Exam 20: External Growth Through Mergers

If an acquiring firm's merger proposal was initially rejected by a target firm's management and its board of directors, the acquiring firm could utilize a tender offer to gain control of the target firm.

Risk-averse investors may discount the future earnings of the merged firm at a higher rate if they move in different directions during business cycles.

Selling stockholders may receive a price well above current market or book value.

Stockholders of acquired firms in mergers tend to be more concerned with future earnings and dividends exchanged than with the market value exchanged.

Nonfinancial motives for mergers include

Synergy is said to occur when the whole is

Which of the following type of merger decreases competition?

A "takeover tender offer" describes the attempted purchase of a firm with the consent of that firm's management.

A business combination of two or more companies in which the resulting firm maintains the identity of the acquiring company is defined as a

A "takeover tender offer" lets a company attempt to acquire a target firm against its will.

The potential of a tax loss carryforward has no effect when considering the acquisition of a company.

The rising ratio of divestitures to new acquisitions that occurred in the past suggests that

The portfolio effect in a merger has to do with

White knights

Mergers often improve the financing flexibility that a larger company has available.

Which of the following is NOT a potential benefit of a merger?

Which of the following is NOT a form of compensation that selling stockholders could receive?

In a horizontal merger, the integration that occurs comes from acquiring companies that supply resources to the company's production process.

Vertical integration usually represents acquisition of a competitor.

Sandler Inc. plans to acquire Young Corp. Information on each for last year and today, the last day of that period, follows (all shares outstanding are common shares):