Which statement best describes mergers?
A)The purchase of Red Lobster Restaurants initiated by Remax Realty is an example of conglomerate mergers.
B)A merger can be blocked either by a firm's customers or its suppliers, not the government.
C)The existence of golden parachutes is one reason that the management of a target company tries to block a takeover.
D)In a hostile takeover, the target company's management makes a tender offer asking its shareholders to sell their shares to the acquiring company.

Question

Quizplus · Accepted Answer

A merger is a combination of two or more companies into one new company. In a conglomerate merger, the two companies are in different industries. The purchase of Red Lobster Restaurants by Remax Realty is an example of a conglomerate merger because Red Lobster is a restaurant company and Remax Realty is a real estate company.

Which Statement Best Describes Mergers