Which of the following actions by an acquiring firm signals its belief that postmerger gains will be substantially larger than expected?
A) The acquiring firm makes a stock offer, since its stock value is priced lower than it will be postmerger.
B) The acquiring firm makes a cash offer, since this allows the acquirer to solely benefit from gains not yet reflected in the market.
C) The acquiring firm attempts to gain majority ownership, but not complete ownership.
D) The acquiring firm makes an offer with the condition that management must be replaced.
Correct Answer:
Verified
Q1: The following are sensible motives for mergers
Q2: The following are sensible reasons for mergers:
I.economies
Q4: AT&T and Time Warner is an example
Q5: Firm A plans to acquire Firm B
Q6: Firm A has a value of $100
Q7: Firm A has a value of $150
Q8: The market for corporate control includes
I.mergers;
II.spin-offs and
Q9: The following are dubious reasons for mergers:
I.diversification;
II.increase
Q10: The following are sensible motives for mergers:
I.prevent
Q11: Firm A has a value of $200
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