When a merger of two firms is achieved by one firm, automatically assuming all the assets and all the liabilities of the other firm, such a merger requires
A)no shareholder meeting to vote.
B)the approval of at least 50 percent of the stockholders (or as specified by corporate charters or state laws)of each firm.
C)that the management of the two firms be tossed out.
D)that the target firm search for alternative suitors.

Question

Quizplus · Accepted Answer

When one firm acquires another firm and assumes all its assets and liabilities, it is known as a merger. Such a merger requires the approval of at least 50 percent of the stockholders (or as specified by corporate charters or state laws) of each firm. This is usually done through a shareholder meeting where the shareholders of both companies vote on the proposed merger. Therefore, option B is the correct choice. Options A, C, and D are incorrect as they do not accurately reflect the requirements of a merger.

When a Merger of Two Firms Is Achieved by One