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LSDefine
Simple English definitions for legal terms
vertical merger
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A quick definition of vertical merger:
A vertical merger is when two companies that are involved in different parts of making a product or providing a service join together. For example, a company that makes cars might merge with a company that sells cars in order to have more control over the whole process. This is different from a horizontal merger, where two companies that do the same thing join together.A more thorough explanation:
A vertical merger is a type of merger that occurs between two businesses that operate at different levels of the same product's supply chain. For example, a manufacturer merging with a retailer. This type of merger is different from a horizontal merger, which occurs between two businesses that operate at the same level of the supply chain, such as two manufacturers of the same product.
One example of a vertical merger is the merger between Amazon, an online retailer, and Whole Foods, a grocery store chain. Amazon, as an online retailer, operates at a different level of the supply chain than Whole Foods, a grocery store chain. By merging, Amazon can expand its reach in the grocery market and gain access to Whole Foods' physical stores.
Another example of a vertical merger is the merger between Comcast, a cable company, and NBCUniversal, a media company. Comcast, as a cable company, operates at a different level of the supply chain than NBCUniversal, a media company. By merging, Comcast can gain access to NBCUniversal's content and expand its offerings to its cable subscribers.