What is a merger? Discuss if it is an effective strategy or not. Mergers and AcquisitionsAlthough the terms are often used interchangeably,and usually in tandem, mergers and acquisitions are,by definition, distinct from each other.• A merger describes the joining of two independentcompanies to form a combined entity. Mergers tendto be friendly; in mergers, the two firms agree to joinin order to create a combined entity. In the liveevent-promotion business, for example, Live Nationmerged with Ticketmaster.Mergers and Acquisitions• An acquisition describes the purchase or takeoverof one company by another. Acquisitions can befriendly or unfriendly. For example, Disney'sacquisition of Pixar, for example, was a friendly one,in which both management teams believed thatjoining the two companies was a good idea.Mergers and Acquisitions• When a target firm does not want to be acquired, theacquisition is considered a hostile takeover.• British telecom company Vodafone's acquisition ofGermany-based Mannesmann, a diversifiedconglomerate with holdings in telephony andinternet services, at an estimated value of $150billion, was a hostile one. It was also the largesttakeover in corporate history.

A business combination is a deal in which one company is acquired by another (acquired person).…

Answered: What is a merger? Discuss if it is an…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter22: Mergers And Corporate Control

Section: Chapter Questions

Problem 1Q

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It is often difficult to draw a distinctive line between mergers and takeovers, and the terms tend to be used rather loosely to describe the process by which firms combine. In principle, a merger may be defined as a combination of firms of approximately equal standings on the basis of an agreement between their respective managements who recognize some mutual advantage in he arrangement. A merger can result in a new company being formed or one of the two companies absorbs the other. Required: i. Describe various types of mergers and critically discuss the motives for undertaking mergers and takeover. ii. Identify the organ(s) or institution(s) that regulates/approves the mergers and acquisitions in Tanzania and discuss all steps/procedures to be undertaken by the merging companies in Tanzania as required by the regulator for a merger to be successful. iii. Identify any recent Merger and Acquisition in Tanzania, discuss its type and the motive behind it.
Create a table to compare and contrast the three types of corporate mergers: horizontal, vertical, or conglomerate. Describe the characteristics of the corporations that are involved (products, consumers, etc.) and the benefits of this type of merger for each corporation.
Four economic classifications of mergers are (1) horizontal, (2) vertical, (3) conglomerate,and (4) congeneric. Explain the significance of these terms in merger analysis with regard to(a) the likelihood of governmental intervention and (b) possibilities for operating synergy.
Which of the following situations best describes a business combination to be accounted for as a statutory merger? Select one: a. Two companies combine to form a new third company, and the original two companies are dissolved. b. One company transfers assets to another company it has created c. Both companies in a combination continue to operate as separate, but related, legal entities. d. Only one of the combining companies survives and the other loses its separate identity
The following are sentences relating to types of mergers and acquisitions. Which is/are true? [S1] Both horizontal and product-extension types of M&A involve catering to the same market group before and after the M&A. [S2] A vertical M&A involves a supplier or buyer of the acting firm as the target firm.a. Only S1 is true.b. Only S2 is true.c. Neither is true.d. Both are true.
TRUE OR FALSE 1. The merger of two completely unrelated enterprises is referred to as a congeneric merger, however, the merger of somewhat related companies is referred to as a conglomerate merger of somewhat related companies is referred to as conglomerate merger. 2. if there is sufficient proof that the acquisition has been made for a business purpose and the shareholders of the target firm will be compensated with voting shareholders of the target firm will be compensated with voting shares in the acquiring firm, the acquisition will be non-taxable. 3. with cash consideration, the stockholders of the target firm share the gains and losses of acquisition and vice-versa. 4. A merger is the total absorption of one firm by another, however with a consolidation an entirely new firm is created. 5. A white knight is a friendly suitor that a target firm turns to as an alternative to a hostile bidder.
Which of the following statements best describes the difference between a merger and joint venture? a. None of these statements provided differences the two. b. In a merger , two firms combine financial resoures to establish a new firm c. in a joint venture the bidding firm takes control o fthe control of the joint project. d. In a joint venture , firms agree to cooperate in pursuit of joint goal
Management accounting- mergers and aquisitions Mergers are often categorised as horizontal, vertical or conglomerate. Explain each of these type of mergers in detail.
A merger occurs when one corporation takes over all the operations of another business entity, and that entity is dissolved. Select one: True False
two companies are considering a merger, state several argument in favour of combination
Explain how purchase accounting is implementedin a merger. Does the accounting profession nowrequire this method? How is any premium that theacquiring firm paid over the acquired firm’s bookvalue treated subsequent to a merger?
“Reasons for merger that will result in wealth maximization are strategic benefits, market power, economics of scale, economies of vertical integration and taxation benefits”. Describe how any four out of the five factors mentioned may contribute to the success of a merger business exercise

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