One CEO justified the merger of his soft-drink company with a machine tool company in the following manner. This is a great merger. First the products are unrelated. This out company’s earnings volatility is likely to decrease. Second, our management team has proven that we are better managers than the former management team of the tool company, and this we are likely to discover new way to create and capture value within the tool company. Evaluate this explanation for the merger.

One CEO justified the merger of his soft-drink company with a machine tool company in the following manner. This is a great merger. First the products are unrelated. This out company’s earnings volatility is likely to decrease. Second, our management team has proven that we are better managers than the former management team of the tool company, and this we are likely to discover new way to create and capture value within the tool company. Evaluate this explanation for the merger.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 1.2CE

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