Horizontal Merger

AAA

DEFINITION of 'Horizontal Merger'

A merger occurring between companies in the same industry. Horizontal merger is a business consolidation that occurs between firms who operate in the same space, often as competitors offering the same good or service. Horizontal mergers are common in industries with fewer firms, as competition tends to be higher and the synergies and potential gains in market share are much greater for merging firms in such an industry.

INVESTOPEDIA EXPLAINS 'Horizontal Merger'

This type of merger occurs frequently, because of larger companies attempting to create more efficient economies of scale. The amalgamation of Daimler-Benz and Chrysler is a popular example of a horizontal merger.


Conversely, a vertical merger takes place when firms from different parts of the supply chain consolidate in order to make the production process more efficient or cost effective.

RELATED TERMS
  1. Economies Of Scale

    The cost advantage that arises with increased output of a product. ...
  2. Diversification Acquisition

    A corporate action in which a company purchases a controlling ...
  3. Congeneric Merger

    A type of merger where two companies are in the same or related ...
  4. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  5. Vertical Merger

    A merger between two companies producing different goods or services ...
  6. Merger

    The combining of two or more companies, generally by offering ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. Biggest Merger and Acquisition Disasters
    Entrepreneurship

    Biggest Merger and Acquisition Disasters

  3. Why do companies merge with or acquire ...
    Investing

    Why do companies merge with or acquire ...

  4. How long does it take for a merger to ...
    Investing

    How long does it take for a merger to ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center