A merger in which an entirely new ﬁrm is created and both the acquired and acquiring ﬁrms cease to exist is called a:
A)divestiture.
B)consolidation.
C)tender offer.
D)spinoff.
E)conglomeration.

Question

Quizplus · Accepted Answer

A consolidation, also known as a merger of equals, is a type of merger in which an entirely new firm is created and both the acquired and acquiring firms cease to exist. This is different from other types of mergers such as acquisitions or takeovers, in which one company takes over another but both companies remain separate legal entities.

A Merger in Which an Entirely New ﬁRm Is Created