Business mergers, as defined by the Britannica Encyclopedia, is when a corporate combination of two or more independent business corporations into a single enterprise, usually the absorption of one or more firms by a dominant one. A merger may be accomplished by one firm purchasing the other’s assets with cash or its securities or by purchasing the other’s shares in the acquired firm. This thus, results in the company acquiring the other company’s assets and liabilities.
There are various types of business mergers. There are vertical forward integration, vertical backward integration, lateral integration and conglomerate. For example, when a sugar factory merges with a supermarket such as TESCO, it is considered a vertical forward integration because it is merging with a tertiary sector while a sugar factory is a secondary business sector – it processes raw materials and sends them off to a retail or wholesaler for goods to be sold. However, when the sugar factory merges with suppliers such as sugarcane factory, it is considered a vertical backward integration because the sugarcane factory is a primary business sector.
Also, if RHB – an Investment bank merges with Commercial banks like HSBC bank or CitiGroup etc, it is considered a conglomerate as commercial banks cater to only individual clients whereas investment banks are financial institutions that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. Merging these two banks would result in a Universal Bank which participates in many kinds of banking activities.
However, when RHB Investment Bank merges with OSK Investment bank, it is under lateral integration. This is because both RHB & OSK are both at the same level - Investment Banks and are at the same field – Business and this is what I will be talking