Which type of merger is characterized by combining companies in different stages of production?

A vertical merger occurs when companies operating at different stages of production within the same industry combine. This type of merger allows the resulting company to control more of its supply chain, which can lead to increased efficiencies, cost savings, and better access to raw materials or distribution channels. For instance, if a manufacturer merges with a supplier of its raw materials, this vertical integration can streamline operations and improve coordination between production processes.

In contrast, horizontal mergers involve companies at the same stage of production or within the same industry, aiming to increase market share or reduce competition. Market mergers are somewhat ambiguous and often do not align with the definition of mergers related to production stages. Conglomerate mergers occur when companies in unrelated businesses combine, focusing more on diversification rather than production stages. Thus, the nature of a vertical merger is distinct and specifically tied to the stages of production, reinforcing the correct identification of this type of merger.