduces reliance of one company on another. For example, an upstream oil company can merge with a downstream oil company to streamline operations.

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vertical merger

A merger between companies that supply different goods or services but in a common industry.