Abbott Labs

• Transaction structures—the takeover could involve a cash offer, a share offer, an asset swap or a combination of these methods. Need to consider legal, taxation and accounting issues.

of the acquiring corporation . . . , and the acquiring corporation must be in control of the other corporation immediately after the

Target firm remains as a shell company, but its assets are transferred to the acquiring firm. Ultimately, target firm

They proceeded for this proposal and keeping in mind that they need not to pay any interest, dividends or the $80 per share until we start generating sales. At the same time, the investors will also get their money back plus $120 per share profit. The attorney approved the new stock offering and $312,500 shares of common stock were privately sold

However, in some business combinations, commonly called reverse acquisitions, the issuing entity is the acquiree. In a reverse acquisition the legal acquirer is defined as the acquiree for accounting purposes.

A merger is basically a deal that unites two existing companies into one company. This is usually done to expand a company’s reach, expansion into new segments or simply to gain market share. There are different types of mergers that exist as a result of the different reasons that companies might have to merge. The 5 main types include:

Throughout the years many acquisitions have been hostile, which has led to companies to creative preventative and defensive takeover methods. Preventative is used as a way to reduce the likelihood of a takeover, and defensive measure (active measures) are used afer a hostile bid has been issued.

Some high-profile takeover targets share price for the steep discount, they signed the agreement price, showing cracks that may be lurking in the current trading boom. Such as Take Office Depot Inc. The company’s stock trades 29% below the price Staples Inc. agreed in February to pay for its smaller rival. I believe the growing number of investors worried about antitrust regulators will block an agreement, combined with the country's two largest office supplies chain. Cigna Corp.’s stock is 22% below the value of Anthem Inc.’s $48 billion offer, while oil-field-services provider Baker Hughes Inc. trades 17% cheaper than the price of its pending $35 billion sale to Halliburton Co.

For example, a supermarket chain may take over a bakery and a tyre manufacturer merger with a producer of rubber. The main motive behind such integration is to ensure an adequate supply of good quality raw materials at a reasonable price. Another aim might be to restrict the access of the rival firms to the supplies. Vertical integration forward is when a firm merges with, or takes over, a market outlet. For instance, an oil company may buy a chain of petrol stations and an airline may merge with a tour operator.

Under this plan, the target company issues rights to its stockholders in the form of a dividend. When an acquirer purchases a specified percentage ownership in the target company, the target shareholders, excluding the acquirer, are entitled to sell their common stock back to the company for a specified sum of cash, debt securities, preferred stock, or some combination thereof. This form of poison pill strategy is rarely used by the U.S. corporations.

number of shares to be offered from 3.5 million to 5 million. Under the current proposal, a company

In an efficient capital market, the price of the target and acquirer will fully and immediately

* The acquirer is the combining entity that obtains control of the other combining entities or businesses.

Consideration Transferred - Consideration transferred is the amount paid by the acquirer to the previous owners to purchase the business. It is measured at acquisition date fair value and is the sum of assets transferred by acquirer, liabilities incurred by acquirer, and equity interests issued by the acquirer (FASB 805-30-30-7). If the sum includes carrying amounts that differ from the fair value then these assets and liabilities should be re-measured at fair value and gains or losses should be recognized (FASB 805-30-30-8). Assets and liabilities that are held both before and after the business combination should not recognize a gain or loss; they should be measured at their carrying amounts directly before the acquisition date (FASB 805-30-30-8).

According to Investopedia, market arbitrage can be defined as buying and selling the same item in different marketplaces so at to profit from a difference in price between the two markets. An arbitrageur (a person involved in arbitrage) buys a lower priced item and short sells the higher priced one. The spread between the two becomes his profit.