Compass Diversified Holdings Inc. has decided to buy Ergo Baby Carrier Inc., a newly emerging baby products company. Compass has looked to support small to medium sized companies that have the potential to grow despite the upset state of the economy. Ergo has proven its potential, gaining revenues of $22.8 million in 2009.
By merging with Compass, Ergo will benefit greatly, for Compass will further diversify the products the growing business offers. Not only will consumers now associate Ergo’s reputation with Compass, but they will also have a wider variety of products to choose from. This should increase consumer demand for Compass products. At the same time, Compass, investing in leaders of niche markets, will benefit from Ergo’s top notch specialization in baby carriers, baby backpacks, and other products that reflect this particular niche.
http://online.wsj.com/article/SB10001424052748704394704575496222162050434.html
Comparing this to Molly's post, I find the joining of these two companies more well-reasoned than the paper company buying out competition. Ergo will at least expand its consumer market, but the paper company mentioned in Molly's post will only maintain its current clientele.
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