| Mergers and acquisitions |
From Economist.com
There are three sorts of mergers: horizontal integration, when two similar firms tie the knot; vertical integration, in which two firms at different points in the supply chain get together; and diversification, when two companies with nothing in common jump into bed. These can be a voluntary merger of equals, a voluntary takeover of one firm by another; or a hostile takeover-in which the management of one firm tries to buy a majority of shares in another.
Mergers in America are regulated by the Federal Trade Commission, and in Europe by individual countries (Europe's competition commissioner scrutinises cross-border mergers). In both places, mergers that are deemed to be against the public interest can be vetoed.
Merger activity generally comes in waves, and is most common when shares are overvalued. The late 1990s saw fevered activity. Then the pace slowed in most industries, particularly after September 11th 2001. It picked up again in mid-2003 as companies that weathered the global recession sought bargains among their battered brethren. By the start of 2006 a mergers and acquisitions boom was in full swing, provoking a nationalist backlash in some European countries.