Question

Anheuser-Busch, InBev NV, the maker of Bud Light, proposed a merger with Modelo, the maker of Corona. At the time of the proposed merger, AB InBev NV held 39% of the beer market, Miller/Coors held 26%, Modelo held 7%, and Heineken, the last of the big four held 6%. Other beer makers combined hold the remaining 22% of the U.S. beer market. The combination would give AB InBev NV 46% of the market. Modelo has been one of the market players that has resisted the parallel price increases in the industry.
Which of the following is correct?
a. The merger is simply an asset acquisition.
b. The merger is exempt under the failing company doctrine.
c. The merger proposed is a horizontal one.
d. The merger proposed is a vertical one.

Answer 1

Answer:

Option C. The merger proposed is a horizontal one

Explanation:

In the horizontal merger, the two or more than two companies acquire the company which is in the same industry. Such type of mergers are proposed because it would enable the company to force the other rivals to move according to the thier decisions that has affect on the other rivals or achieve what collectively is possible. So this increases the benefits through integration, access to better technology, increased market share and increased cost savings as well.