Merger:
A merger can be defined as an agreement that unifies two existing firms into a single new firm. Mergers can be of different types and can occur due to different reasons. However, the primary reasons why mergers and acquisitions occur are to expand the reach of a firm or diverse the firm into divisions or earn more profits.
Horizontal merger:
Horizontal mergers are mergers that take place between firms that deal with similar products in a common market. A horizontal merger usually reduces the degree of competition in the market. Some good and interesting examples of horizontal mergers are the bank mergers of 1980s and the merger of HP and Compaq.
To determine:
The reason why a horizontal merger might create value for shareholders.
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