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Fusion (merger) is the voluntary combination of assets of two or more companies in one organism which assume that the merger will improve their situation.

It is a form of cooperation between the potential Competitors, Suppliers, Producers and Customer s who have decided to jointly lead the project, or business, integrating and combining their resources and skills. Cooperation focuses on the development prospects of the market.

Types of mergers

Horizontal Mergers

Situation when two companies merge in the same sector and whose aim is to increase market share, or from different sectors, to meet the competition and increase their business.

Vertical Mergers

Partners combine the two companies belonging to the same branch, representing various stages of production. There are two types of this mergers: vertical mergers to the top which associate the company with other suppliers, and vertical mergers to the bottom, where the company seeks to merge with the company distribution network. It is a combination of companies involved in various places in the supply chain - manufacturer - distributor. Example: Production company acquires a trade or business of the previous chain of manufacture (e.g., a manufacturer of components). We eliminated a broker, so we can save money. We have more control over the value added to the product, because we are able to control a greater range of production activities and consequently, this can result in a slightly different pricing policy. Sometimes it happens, that company deprive competitors of access to sources of supply or distribution channels. Vertical merger is also used when there are difficulties with the development of new competencies or there are high barriers to entry. It is used also in the case of a high level of maturity of the previous or next sector.

Conglomerate Mergers

They lead to the creation of conglomerates, when manufacturing activity of both partners are not linked together.Such mergers rely on combining of the capital and organizational assets of strategic partners, operating in separate sectors, and often in different markets.Conglomerate mergers are based mainly on the use of the resources of one of the partners.

Related diversification merger

In this type of merger company is expanding the business, with a non-competitive divisions, which allows it to leverage its existing competencies.It is a form of diversification of the company.When there are high barriers to entry into a new sector, for example, company comes to the conclusion that it is necessary to enlarge its market share by such merger.

Concentration mergers

Rely on the connection of multiple companies, they usually take the form of horizontal merger or product-market merger.

Coordination merger

Most often it takes the form of horizontal and vertical merger of multiple companies.

Symmetric merger

This increase cooperation between partners who contributed even share to the common company. None of this companies have dominant role in a given economic sector.

Egalitarian merger

This merger combine the two companies more or less the same size.It is very rarely used type of merger.

Hostile and friendly acquisitions

Another way of classification is the division of merger on hostile and friendly types. Mergers are mostly friendly solutions, while at the time of joining dissimilar companies, where one of this companies dominated over the weaker company, we are dealing with acquisition, or a hostile takeover bid, which in turn can lead to the elimination of the acquired company.

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