a.
To discuss: The significance of the four economic classifications of mergers on the likelihood of governmental intervention.
Introduction:
A process or an agreement where two or more firms combines together to form one new company is termed as Mergers.
a.
Explanation of Solution
The significance of the four economic classifications of mergers on the likelihood of governmental intervention is as follows:
The mergers that result in the government intervention from the four economic classifications of mergers are as follows:
- Vertical mergers
- Horizontal mergers
These types of mergers would result in the operating synergy.
b.
To discuss: The significance of the four economic classifications of mergers on the possibilities for operating synergy.
b.
Explanation of Solution
The significance of the four economic classifications of mergers on the possibilities for operating synergy is as follows:
The Conglomerate merger takes place when a dissimilar company combines together to form a new company. However, the congeneric merger occurs with same general industry. Both these mergers are not attacked by the government and even they provide less synergistic benefits.
Want to see more full solutions like this?
Chapter 21 Solutions
Bundle: Fundamentals Of Financial Management, Loose-leaf Version, 15th + Mindtapv2.0 Finance, 1 Term (6 Months) Printed Access Card
- 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.arrow_forwardDefine synergy. Is synergy a valid rationale for mergers? Describe several situationsthat might produce synergistic gains.arrow_forwardIt 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.arrow_forward
- Discuss the underlying theories and empirical evidence on the value creation from horizontal mergers. How do other firm- and deal- characteristics interact with the valuation effects of such mergers?arrow_forwardSeveral reasons have been proposed to justify mergers. Among the more prominent are (1) tax consideration, (2) risk reduction, (3) control, (4) purchase of assets at below replacement cost, and (5) synergy in general. Which of the reasons are economically justifiable? Which are not? Which fit the situation at hand? Explain.arrow_forwardWhy might two companies choose to form a strategicalliance rather than pursue a merger or an acquisition?arrow_forward
- What is the role of Strategic Rationale in Merger & Acquisitionarrow_forwardWhich one of the following statements correctly applies to a merger? Multiple Choice The acquiring firm does not have to seek approval for the merger from its shareholders. The shareholders of the target firm must approve the merger. The acquiring firm will acquire the assets but not the debt of the target firm. The merged firm will have a new company name. The titles to individual assets of the target firm must be transferred into the acquiring firm's name.arrow_forwardWhat are the four economic types of mergers?arrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning