Tandem Corporation is the target of a hostile takeover by Alpha Corporation.Management of Tandem fears for their jobs because of statements made by Alpha's management about the need to streamline the Tandem management.Tandem works out a deal with Beta Corporation for the two corporations to merge,with Beta surviving.Beta has indicated that it will leave present management intact.Two years after the merger with Beta,an independent consultant reports that there are too many levels of management in the combined corporation,and that thirty percent of management positions should be eliminated.In this circumstance:

Question

Quizplus · Accepted Answer

Tandem prevented the hostile takeover by a "white knight" merger with Beta, which is a legal tactic. The independent consultant's report about the excessive levels of management does not necessarily make Tandem's management liable to shareholders for the loss of profits, assuming they followed the "business judgment rule," which requires that their decisions are made in good faith and in the best interest of the corporation. Thus, the option D is the most appropriate choice.

Tandem Corporation Is the Target of a Hostile Takeover by Alpha