These are corporations that have purchased competing companies in an attempt to eliminate the competition and gain market share. It would be like IBM purchasing Compaq, Dell and Gateway. Some horizontal mergers are illegal and are halted. Conglomerates - This is when one company buys other companies that are unrelated to their core business in an attempt to diversify. Corporations may become conglomerates after becoming very large through mergers and acquisitions of a variety of businesses.
Diversification is one of the main reasons for conglomerate mergers.
By having component businesses each making unrelated products, the overall sales and profits will be protected. For example, isolated economic events, such as bad weather or the sudden change of consumer tastes, may affect some product lines at some point, but not all at one time. Take a look at the graph below. The vertical merger expand the company upwards and down, the horizontal from side to side and the conglomerate moves off and does neither. The business of corporate mergers and acquisitions is an exciting and profitable one.