So, let’s say a consumer goods company purchases a medical device distributer. That is obviously conglomerate. But what if the same parent company later buys a medical device manufacturer, is that still conglomerate since the parent–not the portfolio company–made the acquisition or is it vertical?
Thanks!
I’m not sure if you look through to the underlying portfolio company or not, but my guess would be it’s vertical.
It is still a conglomerate, isn’t it? One part is a consumer goods and the other is a medical company. The medical company has a vertical advantage now since it manufacturates an important part of its own products. Something that deserves a better disclosure by the way.
It will still be a conglomerate as long as it is into multiple business lines which are unrelated.
As far as the parent co. buying a medical device manufacturer is concerned, it is Backward Integration.