Deck 41: A: Corporate Merger,consolidation, Termination

Question 1

If one corporation owns all of the shares of another corporation,it is referred to as the target corporation.

Answer 1

False

Question 2

A target corporation's attempted takeover of an acquiring corporation is referred to as the Pac-Man defense.

Answer 2

True

Question 3

The officers and other employees of each corporation involved must approve a merger.

Answer 3

False

Question 4

The board of directors of each corporation involved must approve a share exchange.

Question 5

Except in a short-form merger,the shareholders of both corporations must approve a merger or other plan of consolidation.

Question 6

When dissolution takes place by voluntary action,the shareholders are responsible for winding up the affairs of the corporation.

Question 7

The results of a consolidation are different from those of a merger-both companies remain.

Question 8

A tender offer can be conditioned on the receipt of a specified number of outstanding shares by a certain date.

Question 9

A self-tender is a company's offer to acquire stock from its own shareholders.

Question 10

A corporation that is selling all of its assets must obtain approval only from its shareholders.

Question 11

A merger involves the legal combination of two or more corporations,only one of which continues to exist.

Question 12

Shareholder appraisal rights do not usually extend to short-form mergers.

Question 13

Generally,a corporation that purchases the assets of another corporation is not automatically responsible for the liabilities of the selling corporation.

Question 14

When a consolidation takes place,the newly formed corporation issues shares or pays fair consideration to the shareholders of any corporation that ceases to exist.

Question 15

When a corporation is dissolved voluntarily,the corporation must notify its creditors of the dissolution.

Question 16

The power to merge is conferred by statute.

Question 17

Winding up is the process by which corporate assets are valued before a merger or other plan of consolidation.

Question 18

Dissolution can be brought about voluntarily by the directors and shareholders of a corporation.

Question 19

An attempted takeover can succeed even if it would result in a substantial increase in the acquiring corporation's market power.

Question 20

In some circumstances,a shareholder may petition a court to have the corporation dissolved.

Question 21

Nina is a dissenting shareholder of Mediterranean Olive Oil Company whose management is consid?ering a tender offer by Healthwise Foods,Inc.Nina and Mediterranean cannot agree on the fair value of the stock.The value will be determined by

A)a court.
B)Nina.
C)Mediterranean.
D)Healthwise.

Question 22

Pink Boutique Company and Purple Kiosk Company decide to consolidate.This corporate combination does not require the approval of

A)Pink and Purple's directors.
B)Pink and Purple's officers.
C)Pink's shareholders.
D)Purple's shareholders.

Question 23

Fact Pattern 41-1B
Shrimp Boat Company decides to consolidate its operations with Trawlers,Inc. ,to form Coastal Fishers Corporation (CFC).
Refer to Fact Pattern 41-1B.Trawlers had rights in certain property.Af?ter the consolidation,CFC acquires the rights

A)automatically.
B)only after completing certain additional statutory procedures.
C)only if Trawlers' former shareholders expressly approve.
D)only if the acquisition is a specified result of the consolidation.

Question 24

Fact Pattern 41-2B
Mega Corporation wants to gain control of MiniCo,Inc.The companies negoti?ate for several months,without coming to terms.Mega decides to pursue a takeover at?tempt.MiniCo decides to resist.
Refer to Fact Pattern 41-2B.MiniCo issues shares that its shareholders can exchange for cash if a takeover is successful,intending to make Mega's takeover attempt too expensive.This is a

A)crown jewel defense.
B)Pac-Man defense.
C)poison pill defense.
D)white knight defense.

Question 25

Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation.With respect to Heavy Hydraulics's liabilities,Giant Lift is

A)automatically responsible.
B)not responsible under any circumstances.
C)responsible if Heavy Hydraulics is a competitor of Giant Lift.
D)responsible if the sale is actually a merger or consolidation.

Question 26

Guaranty Financial Corporation merges with Fraternal Bank Corporation,with Guaranty absorbing Fraternal.After the merger

A)a different,new entity is the surviving corporation.
B)Guaranty and Fraternal are both surviving corporations.
C)Guaranty is the surviving corporation.
D)Fraternal is the surviving corporation.

Question 27

Like other corporations,Riveters Construction Company can expand its operations through

A)a liquidation and distribution of its assets.
B)a purchase of substantially all of the assets of another corporation.
C)articles of dissolution filed voluntarily with the state.
D)the appointment of a receiver to wind up the corporate affairs.

Question 28

Realty Credit Company and Security Mortgage Corporation plan to con?solidate.Most likely,the articles of consolidation will be filed with

A)the county recording office.
B)the local realtors' association.
C)the state's secretary of state.
D)the federal Bureau of Land Management.

Question 29

Fact Pattern 41-1B
Shrimp Boat Company decides to consolidate its operations with Trawlers,Inc. ,to form Coastal Fishers Corporation (CFC).
Refer to Fact Pattern 41-1B.The articles of consolidation dif?fer from Shrimp Boat's articles of incor?poration.The articles

A)are replaced by Trawlers' articles of incorporation.
B)are replaced by the articles of consolidation.
C)effectively prevent the consolidation.
D)prevail.

