Which of the following statements is most CORRECT?
A) Regulations in the United States prohibit acquiring firms from using common stock to purchase another firm.
B) Defensive mergers are designed to make a company less vulnerable to a takeover.
C) Hostile mergers always create value for the acquiring firm.
D) In a tender offer, the target firm's management always remain after the merger is completed.
E) A conglomerate merger is one where a firm combines with another firm in the same industry.

Question

Quizplus · Accepted Answer

Defensive mergers are indeed designed to make a company less vulnerable to a takeover. Options A, C, D, and E are incorrect. Regulations in the United States do not prohibit acquiring firms from using common stock to purchase another firm. Hostile mergers do not always create value for the acquiring firm. In a tender offer, the target firm's management may or may not remain after the merger is completed. A conglomerate merger is one where a firm combines with another firm in a different industry.

Which of the Following Statements Is Most CORRECT