This type of merger takes place between companies that sell the same products but compete in different markets. Companies participating in a market expansion merger strive to access a larger market and hence a broader customer base. To expand their markets, Eagle Bancshares and RBC Centura merged in 2002. Non-overlapping companies will only merge if it is reasonable from the shareholder Wealth perspective, i.e. whether companies can create synergies that include savings in value, performance and costs. A conglomerate merger emerged when Walt Disney merged with the American Broadcasting Company (ABC) in 1995. This is a merger between two or more unrelated companies. Companies may operate in different industrial sectors or in different geographic regions. A simple conglomerate consists of two companies that have nothing in common.
On the other hand, a mixed conglomerate occurs between organizations that, although active in unrelated activities, are effectively seeking to expand products or markets through concentration. Mergers are the most common way to gain market share, reduce operating costs, expand into new territories, merge common products, increase revenue and increase profits – all of which should benefit corporate shareholders. Following a merger, the shares of the new company will be distributed to the current shareholders of the two original companies. In the case of R and D involving large companies with many shareholders, a shareholder representative should participate in the negotiations in order to defend their interests. This could be one of the majority shareholders or it could be a professional company hired for that purpose. An ingenious fusion is also called product extension fusion. It is a combination of two or more companies operating in the same market or sector with overlapping factors, such as technology, marketing, production processes and research and development (R -D). A product extension merger is achieved when a new line of products from one company is added to an existing product line of the other company. If two companies become a business as part of a product extension, they can have access to more consumers and, therefore, a greater market share. An example of an ingenious merger is Citigroup`s 1998 union with Travelers Insurance, two companies with complementary products. The agreement contains all the useful information about the merger and begins with an opening sale that lists the price of the transaction and the details of the purchase. Other elements of the agreement include insurance and guarantees, agreements, conditions, compensation procedures and termination procedures and remedies.
A merger is the voluntary merger of two companies on largely identical terms into a new legal entity. A final merger agreement is also applicable for other purposes. These agreements are also used for acquisitions consisting of the acquisition of shares and acquisitions consisting of asset acquisitions. When two companies manufacture product fusion parts or services, the union is called vertical merger. A vertical merger occurs when two companies operating at different levels within the supply chain of the same sector combine their activities.