A merger in which an entirely new ﬁrm is created, with both the acquired and acquiring ﬁrms ceasing to exist, is called a _________________.
A) Divestiture.
B) Consolidation.
C) Tender offer.
D) Spinoff.
E) Merger.

Question

Quizplus · Accepted Answer

A consolidation, also known as a statutory merger, involves the creation of a completely new legal entity in which both the acquiring and acquired companies cease to exist as separate entities. This results in a new company with a new stock ownership, management structure, and board of directors.

A Merger in Which an Entirely New ﬁRm Is Created