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What Is A Conglomerate Merger? Meaning And Definition

by shagun Saini
What is a conglomerate merger?

Do you want to strengthen your business operation? Do you know What is a conglomerate merger? Do you want to expand your business as well? Then, probably you should know What is a conglomerate merger? So, here we will understand What is a conglomerate merger? And also know Types of Conglomerate Mergers, examples of conglomerate merger, conglomerate merger companies list, and conglomerate merger advantages and disadvantages.

But before understanding What is a conglomerate merger? You should firstly know merger meaning then you will be better able to understand What is a conglomerate merger?

  • What Is A Conglomerate Merger?

A Conglomerate Merger can be defined as a union between companies or say a merger between firms that carry on business activities that are unrelated to each other firms or union business.

A Merger normally occurs between the business firms that are operating in different industries or different categories or the firms located in diverse geographical locations.

So, A conglomerate is depicted as a large company that is composed of smaller companies which the larger company has acquired over time.

  • Types Of Conglomerate Merger

When discussing the Types of Conglomerate Merger, it can be categorized into two as:

  • Pure Conglomerate Mergers And

  • Mixed Conglomerate Mergers

  • Pure Conglomerate Mergers: Pure conglomerate mergers are the ones who merge their business and have nothing in common. A pure conglomerate merger can be defined as a union between companies or say a merger between firms that carry on business activities that are unrelated to each other firms or union business.
  • Mixed Conglomerate Mergers: A mixed conglomerate mergers are the one who merges their business and has something in common as the interest of companies merging together is for expansion of their business, or to gain more customers, or say to expand their products. So, their interest is common in a mixed conglomerate merger.
  • Give Examples Of Conglomerate Merger:

Some of the common conglomerate merger examples can be stated as:

  • Example 1: A firm engaged in the business of Cloth manufacturing merges its business with A firm engaged in the business of stone manufacturing then this merger will be known as a conglomerate merger example.
  • Example 2: A firm engaged in the business of steel manufacturing merges its business with A firm engaged in the business of food manufacturing then this merger will be known as a congeneric merger example.
  • Conglomerate Merger Companies List:

Some of the common conglomerate merger companies list depicting the conglomerate merger examples are as follows:

  • Walt Disney Company & American Broadcasting Company merger: This conglomerate merger of Walt Disney Company & American Broadcasting Company took place in 1995 when Disney purchased ABC and entered into the national television realm of the American Broadcasting Company also known as ABC.
  • eBay & PayPal merger: This conglomerate merger of eBay & PayPal merger took place in 2002 when eBay bought PayPal and combined their business, although they bought got split in 2015 as well due to pressure from the stockholders as well as also due to the swiftly moving business environments of payments in the market.
  • Amazon & Whole Foods merger: This conglomerate merger of Amazon & Whole Foods merger took place in 2015 as Amazon take control over the grocery market this merger is sometimes categorized as a horizontal merger too.
  • Conglomerate Merger Advantages And Disadvantages

Some of the advantages, as well as disadvantages associated with conglomerate merger, areas:

  • Conglomerate Merger Advantages

Some of the conglomerate merger advantages are as follows:

  • Business Diversification: Diversification of the business or expanding up of the business is the main conglomerate merger advantage which helps to overcome the risk and earn more profits by expansion of business.
  • Lower investment: There is a lower investment involved as a business is merged as well as diversified. A company is now operating in different industries by the process of conglomerate mergers.
  • Cross-selling products: Cross-selling products is possible when the process of conglomerate merger took place as business leads to higher profits and diverse market opportunities to sell the product.
  • Conglomerate Merger Disadvantages

Some of the conglomerate merger disadvantages are as follows:

  • Governance conflicts: There exist governance conflicts that may lead to disbalance in the business. There may be problems related to the accounting method used, etc.
  • The shift of Focus: There may be a Shift of Focus involved in the business where the focus of the business firm may shift to other areas other than their most valuable business sector, which can lead to poor performance of the business.
  • No Past Experience: There is No Past Experience of the firms or business as the companies have merged together have no idea about the functionalities of each other, creating a situation of chaos or mismanagement within the firm.

What is Merger?

Merger refers to the process where two or more companies or say two or more existing companies voluntarily or by will agree to mix up their business as one new company. The formation of a new business or company is for the purpose or objective to achieve higher market control, more profits, improve the financial and operations of the company, enlarge the research and development program of the company, enlarge the business of the company into new zones, etc.

A Merger normally occurs between the business firms that are operating in different industries or different categories or the firms located in diverse geographical locations.

  • Types of Mergers

 There exist various types of mergers, which are as follows:

  • Horizontal Merger
  • Vertical Merger
  • Conglomerate Merger
  • Concentric Merger
  • Forward Merger
  • Reverse Merger
  • Subsidiary Merger

As here we will understand What is a conglomerate merger?

Frequently Asked Questions Related To What Is A Conglomerate Merger:

  • What Do You Mean By The Conglomerate Merger?

A Conglomerate Merger can be defined as a union between companies or say a merger between firms that carry on business activities that are unrelated to each other firms or union business. So, A conglomerate is depicted as a large company that is composed of smaller companies which the larger company has acquired over time.

  • What Is An Example Of A Conglomerate?

A firm engaged in the business of Cloth manufacturing merges its business with A firm engaged in the business of stone manufacturing then this merger will be known as a conglomerate merger example.

  • What Are The 3 Types Of Mergers?

There exist various types of mergers, although the common 3 types of mergers are as follows:

  • Horizontal Merger
  • Vertical Merger
  • Conglomerate Merger
  • Is Amazon A Conglomerate?

Yes, Amazon is a Conglomerate Merger as Amazon & Whole Foods merge took place in 2015 as Amazon take control over the grocery market this merger is sometimes categorized as a horizontal merger too.

Conclusion:

We have understood What is a conglomerate merger? And also know Types of Conglomerate Mergers, examples of conglomerate mergers, conglomerate merger companies list, and conglomerate merger advantages and disadvantages. A Conglomerate Merger can be defined as a union between companies or say a merger between firms that carry on business activities that are unrelated to each other firms or union business. So, A conglomerate is depicted as a large company that is composed of smaller companies which the larger company has acquired over time. Thus, the meaning of What is a conglomerate merger? Is clear.

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