Horizontal merger

A horizontal merger is the combination of two firms in the same industry. A merger between the firms allows them to combine product lines and achieve a higher combined market share within the industry. This approach may lead to economies of scale, especially if the production processes of the organizations are combined. There may also be synergies from the elimination of overlapping facilities and staff. Further, the combined product lines may be more extensive than what one firm could achieve alone, allowing the combined company to sell into additional market niches.

Horizontal mergers are more common when the initial growth of an industry is beginning to slow down, since this is the point at which some entities are more likely to fail, and so will be snapped up by their competitors.

Related Courses

Business Combinations and Consolidations 
Mergers and Acquisitions