If a supplier merges with a retailer, what type of merger is this considered?

When a supplier merges with a retailer, it is considered a vertical merger. This type of merger occurs when companies at different stages of the supply chain come together. In this case, the supplier provides raw materials or products to the retailer, which sells those goods to consumers.

The primary goal of a vertical merger is to increase efficiency and reduce costs by streamlining the processes from production to sales. By merging, the supplier and retailer can better coordinate inventory management, logistics, and pricing strategies, ultimately providing greater value to their customers.

In contrast, horizontal mergers involve companies operating at the same level of the supply chain (like two retailers or two suppliers), market extension mergers involve companies that serve different markets but offer similar products, and conglomerate mergers involve firms in unrelated businesses. These differences highlight why the merger of a supplier and a retailer is specifically classified as vertical.