Merger between 'Larsen and Toubro (L & T)' with key business area in construction engineering and manufacturing critical equipments and 'Voltas Limited', an Indian multinational electronics company specialized in manufacturing home appliances, whose business fields are totally unrelated, has taken place. Identify and explain the type of merger between 'Larsen and Toubro (L & T)' and 'Voltas Limited'.

Question

Accepted Answer

The type of merger between Larsen and Toubro (L&T) and Voltas Limited is a **Conglomerate Merger**.

A conglomerate merger takes place between firms in totally unrelated business activities. In this case, L&T has its key business area in construction engineering and manufacturing of critical equipments, while Voltas Limited specialises in manufacturing home appliances.

These two companies operate in completely unrelated business fields — one in construction/heavy engineering and the other in consumer electronics/home appliances. Since their business fields are totally unrelated, their merger qualifies as a conglomerate merger.

A conglomerate merger can be of two types: Pure conglomerate (firms with nothing in common) and Mixed conglomerate (firms seeking product or market extensions). This appears to be a pure conglomerate merger as the two firms have nothing in common in their business operations.