Larger companies can get better deals from their suppliers. It can be a nice alternative to bankruptcy for a company which is unprofitable on its own. It would allow for integrations which would be all but impossible with separate companies.

Of course in practice it rarely works out like that. Megacorps usually do acquisitions to get rid of competition or to obtain technology. The smaller company is almost always completely gutted within a few years, to the detriment of their original customer base.