Deck 11: Corporate Restructuring

Question 1

If a public company issues stock in its own subsidiary, these shares do not have to be registered by the SEC in order to be publicly traded as the parent company's shares are already registered.

Answer 1

False

Question 2

The sale of Miller by Altria accomplished what:

A)Narrowed Altria's strategic focus
B)Improved Altria's overall financial performance
C)Enabled Inbev to gain market share
D)All of the above
E)Both a and b
F)Both a and c

Answer 2

E

Question 3

The trend in the number of divestitures and sell-offs tends to be opposite that of M&As and the movement in the economy in general.

Answer 3

False

Question 4

Which of the following studies showed positive shareholder wealth effects for sell-offs?

A)Cusatis, Miles, and Wooldridge
B)JP Morgan
C)Kudla and McInish
D)All of the above
E)Both a and c

Question 5

The sell-offs by Starwood following its acquisition of Taittinger were motivated by:

A)Eliminating a nonstrategic component
B)Eliminating a poorly performing unit
C)Raising cash to pay off debt
D)None of the above

Question 6

Asian spin-off volume:

A)Historically follows the same pattern as the U.S.spin-off volume
B)Followed the same pattern as European spin-off volume
C)Has declined in the past when spin-offs rose in European and the United States
D)None of the above

Question 7

Sell-offs of their parts supplier units enabled GM and Ford to successfully use sell-offs to avoid union compensated-related liabilities of those units.

Question 8

Kaplan and Weishbach found that diversifying deals were which of the following with respect to the likelihood of subsequent divestiture?

A)Four times more likely to be divested
B)Equally likely
C)Two times less likely
D)None of the above

Question 9

Which of the following are examples of pension-related employee benefit plans?

A)Defined benefit
B)Defined contribution
C)Profit sharing
D)All of the above

Question 10

Boise Cascade abandoned its core business and focused on the business of Office Max, which it had previously acquired.

Question 11

Involuntary divestitures generally have what effects?

A)Positive
B)Negative
C)No consistent effects
D)None of the above

Question 12

In a spin-off the entity being separated from the parent company often is assigned specific debt attributable to it as part of the sale process.

Question 13

First Data shareholders were able to realize increased value when Western Union was spun off.

Question 14

The trend in European sell-offs is opposite that of the United States.

Question 15

Which of the following are common reasons cited for selling off prior acquisitions?

A)Poor fit
B)Poor performance
C)Cash flow needs
D)All of the above
E)None of the above

Question 16

The following describes reverse synergy:

A)2 + 2 = 5
B)2 + 2 = 4
C)4 - 1 = 5
D)none of the above

Question 17

A defensive spin-off is where a target sells off a division to make the company less attractive to bidders.

Question 18

Cash flow needs motivated the sell-off of Hertz by GM.

Question 19

Many studies covering a quarter of a century document the positive shareholder wealth effects of sell-offs.

Question 20

In the United States, in order for a spin-off to be nontaxable, the following must be the case:

A)Both the parent company and the spun-off entity must be in business for at least five years before the restructuring.
B)The subsidiary must be at least 80% owned by the parent company.
C)The parent company and the spun-off entity must be in the same industry
D)Both a and b
E)Both b and c