Definition of Horizontal Merger



Horizontal mergers are mergers of two companies operating in the same industries. For example the merger of Pepsi and Coca-Cola beverages will be a horizontal merger. There can be multiple objectives of horizontal mergers, for example, larger market share, economies of scale, and favorable distribution network.

 


There are other synergies attached to horizontal mergers. If Gillette is an expert in making sports products and Nike is an expert in making sports wear, then both companies jointly can produce a new range of products with greater demand and unique specifications that can capture more market share than their collective individual market shares. 


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