Exam 38: Corporate Acquisitions and Multinational Corporations

Maple Corporation wants to acquire Foodcity Corporation,a chain of supermarkets.Both corporations are publicly traded.Maple Corporation has some cash,but not a large amount,and it needs to have ample cash for its operations.How might Maple be able to acquire Foodcity?

JKL corporation has acquired 7 percent of Target Corporation in a hostile takeover attempt.Target is opposed to this takeover,so Target offers to purchase the 7 percent of its shares owned by JKL for $40 per share.The actual fair market value of that stock is $25 per share.JKL accepts the offer.This is an example of:

At the time Corporation A was created,the management was concerned about potential hostile takeovers,so in the articles of incorporation it included a provision that all of Corporation A's contracts would expire if the ownership of Corporation A changed hands.This antitakeover technique is best described as:

What is a tender offer?

A copy of the proxy,the proxy statement and all other solicitation materials must be filed with the SEC at least 30 days before materials are sent to shareholders.

When a company is the target of a hostile takeover,it cannot issue additional stock simply to make the takeover more expensive for the acquiring company.

The Williams Act requires that tender offers be open at least 20 days.

Ordinarily,a merger requires approval of both boards of directors and the shareholders of both corporations.

Tandem Corporation is the target of a hostile takeover by Alpha Corporation.Management of Tandem fears for its jobs because of statements made by Alpha's management about the need to streamline the management of Tandem.Tandem works out a deal with Beta Corporation for the two corporations to merge with Beta surviving.Beta has indicated that it will leave present management intact.Two years after the merger with Beta,an independent consultant reports that there are too many levels of management in the combined corporation and that 30 percent of management positions should be eliminated.In this circumstance,which of the following occurred?

In a merger,the shareholders of the merged corporation always receive stock of the surviving corporation.

Ramone is president of Rock Permanence,Inc.Flash in the Pan Corporation has just made a tender offer to the shareholders of Rock Permanence.Flash in the Pan is known for severe job cuts after takeovers,so Ramone and the other officers do the following: 1.They adopt contracts with provisions that the contracts will expire Flash in the Pan should acquire Rock Permanence. 2.They tell many shareholders that they will be hired if they do not accept the offer.Each of these shareholders is told to keep the arrangement secret and that they are one of only a select few who will be hired. 3.They distribute an article from a newspaper 2 years earlier that discussed the inept management of Flash in the Pan.They do not tell the shareholders that the publisher of the article had been successfully sued by Flash in the Pan because of false statements. 4.They send mailings to their shareholders calling the management of Flash in the Pan a "committee of the devil" and "shareholders' nightmare." Discuss the appropriateness of the four listed actions by management.

In recent years shareholders have increasingly attempted to use shareholders' meetings as a forum to encourage corporations to operate in accordance with the views of one or some shareholders with respect to various policy issues.Common examples include environmental issues and human rights issues,especially for corporations with operations in other nations.Is this a proper forum for this particular type of activity? What are the arguments on each side of the issue? What other methods could these shareholders use to promote the viewpoints on these issues?

In a proxy contest,what obligation does management have to the dissenting group of shareholders?

In evaluating whether management's actions are appropriate in response to a hostile tender offer,the primary concern is usually that management might have improperly:

A shareholder's proxy can be granted to:

Which of the following is true with regard to subsidiary corporations?

The board of directors may sell most of the corporation's assets without shareholder approval.

State antitakeover statutes became unconstitutional once the Williams Act regulated using federal law in this area.

The business judgment rule protects the decisions of the board of directors in situations where it acts in good faith that the action taken was in the best interests of the corporation and its shareholders.

The pro-rata rule holds that the shares must be purchased on a pro-rata basis if too many shares are tendered.