In 1988, Philip Morris, the leading cigarette manufacturer in the United States, merged with Kraft Inc., the maker of several leading food brands such as Miracle Whip, Velveeta, and Maxwell House. What type of merger would this combination be classified as?

Question

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This merger is classified as a conglomerate merger because it involves two companies that operate in different industries—Philip Morris in cigarettes and Kraft in food products—combining. Conglomerate mergers typically involve companies that have no direct business overlap.

In 1988, Philip Morris, the Leading Cigarette Manufacturer in the United