Exam 18: Corporate Restructuring

In a(n) ____, stock in a subsidiary or a newly incorporated division is distributed to shareholders of the parent company.

In a Leveraged buyout (LBO):

Companies A and B combine to form Company X and cease to exist as separate entities. This is an example of ____.

When the managements and boards of target companies oppose mergers they usually publicly state that the merger is not in their personal best interest, but the real reason for their opposition is that the acquirer generally isn't offering the target's stockholders enough for their shares.

In financial mergers, the acquiring company may not have any expertise in the target company's business.

If an acquiring company is willing to pay $20 per share for a target's stock, and its own stock is selling for $10, which of the following is not a reasonable payment for 100 shares of the target?

The advantage of the parent(holding company)-subsidiary organization is that it:

An unfriendly merger or hostile takeover occurs only when one of two bitterly competitive rival firms acquires the other.

When a recession came along in the late 1980s:

In a consolidation, all of the combining firms cease to exist as separate corporations.

Which of the merger waves in the United States resulted in the concentration of several major industries into oligopolies?

Acquiring firms rarely pay more than a small premium over their target's premerger market price, because to do so would be an irrational transfer of wealth to the target's stockholders.

What type of mergers is generally the subject of antitrust laws?

A combination in which all of the combining companies are dissolved and a new firm is formed is a:

In Chapter 7 bankruptcy, firms are voluntarily reorganized. Chapter 11, on the other hand, requires immediate liquidation.

A group of companies that acts like a monopoly is a:

The late 1960's werethe era of the conglomerate merger.

It is generally accepted that horizontal mergers (between competitors) decrease competition. Imagine a three firm industry in which the competitors' market shares are as follows: A 26\% B 20 C 54\% Is it possible that a merger between A and B would increase competition in the industry to the benefit of customers?

Merger analysis is always a straightforward exercise in capital budgeting.

In a merger, all but one of the combining firms ceases to exist as a legal entity.