Exam 21: Mergers, Acquisitions, and Corporate Control

When Bank of New York and Mellon Financial Corporation merged in 2007,management forecast annual cost savings of $700 million or over 8% of the current combined cost.

The major cost of a merger is the:

Firms that are acquired to take advantage of bootstrapping often have:

Leveraged buyouts are acquisitions where a large fraction of the purchase price is financed with debt.

When a firm is taken over,its management is usually replaced.

Strictly speaking,merger means the combination of all the assets and liabilities of two firms.

Which of the following is not a method of changing the management of a firm?

Firms with substantial amounts of free cash flow often discover that:

Empirical studies show that the operating efficiency of firms having undergone a leverage buyout ______ over the following 3 years.

What does empirical evidence suggest about the distribution of gains from mergers?

On October 28,1988,the board of directors of RJR Nabisco revealed that the company's CEO had formed a group of investors prepared to buy all the firm's stock for $75 per share in cash and take the company private.RJR's share price immediately moved to about $75 from $56.

For firms in a mature stage of life with free cash flow,do you accept the charge that there might be some actual incentive to waste cash?

Large-scale efforts to make a firm less appealing in the midst of a potential merger are known as:

In 2010,the SEC recently introduced a new rule allowing large investors (those holding a 3% ownership stake in the firm for at least 2 years)to nominate their own candidates for the board of directors.

Today's buyouts are generally smaller and not leveraged as aggressively as the deals of the 1980s.

Splitting AT&T in 1996 into four separate firms is an example of a:

The observation that cash-rich firms often use the funds to diversify rather than increase dividends indicates that:

When a management team buys the firm from current shareholders while continuing to manage and often incurring large segments of debt,it is known as a:

Describe the basic differences between mergers,leveraged buyouts,management buyouts,divestitures,and spin-offs.

If Georgia Pacific (lumber products)were to acquire a national homebuilding firm,the combination would be termed a: