Which of the following factor(s)influence(s)the acquiring firm's choice between merger and an acquisition of stock?
I.Shareholders are dealt with directly to bypass target management and board of directors.
II.In a tender offer, usually some minority shareholders do not tender, stopping complete firm absorption.
III.Target management may be unfriendly and resist an offer. Resistance often increases the acquisition price.

Question

Quizplus · Accepted Answer

All three factors listed can influence the acquiring firm's choice between merger and acquisition of stock. The first factor (I) involves direct dealing with shareholders, which can be a benefit of a merger. The second factor (II) may push the acquiring firm towards a stock acquisition rather than a tender offer, as the latter can result in minority shareholders preventing a complete absorption of the target firm. The third factor (III) is also relevant, as it highlights the potential for resistance from target management, which may make a merger more attractive than an acquisition of stock. Therefore, all three factors influence the acquiring firm's decision, and the best answer is D.

Which of the Following Factor(s)influence(s)the Acquiring Firm's Choice Between Merger