Consolidating Product Lines via Mergers and Acquisitions: Evidence From the USPTO Trademark Data

Using a new trademark-based product market competition measure and a novel trademark-merger data set over the period 1983-2016, we show that companies facing greater product market competition aremore likely to be acquirers. We further showthat postmerger, compared to their nonacquiring peers, acquirers consolidate their product offerings by discontinuing more existing product lines and developing fewer newproduct lines. Using a quasi-experiment based on bids withdrawn due to exogenous reasons helps us establish the causal effect of deal completion on product-market consolidation. We conclude that acquisitions create product market synergies by cutting overlapping product offerings to achieve cost efficiency.