Merger refers to two or more companies come together and form a new company. Merger is the corporate restructuring strategy to increase the profitability by reducing the cost, Mergers will help the companies to reduce the operating cost. In merger new entity will come in to existence.Merger may be of similar operating industry or from different industry according to the benefit companies will do the merger.By merging many companies supplychain will be utilized properly for the both the companies so the coat will be reduced.
Types of merger:
Horizontal merger: in this type Both the companies are from the similar operating industry.this type of merger will help in reducing the cost of production. Synergy will be high.
Verticle merger: Inthis type of merger companies are merged are from the different level of same industry.both companies are working in same industry but they are working in different level. One companies out put may be input for another company.
Conglamarate merger: In this type of merger companies which are working in different industry will come together and form new business. This will help in increase the brand value.
Merger will help the companies to get Synergy,where cost of production will comedown. Cost of supply will be reduced.by merger company can enter in to other industry also.it will help companies to increase the market share.
Mergers are aimed to reduce the cost of production and cost of supply chain. Also to increase the market share of the company.