Question 30

Fact Pattern 41-2B
Mega Corporation wants to gain control of MiniCo,Inc.The companies negoti?ate for several months,without coming to terms.Mega decides to pursue a takeover at?tempt.MiniCo decides to resist.
Refer to Fact Pattern 41-2B.MiniCo solicits a merger with NuNation Corporation,a third party,which makes a better offer to MiniCo's share?holders.NuNation is a

A)crown jewel.
B)Pac-Man.
C)poison pill.
D)white knight.

Question 31

Nadia is a shareholder of Open Air Productions,Inc.Nadia could normally ex?er?cise appraisal rights if Open Air participated in

A)a share exchange.
B)a dissolution.
C)a takeover.
D)a winding up.

Question 32

Fact Pattern 41-2B
Mega Corporation wants to gain control of MiniCo,Inc.The companies negoti?ate for several months,without coming to terms.Mega decides to pursue a takeover at?tempt.MiniCo decides to resist.
Refer to Fact Pattern 41-2B.MiniCo is

A)an alien corporation.
B)an acquiring corporation.
C)a receiver.
D)a target corporation.

Question 33

A merger between Grain Mills Corporation and Farm2Fork Distribution Inc.can be expressed as Grain Mills + Farm2Fork =

A)Farm2Fork.
B)Harvest Dining Corporation.
C)Harvest Dining Corporation + EZ Brewing Company.
D)EZ Brewing Company.

Question 34

Mall Stores Corporation owns 95 percent of the shares of Niche Shoppes Corporation.Through a certain transaction,Mall Stores combines with Niche Shoppes,but only Mall Stores continues to exist.This is

A)a consolidation.
B)a share exchange.
C)a short-form merger.
D)a termination.

Question 35

Office Company and Keen Company wish to combine all assets,stock,and personnel into a new firm to be called OK Corporation.This is

A)a consolidation.
B)a merger.
C)a share exchange.
D)a takeover.

Question 36

Java Corporation wants to purchase all of the assets of Kaffee Corporation.Loki is a Kaffee shareholder.The approval of Loki and other Kaffee shareholders is necessary

A)in all circumstances.
B)in no circumstances.
C)only if Kaffee will be paid with unauthorized,unissued stock.
D)only if Java assumes Kaffee's liabilities as part of the deal.

Question 37

Fact Pattern 41-1B
Shrimp Boat Company decides to consolidate its operations with Trawlers,Inc. ,to form Coastal Fishers Corporation (CFC).
Refer to Fact Pattern 41-1B.Trawlers owed money to View Harbor Storage and other creditors.After the consolidation,CFC must pay

A)all of Trawlers' debts.
B)half of Trawlers' debts.
C)none of Trawlers' debts.
D)only debts that Trawlers incurred after consolidation was proposed.

Question 38

Ruff Games,Inc. ,wishes to ac?quire a controlling interest in Sport Toy Com?pany by buying its stock.A public offer by Ruff Games to Sport Toy share?holders is

A)a buyout notice.
B)a golden parachute.
C)an acquisition call.
D)a tender offer.

Question 39

Corn Candy Corporation (CCC)has a right of action against Bio Farms,Inc.CCC merges with Agri Sweeteners,Inc. ,with Agri absorbing CCC.After the merger,CCC's right of action against Bio Farms can be exercised by

A)CCC.
B)Agri Sweeteners.
C)Bio Farms.
D)no one.

Question 40

Motor Parts Corporation offers to buy the stock of NASCAR Products Corporation (NPC).NPC's directors oppose the offer.Orin and other NPC shareholders file a suit,alleging a breach of the directors' fiduciary duties.Most likely,the court will

A)apply the business judgment rule to analyze the directors' acts.
B)dismiss the suit as a non-judicial dispute over "fair value."
C)evaluate the terms of the deal on the basis of antitrust law.
D)order the shareholders to be paid a "premium" for their stock.

Question 41

Marble Meats Corporation (MMC)proposes to combine with Natural Farms,Inc. ,and asks MMC shareholders to vote on the proposal.Omar,an MMC shareholder,votes against it,but is outvoted by the other shareholders.Is there an action that Omar can take to avoid being forced to go along with the transac?tion? If so,what can he do? After the combination,Natural Farms ceases to exist.MMC is the surviving firm.What type of combination is this?

Question 42

Brock is a shareholder of Competent Homebuilders Corporation (CHC).For the last few years,business has not been profitable for CHC.The firm has lost money on its operations.There has been some profit through sales of company assets,but the board of directors has refused to declare a dividend.This last year,the firm's accountants failed to file fed?eral in?come tax returns and the board refused to pay the tax.Brock takes a close look at the firm and protests to the board,in particular over the fail?ure to declare a dividend,but the board ignores the complaint.Which of these events,if any,would form a ground for a court to order the dissolu?tion of CHC,on Brock's petition? If the court denies the petition,could Brock and the other shareholders dissolve CHC?