Down River Markets has decided to acquire a controlling interest in Blue Jays by purchasing shares of stock in the public markets.Which of the following statements correctly apply to this acquisition?
I.The purchase of publicly-traded shares may be more expensive than an outright merger with Blue Jays would have been.
II.Down River Markets can avoid dealing with the board of directors of Blue Jays by purchasing shares in this manner.
III.If Down River Markets is successful in acquiring at least 80 percent of the outstanding shares of Blue Jays,the remaining shareholders in Blue Jays will be forced to also sell their shares to Down River Markets.
IV.Whether or not Down River Markets gains control of Blue Jays depends upon the willingness of Blue Jays shareholders to sell their shares.
A)I and III only
B)II and IV only
C)I, II, and IV only
D)I, II, and III only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

I. Purchasing shares in the public market can indeed be more expensive due to market premiums over the intrinsic value of the shares.II. By purchasing shares directly in the public market, Down River Markets can bypass the need to negotiate directly with Blue Jays' board.IV. The success of the acquisition depends on the shareholders' willingness to sell their shares at the offered price.

Down River Markets Has Decided to Acquire a Controlling Interest