WEEK 11 - MERGERS AND ACQUISITION
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A change in the corporate charter making it more difficult for the firm to be acquired by increasing the percentage of shareholders that must approve a merger offer is called a:

  • supermajority amendment (correct)
  • standstill agreement
  • greenmail provision
  • poison pill amendment
  • The positive incremental net gain associated with the combination of two firms through a merger or acquisition is called:

  • goodwill
  • the merger cost
  • the consolidation effect
  • synergy (correct)
  • Which of the following is an advantage of share-for-share mergers?

  • They allow target shareholders to see exactly how much is being offered for the target company.
  • They will not lead to a dilution of target company’s EPS
  • . They are less expensive compared to cash offers
  • They do not incur transaction costs related to re-investing (correct)
  • A contract wherein the bidding firm agrees to limit its holdings in the target firm is called a:

    <p>standstill agreement</p> Signup and view all the answers

    Which of the following is NOT an example of a revenue synergy arising from a horizontal merger?

    <p>Savings from closing duplicated facilities.</p> Signup and view all the answers

    In a Pac-Man Defence,

    <p>Target company makes a counter-bid for the bidder</p> Signup and view all the answers

    Which of the following is most likely to be a benefit of two very different companies merging?

    <p>Cash flow smoothing.</p> Signup and view all the answers

    Which of the following is NOT an example of a cost synergy arising from a horizontal merger A. A bank closing branches where there are two in one small town

    <p>The launch of a new product.</p> Signup and view all the answers

    In the case of a predatory takeover, the people likely to gain most in the short term are:

    <p>The shareholders of the target company.</p> Signup and view all the answers

    Generally speaking managers are most likely to put up a defence against a take-over because:

    <p>It is likely to disadvantage themselves.</p> Signup and view all the answers

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