FINANCE 601 ACCESS CODE (CUSTOM)
16th Edition
ISBN: 9781259867668
Author: Ross
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 29, Problem 9CQ
Summary Introduction
To explain:-Whether it makes sense for your company management to favor the lower offer of take over and form of payment that affects your answer.
Merger:
Merger occurs when the shareholders of two or more companies pool the resources of their company into one separate legal entity and as a result a new company comes into existence. Merger is basically the result of merge of two or more companies into one.
Cash vs. Stock Payment Method:
Cash versus stock payment method is one of the methods of payment where the acquiring firm has to decide when do the acquiring firm have to pay with cash or when do the acquiring firm have to pay with stock to the target company.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Do solve it as soon as possible
Identify which statement is not correct. In a takeover bid to acquire a part or all shares in another company:
Select one:
a.
Friendly merger reduces the chance of overpaying for target’s shares.
b.
Successful acquirer is likely to pay more for target’s shares in scenarios that include multiple rival bidders.
c.
Target company management would not accept an offer where the consideration for target’s shares exceeds the NPV of the merger.
d.
Hostile takeover may result in overpaying for target’s shares.
Why might one company have to complete more due diligence than another in a merger?
A. None of these answers
B. It is important for a company to know what it is buying
C. Acquisitions can be risky
D. If there is a large size discrepancy the merger seems more like an aquis
What is the term use to describe making successive offers or asking prices in response to a lack of counteroffer in merger negotiation?
Chapter 29 Solutions
FINANCE 601 ACCESS CODE (CUSTOM)
Ch. 29 - Prob. 1CQCh. 29 - Prob. 2CQCh. 29 - Prob. 3CQCh. 29 - Prob. 4CQCh. 29 - Prob. 5CQCh. 29 - Prob. 6CQCh. 29 - Economies of Scale What does it mean to say that a...Ch. 29 - Prob. 8CQCh. 29 - Prob. 9CQCh. 29 - Prob. 10CQ
Ch. 29 - Prob. 1QPCh. 29 - Prob. 2QPCh. 29 - Prob. 3QPCh. 29 - Prob. 4QPCh. 29 - Cash versus Stock Payment Penn Corp. is analyzing...Ch. 29 - EPS, PE, and Mergers The shareholders of Flannery...Ch. 29 - Prob. 7QPCh. 29 - Cash versus Stock as Payment Consider the...Ch. 29 - Prob. 9QPCh. 29 - Prob. 10QPCh. 29 - Prob. 11QPCh. 29 - Prob. 12QPCh. 29 - Prob. 13QPCh. 29 - Prob. 14QPCh. 29 - Prob. 15QPCh. 29 - Prob. 16QPCh. 29 - Prob. 1MCCh. 29 - Prob. 2MCCh. 29 - Prob. 3MCCh. 29 - Prob. 4MC
Knowledge Booster
Similar questions
- Describe some of the positives and negatives from the point of view of both the acquirer and the target in a merger. What is the usual impact on the stock prices of each?arrow_forwardTwo large, publicly owned firms are contemplating a merger. No operating synergy isexpected. However, because returns on the two firms are not perfectly positively correlated,the standard deviation of earnings would be reduced for the combined corporation. Onegroup of consultants argues that this risk reduction is sufficient grounds for the merger.Another group thinks that this type of risk reduction is irrelevant because stockholders canhold the stock of both companies and thus gain the risk-reduction benefits without all thehassles and expenses of the merger. Whose position is correct? Explain.arrow_forwardIdentify which anti-hostile takeover strategies are being described. [S1] A merger will only push through if at least 80% of the outstanding capital stock vote for this decision. [S2] A third entity purchases the remaining 30% shares so that the would-be acquirer cannot increase its ownership of the corporation from 41% to 71%.a. Supermajority provision; White Knightb. Lobster Trap; Creeping Tender Offerc. Lobster Trap; White Knightd. Supermajority provision; Creeping Tender Offerarrow_forward
- Many companies have serious discussions aboutmerging. Sometimes these discussions lead tomergers, sometimes not. What are some factorsthat should be considered and that affect the likelihood of a merger actually being completed?arrow_forwardLook at a recent example of a merger announcement, and log on to the website of the acquiring company. What reasons does the acquirer give for buying the target? How does it intend to pay for the target—with cash, shares, or a mixture of the two? Can you work out how much the target’s shareholders will gain from the offer? Is it more or less than would be the case for an average merger? Now log on to finance.yahoo.com and find out what happened to the stock price of the acquiring company when the merger was announced. Were shareholders pleased with the announcement?arrow_forwardThe combination of resources through a partnership arrangement rather than through a legal combination of the acquiring and target firm is known as a ? a Leveraged Buyout b Joint Venture c Hostile Takeover d Vertical Merger e None of the abovearrow_forward
- Please answer with reason for all why the option is correct and why the other options are incorrectPlease answer correct otherwise skip it When a company buys the stock of another company, the accounting treatment depends on the number of outstanding shares acquired. If a company acquires 35% of the shares (as a percentage of the outstanding shares) of another company, the accounting method the acquirer uses is: - consolidation method - fair value method - equity method - Any of the above. The materiality principle allows the company to choose the method.arrow_forward[S1] A proxy fight involves having shareholders looking for board members that will allow an acquisition. [S2] A tender offer can be made with or without plans for an acquisitiona. Only S2 is true.b. Both are true.c. Only S1 is true.d. Neither is true.arrow_forwarda) What is a conglomerate merger and why are they more likely to be approved? b) Limit pricing is a strategy where a firm sets a low, but profitable, price to discourage entry. How does that differ from predatory pricing? c) What is "Share the gain, share the pain" theory?arrow_forward
- The minority stakeholders may exchange their P100 par value shares for P400 cash in case they do not agree with the acquisition what type of anti-hostile takeover strategy ???arrow_forwardDefine each of the following terms:c. Friendly merger; hostile merger; defensive merger; tender offer; targetcompany; breakup value; acquiring companyarrow_forwardFind a recent merger transaction that failed due to regulatory concerns over market share concentration and reduction of consumer alternatives. Do you support the regulatory concerns? Explain briefly the transaction and your reasoning.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning