A company engaged in a cohol manufacturing merged with a cigarette manufacturing firm. What type of merger is this?

Horizontal merger

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Product extension merger

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Market extension merger

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Vertical merger.

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Solution

The correct option is A Product extension merger
Horizontal merger is merger of two competition firms doing same business Vertical merger is merger of two companies which are at different level of production operating in same industry. Product extension merger is the merger of two companies which have the same customers with related products and services. The objective is to complement the portfolio and cross-sell products and services and is often driven by economies of scale upstream in sales and marketing.

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