Conglomerate merger


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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 ?
Relatedly, the law-study explains that a conglomerate merger will increase the profits that a conglomerate rival of the merged firm that operates in at least one market in which each merger partner operates can earn by practicing contrived oligopolistic pricing by enabling that rival to retaliate against the merged firm's undercutting not only within the market in which the merged firm had undercut its price(s) but also across markets against the merged firm if it undercuts such a rival's price(s) and to reciprocate to a merged firm that has abstained from undercutting not only within the market in which the merged firm has foregone that opportunity but also in a different market in which both it and the merged firm are operating.
Therefore, takeovers were not motivated to discipline target managers during the conglomerate merger wave.
A pure financial rationale for the conglomerate merger. Journal of Finance.
Renzi, The GE/Honeywell Merger." 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.
"A Pure Financial Rationale for the Conglomerate Merger." Journal of Finance, 26: 521-545.
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 activity.
Under the Reagan administration's Baxter guidelines, conglomerate merger activity quickened again in the flush 1980s.
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.
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.