Which of the following best describes a vertical merger?

A vertical merger involves the joining of companies at different levels of the supply chain within the same industry. This type of merger typically seeks to enhance efficiency, improve supply chain management, reduce costs, and increase market control. By combining entities that operate at different stages of production or distribution, a company can achieve better coordination, lower transportation costs, and strengthen its competitive position.

For example, if a manufacturer merges with its supplier, it can benefit in multiple ways, such as securing a stable supply of raw materials and reducing transaction costs associated with sourcing and procurement. This synergy allows the newly formed entity to operate more cohesively, ultimately benefiting customers with lower prices or improved product offerings.

The other options describe different types of mergers or acquisitions. Merging companies that provide the same products is characteristic of a horizontal merger, while merging companies in unrelated industries pertains to conglomerate mergers. Acquiring companies based solely on geographic proximity does not necessarily create the efficiencies seen in vertical mergers and does not focus on integrating operations across different supply chain levels.