Which one of these statements is correct? A)Cash acquisitions provide greater benefits to acquiring shareholders than stock acquisitions when V_AB

Question

Which one of these statements is correct? A)Cash acquisitions provide greater benefits to acquiring shareholders than stock acquisitions when V_AB < V_A + V_B. B)Cash acquisitions with positive NPVs are more expensive than comparable stock acquisitions to the acquiring shareholders. C)Acquiring firms dilute ownership when an acquisition is an all-cash transaction. D)The cost of a cash acquisition is dependent upon the acquisition gains. E)The acquiring firm's shareholders are better served if a negative NPV acquisition is a stock,rather than a cash,transaction.

Quizplus · Accepted Answer

In a negative NPV acquisition, using stock is preferable as it shares the loss with the target's shareholders, rather than solely impacting the acquiring firm's shareholders as in a cash transaction.

Which One of These Statements Is Correct