When a merger of two firms is achieved by one firm,automatically assuming all the assets and all the liabilities of the other firm,such a merger requires:
A)no shareholder meeting to vote.
B)the approval of at least 50% of the stockholders (or as specified by corporate charters or state laws)of each firm.
C)that the management of the two firms be tossed out.
D)that the target firm search for alternative suitors.

Question

Quizplus · Accepted Answer

When one firm assumes all the assets and liabilities of another firm, it is known as a merger. Such a merger requires the approval of at least 50% of the stockholders of each firm (or as specified by corporate charters or state laws). Shareholder meetings are necessary to vote on the merger proposal. Therefore, option A is incorrect. The management of both firms may be impacted by the merger, but it is not necessary to toss out management entirely. Hence, option C is incorrect. Option D is also incorrect because the target firm is already involved in the merger and is not required to look for alternative suitors.

When a Merger of Two Firms Is Achieved by One