Two companies could merge for many reasons, but the most common reasons for any business combination are economic at their core. Here are some of the various economic reasons:

• Increased capabilities: Two companies can combine to leverage costly manufacturing operations, thereby allowing them to cut costs and have expanded research and development opportunities.
• Diversifying products or services: Another reason for merging companies is to complement a current product or service. Two firms may be able to combine their products or services to gain a competitive edge over others in the marketplace. For example, in 2008, HP bought EDS to strengthen the services side of their technology offerings (this deal was valued at about US$13.9 billion).