Why do companies merge?
Diversification can be achieved through M&A
When acquiring an unrelated company or merging with it, one can penetrate a completely new market.
An M&A can also help a company to increase its market share in the short term
This is achieved by horizontal integration. This is not only much faster than to expand internally, the company also eliminates a competitor in the process, as well as being able to leverage the strategic advantages of the acquired company.
By integrating upstream or downstream in the value chain, a firm can decrease its cost and save the margins that the supplier or retailer were previously charging.
There are several other benefits to M&A, including decreasing cost, tax efficiencies, and leverage.