Why is it not sufficient to state that a merger should occur simply because the economic gains are positive?
A) Gains are typically of an accounting nature.
B) Shareholders of the target may capture all gains.
C) Merger cost should be negative after discounting.
D) The merger's gain must also exceed its NPV.

Question

Quizplus · Accepted Answer

The economic gains from a merger might be positive, but if the shareholders of the target company capture all the gains, the acquiring company's shareholders may not benefit, making the merger less attractive for them.

Why Is It Not Sufficient to State That a Merger