Series 79 practice questioneasyMerger Types
When a manufacturer acquires one of its primary raw material suppliers, this transaction is best described as a:
- AConglomerate merger
- BVertical merger✓ Correct answer
- CHorizontal merger
- DForward triangular merger
Explanation
Why B — Vertical merger
A vertical merger occurs when two companies at different stages of the supply chain combine, such as a manufacturer acquiring a supplier (backward integration) or a distributor (forward integration). Vertical mergers can improve supply chain efficiency and reduce costs. They generally receive less antitrust scrutiny than horizontal mergers because they do not directly eliminate a competitor.
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