Question 1

In opposing a tender offer,adopting a poison pill involves issuing defamatory statements about the company.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not true about tender offers?

Accepted Answer

A)  The offer must remain open at least twenty business days from the commencement of the offer. 
B)  The SEC must be notified of the terms of a tender offer at least ten days before it is made. 
C)  If the offeror increases the tender price, the higher price must be paid, even to those who already accepted the offer at the earlier lower price. 
D)  Any increase in the price offered or the maximum number of shares that the offeror will accept requires that the effective time of the offer be extended at least ten days. 
E)  The "pro rata" rule holds that the shares must be purchased on a pro rata basis if too many shares are tendered. 
A)  The offer must remain open at least twenty business days from the commencement of the offer. 
B)  The SEC must be notified of the terms of a tender offer at least ten days before it is made. 
C)  If the offeror increases the tender price, the higher price must be paid, even to those who already accepted the offer at the earlier lower price. 
D)  Any increase in the price offered or the maximum number of shares that the offeror will accept requires that the effective time of the offer be extended at least ten days. 
E)  The "pro rata" rule holds that the shares must be purchased on a pro rata basis if too many shares are tendered.

Question 3

Corporate shareholders have the right to vote on the election of directors,mergers,and charter amendments.

Accepted Answer

A) True 
 B)False

Question 4

Section 1(a)of the Securities Exchange Act of 1934 is an antifraud provision that prohibits material misrepresentations or omissions of a material fact in the proxy materials.

Accepted Answer

A) True 
 B)False

Question 5

A tender offer can be made for all or a portion of the shares of the target corporation.

Accepted Answer

A) True 
 B)False

Question 6

Under what circumstances can a dissenting group of shareholders recover from the corporation the costs it incurs in a proxy contest?

Accepted Answer

A)  under all circumstances 
B)  in all proxy contests the dissenting group wins 
C)  in a proxy contest involving an issue of policy, even if the dissenting group does not win the proxy contest 
D)  in all proxy contests involving issues of policy, and in the case of contests concerning personal matters, if the dissenting group wins 
E)  in a proxy contest involving an issue of policy that the dissenting group wins, but never for a contest involving a personal issue 
A)  under all circumstances 
B)  in all proxy contests the dissenting group wins 
C)  in a proxy contest involving an issue of policy, even if the dissenting group does not win the proxy contest 
D)  in all proxy contests involving issues of policy, and in the case of contests concerning personal matters, if the dissenting group wins 
E)  in a proxy contest involving an issue of policy that the dissenting group wins, but never for a contest involving a personal issue

Question 7

The legality of defensive strategies in fighting a hostile takeover is examined using the "business judgment" rule.

Accepted Answer

A) True 
 B)False

Question 8

Should shareholders use shareholder resolutions to encourage responsibility of corporations in which they invest,or should investors make those judgments by simply not investing companies whose policies they oppose? Which approach is more effective?

Accepted Answer

There is no clear answer to whether corp

Question 9

If the number of voting shares of the surviving corporation in a merger increases by twenty percent or less,this eliminates which needed approvals when compared to ordinary mergers,where the number of shares of the surviving corporation increases by more than twenty percent?

Accepted Answer

A)  shareholders of the surviving corporation 
B)  shareholders of both corporations 
C)  shareholders and the board of directors of the surviving corporation 
D)  shareholders and the board of directors of the corporation that does not survive 
E)  The approval requirements are the same, regardless of whether the increase in voting shares of the surviving corporation is more or less than 20 percent. 
A)  shareholders of the surviving corporation 
B)  shareholders of both corporations 
C)  shareholders and the board of directors of the surviving corporation 
D)  shareholders and the board of directors of the corporation that does not survive 
E)  The approval requirements are the same, regardless of whether the increase in voting shares of the surviving corporation is more or less than 20 percent.

Question 10

Which of the following is not a correct description of a defensive strategy to a tender offer?

Accepted Answer

A)  Selling a "crown jewel" refers to a sale by the target corporation of an asset that was particularly attractive to the tender offeror. 
B)  A "white knight" merger refers to a merger with a different purchaser that is friendlier toward management than the company that made the tender offer. 
C)  A "poison pill" is a strategy built into contracts, bylaws, etc., that can make any purchase of the corporation more expensive, such as leases that automatically expire upon the purchase and would require renegotiation, likely at a higher price. 
D)  Under a "standstill agreement," shareholders holding a large number of shares of the target corporation agree that no one of them will sell to the tender offeror, even if the tender offeror raises the offer price. 
E)  A "greenmail" payment is a payment, usually at greater than fair market value, made by the target corporation to the tender offeror for shares already owned by the tender offeror, in exchange for the tender offeror dropping the tender offer. 
A)  Selling a "crown jewel" refers to a sale by the target corporation of an asset that was particularly attractive to the tender offeror. 
B)  A "white knight" merger refers to a merger with a different purchaser that is friendlier toward management than the company that made the tender offer. 
C)  A "poison pill" is a strategy built into contracts, bylaws, etc., that can make any purchase of the corporation more expensive, such as leases that automatically expire upon the purchase and would require renegotiation, likely at a higher price. 
D)  Under a "standstill agreement," shareholders holding a large number of shares of the target corporation agree that no one of them will sell to the tender offeror, even if the tender offeror raises the offer price. 
E)  A "greenmail" payment is a payment, usually at greater than fair market value, made by the target corporation to the tender offeror for shares already owned by the tender offeror, in exchange for the tender offeror dropping the tender offer.

Question 11

A multinational corporation is also referred to as a transnational corporation.

