When one firm acquires another solely for the purpose of diversification, the merger is called a horizontal merger.

Name: When one firm acquires another solely for the purpose of diversification, the merger is called a horizontal merger.
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A merger for the purpose of diversification, where the firms involved are not competitors or operating in the same industry, is typically called a conglomerate merger. A horizontal merger involves companies that are direct competitors in the same industry.

When One Firm Acquires Another Solely for the Purpose of Diversification