August 20, 2008, 2:41 pm
Types of MergersAccretive Merger:
Accretive mergers occur when a company with a high price to earnings ratio purchases a company with a low price to earnings ratio. This makes the purchasing company’s earnings per share increase. This type or merger is the opposite of a dilutive merger.
Congeneric Merger:
Congeneric Mergers take place when two merging companies are in the same general market but don’t have the same supplier or customer relationships.
Conglomerate Merger:
Conglomerate Mergers occur when two merging companies work in separate industries.
“Demerger”:
A “demerger” is a word sometimes used to describe a firm that instead of merging with another firm splits its original company in two creating a second company listed on the stock exchange.
Dilutive Merger:
Dilutive mergers take place when a company with a low price to earnings ratio acquires a company with a high price to earnings ratio. This causes the purchasing company’s earnings per share to decrease. This type of merger is the opposite of an accretive merger.
Horizontal Merger:
A Horizontal Merger occurs when two companies that produce like products in the same industry merge.
Vertical Merger:
Vertical Mergers take place when two companies that create the same product but in different stages of development merge.
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