Firms have more than one option for diversifying; among these options are the following: corporate entrepreneurship, strategic alliances, and mergers and acquisitions. Mergers and acquisitions can have a consolidating effect in the industry, and may force other industry players to merge. When a company 'buys' another company with a cash transaction, a newly legal entity is formed.
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This is true. The last sentence makes a really interesting point, and that's because many people don't know that the Federal Trade Commission (FTC) actually has veto power over acquisitions ...
This solution discusses the mergers and acquisitions question listed. A thorough explanation is provided.