Caterpillar's payment of a 32% premium for the acquisition of Bucyrus in 2011 and subsequent need to issue more stock illustrates the acquisition problem of
A) integration difficulties.
B) inability to achieve synergy.
C) large or extraordinary debt.
D) managers overly focused on acquisitions.

Question

Quizplus · Accepted Answer

Caterpillar's payment of a 32% premium for the acquisition of Bucyrus in 2011 resulted in the company incurring a large amount of debt, which required it to issue more stock to mitigate the impact. This highlights the problem of large or extraordinary debt associated with acquisitions.

Caterpillar's Payment of a 32% Premium for the Acquisition of Bucyrus