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You are correct in asking "Why was it so unusual".
Think of it like a family business that experienced a Divorce. Many times, it's in the best financial interest of both parties to continue "business as usual" no matter what your personal feelings are about each other. It was just business for both companies.
In the earlier 1980's Giant did produce Schwinn's lower price point models. But I think it was CBC that produced the lower end by 1992. By that time period Giant was building Schwinn's mid-tier line.
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