Cassius Ltd and Brutus Ltd agreed to merge by forming another company,Casca Ltd,which acquired all of the share capital of the two companies in a share exchange.Cassius Ltd was a much larger company than Brutus Ltd with several large equity stakeholders so that the Board of Cassius Ltd emerged from the business combination with the power to dominate the operating and financial policies of the merged entity.Based on these facts:
A) Casca Ltd must be the acquiring entity since it acquired the share capital of Cassius Ltd and Brutus Ltd.
B) Cassius Ltd is the acquiring entity since its management emerges as the dominant power in the merged entity.
C) Neither Cassius Ltd nor Brutus Ltd can be the acquiring entity since their equity securities have been acquired by Casca Ltd.
D) None of the above.

Question

Quizplus · Accepted Answer

Cassius Ltd is the acquiring entity because its management emerged as the dominant power in the merged entity, despite the fact that the share capital was acquired by Casca Ltd. The size and power of Cassius Ltd's equity stakeholders gave it this dominance.

Cassius Ltd and Brutus Ltd Agreed to Merge by Forming