Accepted Answer

A) True 
 B)False

Question 12

The Williams Act requires a tender offeror to notify either the management of the target company or the SEC before the offer is made.

Accepted Answer

A) True 
 B)False

Question 13

A corporation can conduct business in a foreign country using either a branch office or a subsidiary corporation.

Accepted Answer

A) True 
 B)False

Question 14

A merger has been proposed for Ship With Us Company and Pack It Up Company.Officers and directors of both corporations are interested in the merger,since they believe the surviving corporation will be stronger and very successful.Neither corporation owns stock in the other.Assume you are advising the companies on how to arrange their merger.What do you need to know and how would you advise the corporations?

Accepted Answer

You would need to know if the articles o

Question 15

In a merger,title to property owned by the merged corporation transfers to the surviving corporation,without formality or deeds.

Accepted Answer

A) True 
 B)False

Question 16

Prior to 1998,tender offers were not federally regulated.

Accepted Answer

A) True 
 B)False

Question 17

Bob has decided to solicit proxies from shareholders of Sunset Corporation.Bob owns two shares of Sunset,which have a share price of $48.Bob is soliciting the proxies in order to elect a friend of his to the board of directors.Bob's friend is reasonably intelligent,but he has no business experience.In his proxy solicitation,Bob accurately describes his friend and his background and,indicates that the proxy is being sought in order to elect this friend to the board of directors.Bob does not disclose why he thinks his friend should be on the board of directors,nor does Bob disclose what effect he thinks his friend's membership on the board will have on company earnings.Two weeks before starting to solicit proxies,Bob filed copies of his proxy materials with the Securities and Exchange Commission.Bob:

Accepted Answer

A)  has not properly prepared the proxy statement, because he did not disclose the potential effect on company earnings of his friend's membership on the board. 
B)  cannot solicit proxies because, he does not own a sufficient amount of stock in the corporation. 
C)  can solicit the proxies, but only if he has obtained approval from the board of directors. 
D)  will be able to recover the costs of this proxy contest, even if his friend is not elected. 
E)  has complied with all applicable proxy requirements. 
A)  has not properly prepared the proxy statement, because he did not disclose the potential effect on company earnings of his friend's membership on the board. 
B)  cannot solicit proxies because, he does not own a sufficient amount of stock in the corporation. 
C)  can solicit the proxies, but only if he has obtained approval from the board of directors. 
D)  will be able to recover the costs of this proxy contest, even if his friend is not elected. 
E)  has complied with all applicable proxy requirements.

Question 18

Many states have enacted ________ that are aimed at protecting companies with ties to the state.These laws protect against the hostile acquisition of corporations incorporated in or doing business in the state.

Accepted Answer

A)  blitzkrieg statutes 
B)  blitzkrieg ordinances 
C)  antitakeover statutes 
D)  antitakeover ordinances 
E)  eminent domain statutes 
A)  blitzkrieg statutes 
B)  blitzkrieg ordinances 
C)  antitakeover statutes 
D)  antitakeover ordinances 
E)  eminent domain statutes

Question 19

In a merger,the surviving corporation gains all the rights,privileges,powers,duties,obligations,and liabilities of the merged corporation.

Accepted Answer

A) True 
 B)False

Question 20

Swim Supplies Corporation has made a large per share hostile bid for Bathing Suits to Go Corporation.The directors of Bathing Suits to Go have already been in negotiations with Swim Away Corporation.The directors of Bathing Suits to Go adopted a strategy where they guaranteed Swim Away Corporation that they will not investigate Swim Supplies' offer or meet with Swim Supplies.The directors of Bathing Suits to Go believe that they have free speech rights,and also the right not to talk.Under what standard will their actions be analyzed,and would a court likely find that they are right?

Accepted Answer

The legality of defensive strategies is

Exam 29: Corporate Acquisitions and Multinational Corporations

In opposing a tender offer,adopting a poison pill involves issuing defamatory statements about the company.

Which of the following is not true about tender offers?

Corporate shareholders have the right to vote on the election of directors,mergers,and charter amendments.

Section 1(a)of the Securities Exchange Act of 1934 is an antifraud provision that prohibits material misrepresentations or omissions of a material fact in the proxy materials.

A tender offer can be made for all or a portion of the shares of the target corporation.

Under what circumstances can a dissenting group of shareholders recover from the corporation the costs it incurs in a proxy contest?

The legality of defensive strategies in fighting a hostile takeover is examined using the "business judgment" rule.

Should shareholders use shareholder resolutions to encourage responsibility of corporations in which they invest,or should investors make those judgments by simply not investing companies whose policies they oppose? Which approach is more effective?

If the number of voting shares of the surviving corporation in a merger increases by twenty percent or less,this eliminates which needed approvals when compared to ordinary mergers,where the number of shares of the surviving corporation increases by more than twenty percent?

Which of the following is not a correct description of a defensive strategy to a tender offer?

A multinational corporation is also referred to as a transnational corporation.

The Williams Act requires a tender offeror to notify either the management of the target company or the SEC before the offer is made.

A corporation can conduct business in a foreign country using either a branch office or a subsidiary corporation.

In a merger,title to property owned by the merged corporation transfers to the surviving corporation,without formality or deeds.

Prior to 1998,tender offers were not federally regulated.

Many states have enacted ________ that are aimed at protecting companies with ties to the state.These laws protect against the hostile acquisition of corporations incorporated in or doing business in the state.

In a merger,the surviving corporation gains all the rights,privileges,powers,duties,obligations,and liabilities of the merged corporation.

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