Which of the following factors influence the 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 usually makes the stock price higher

Question

Quizplus · Accepted Answer

All three factors are relevant in deciding between a merger and an acquisition of stock. Shareholders may prefer a direct deal to bypass target management and board of directors, while in a tender offer, some minority shareholders may not tender their shares, stopping complete firm absorption. Additionally, target management resistance may make the stock price higher, affecting the cost and profitability of the merger or acquisition.

Which of the Following Factors Influence the Choice Between Merger