A merger for diversification is unnecessary from the perspective of stockholders, because they can accomplish the same diversification by selling some of the acquirer's stock and buying some of the target's.

Question

Quizplus · Accepted Answer

Stockholders can diversify their portfolio by selling some of the acquirer's stock and buying some of the target's, without needing a merger for diversification. Therefore, a merger for diversification is unnecessary from their perspective.

A Merger for Diversification Is Unnecessary from the Perspective of Stockholders