Exam 21: Mergers,Acquisitions,and Corporate Control

Economies of vertical integration are one possible source of synergy in mergers.

It is easier for individual investors to diversify their risk by buying shares in different firms than for the firms to combine their operations.

One indication that investors expect no synergy from a merger would be that the:

Proxy fights generally occur when a group is trying to:

A typical poison pill may give existing shareholders the right to buy the company's shares at half price as soon as a bidder acquires more than 15% of the shares.The bidder is not entitled to the discount.

The "Bootstrap Game" is played somewhat in defiance of traditional merger logic in that it:

An increase in earnings per share may be increased by a merger if the:

In the case of a merger that is stock financed,the merger cost may change if the:

Carve-outs and spin-offs both provide shares of the new firm to the divesting firm's shareholders.

Diversification is often a poor motive for mergers because:

The Williams Act in addition to state laws sets forth the rules for tender offers.

A change to the corporate charter that requires that any merger must be approved by a supermajority of shareholders is known as:

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.

Management buyouts are generally all-equity financed by the new shareholders.

The free-cash-flow theory supports the notion that the market gain from an LBO is basically the present value of the firm's future cash flows that would otherwise have been wasted.

The most likely interpretation of headlines that read "ABC Corp.adopts shark repellent" is that ABC:

Which one of the following is correct concerning a spin-off?

The cost of a merger may outweigh the potential gain if the:

A merger adds value by creating synergies.Which one of these is not a possible source of synergy?