If a company that drilled for and produced oil acquired a firm which refined oil into gasoline, this would be referred to as a
A) horizontal merger.
B) vertical merger.
C) conglomerate merger.
D) reverse merger.

Question

Quizplus · Accepted Answer

The acquisition of a firm that is involved in a different stage of the same industry, such as the acquisition of a refining company by an oil producer, is referred to as a vertical merger. In this case, the oil producer gains greater control over the supply chain and may realize cost savings and other synergies. Horizontal mergers involve the combination of two companies that operate in the same market, while conglomerate mergers involve the acquisition of companies in unrelated industries. Reverse mergers refer to a process by which a private company acquires a public company as a means of going public.

If a Company That Drilled for and Produced Oil Acquired