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Merger analysis and related merger issues are addressed.

I need some assistance with answering the following question:

The four classifications of corporate mergers are (1) horizontal, (2) vertical, (3) cluster and (4) congeneric. Explain its meaning in the context of merger analysis in relation to (a) likelihood of government intervention and (b) likely to operate with synergy.

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When we're dealing with a horizontal merger, the chances of government intervention are increased to prevent a monopoly. Horizontal mergers take place when two companies in the same industry merge together and form one large company. Mergers between America Online and another provider, or if Apple and IBM were to merge, or mergers between Walmart and another huge super center would be a horizontal merger. The government has the power to prevent a horizontal merger if it can be proved that a monopoly would be created that would affect the commerce in the U.S. However, even though the chances for government intervention are greater, the synergy created by the merge would also be greater because we're dealing with firms in the same industry, so we would likely have a lot of compatibility between the two firms.

In a vertical merger, a company merges with a company where the product is used to produce the finished good. An example of a vertical merger would be a bike manufacturer merging with a ...

Solution Summary

The four classifications of corporate mergers are (1) horizontal, (2) vertical, (3) cluster and (4) congeneric. Explain its meaning in the context of merger analysis in relation to (a) likelihood of government intervention and (b) likely to operate with synergy.

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