Question 1

Tandem Corporation is the target of a hostile takeover by Alpha Corporation.Management of Tandem fears for their jobs because of statements made by Alpha's management about the need to streamline the Tandem management.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 thirty percent of management positions should be eliminated.In this circumstance:

Accepted Answer

A)   Tandem prevented the merger with Alpha with a "poison pill."
B)   Tandem prevented the merger with Alpha by a "white knight merger" with Beta, an illegal tactic.
C)   Tandem prevented the merger with Alpha by a "white knight" merger with Beta, which was legal; Tandem's management is liable to shareholders for the loss of profits due to the excessive levels of management.
D)   Tandem prevented the merger with Alpha by a "white knight" merger with Beta, which was legal, assuming it met the "business judgment rule." Tandem's management is not liable to shareholders for the loss of profits due to the excessive levels of management, assuming the business judgment rule is satisfied.
E)   The merger was illegal, and Tandem's management is liable to shareholders for the loss of profits. D

Question 2

The Williams Act does not regulate the length of time that a tender offer must remain open.

Accepted Answer

A) True 
 B)False  False

Question 3

One corporation can acquire all the shares of another corporation through a share default.

Accepted Answer

A) True 
 B)False  False

Question 4

In a merger,the corporation which ceases to exist is called the dissolved corporation.

Accepted Answer

A) True 
 B)False

Question 5

If a dissenting shareholder who has exercised his or her appraisal right is dissatisfied with the corporation's determination of the fair market value of the shares,then:

Accepted Answer

A)   the shareholder has no further recourse.
B)   the shareholder must choose to receive the appraisal amount, or cancel the exercise of the appraisal right and accept the terms of the merger or other transaction.
C)   the shareholder must pay for a new appraisal of the shares, and seek that amount in court.
D)   the corporation must petition the court to determine the fair value of the shares.
E)   the shareholder must vote, along with all other dissenting shareholders, on whether the dissenting shareholders will accept the appraisal amount, or drop the dissent and go along with the merger plan.

Question 6

A shareholder exercising his or her appraisal right can have the corporation petition the court to determine the value of shares,if the shareholder believes that the corporation has set the value too low.

Accepted Answer

A) True 
 B)False

Question 7

In a merger,the corporation that continues to exist is called the merged corporation.

Accepted Answer

A) True 
 B)False

Question 8

Solicitation of proxies is regulated under the:

Accepted Answer

A)   Securities Act of 1933.
B)   Securities Exchange Act of 1934.
C)   Williams Act.
D)   Proxy Solicitation Act of 1968.
E)   Uniform Commercial Code.

Question 9

A corporate sale or lease of its assets requires the recommendation of the board of directors and an affirmative vote of the majority of the shares of the selling or leasing corporation that are entitled to vote (unless greater vote is required).

Accepted Answer

A) True 
 B)False

Question 10

According to the Williams Act,the tender offer must be extended for ten (10)business days if the tender offeror increases the number of shares it will take or the price it will pay for the shares.

Accepted Answer

A) True 
 B)False

Question 11

Even if management is not in favor of a shareholder resolution,a shareholder has a right to have the resolution included in the corporation's proxy materials if it:

Accepted Answer

A)   relates to the corporation's business.
B)   concerns a policy issue.
C)   does not concern the payment of dividends.
D)   relates to the corporation's business, concerns a policy issue, or concerns the payment of dividends.
E)   relates to the corporation's business, concerns a policy issue, and does not concern the payment of dividends.

Question 12

The Delaware antitakeover statute provides that an acquirer of a Delaware corporation cannot complete a merger with the acquired corporation for one (1)year after purchasing fifteen (15)percent or more of the Delaware corporation's shares.

Accepted Answer

A) True 
 B)False

Question 13

The board of directors has a fiduciary duty to shareholders in taking action relative to a hostile takeover.

Accepted Answer

A) True 
 B)False

Question 14

A corporation must notify shareholders of the existence of their appraisal rights before a transaction can be voted on.

Accepted Answer

A) True 
 B)False

Question 15

A short-form merger is a simplified form of merger that can be used so long as the number of voting shares outstanding of the surviving corporation increases by less than twenty percent.

Accepted Answer

A) True 
 B)False

Question 16

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:

Accepted Answer

A)   demanded too high of a price for the corporation's stock.
B)   put its own interests ahead of those of the shareholders.
C)   put persons on the board of directors who favor management.
D)   tried to implement changes to the corporate structure too quickly.
E)   failed to take sufficient defensive measures.

Question 17

Go-Fer-It Corporation has made a tender offer to acquire eighty percent of the shares of Beekin Corporation at $58 per share.Because only sixty-eight percent of Beekin's shares have been tendered,the board of directors of Go-Fer-It wants to raise its offer price to $65 per share.If Go-Fer-It raises the offer price to $65,it must:

Accepted Answer

A)   cancel the first tender offer and start over.
B)   keep the higher offer open for at least twenty days.
C)   pay the $65 to all shareholders who accepted at $58 per share.
D)   not complete the merger unless at least ninety percent of Beekin's shares are tendered.
E)   do nothing, other than advertise the increase in the offer.

Question 18

Explain what a "poison pill" is,and how it affects business dealings.

Accepted Answer

The answer of Explain what a "poison pill" is,and how...

Question 19

In fighting a hostile takeover,a "Pac-Man" tender offer refers to:

Accepted Answer

A)   an offer to merge with a friendly party that promises to leave the target corporation intact.
B)   an offer to sell a profitable division that is attractive to the outside interest.
C)   a lawsuit filed primarily for the purposes of delay.
D)   an offer to purchase a block of stock in the employee stock ownership plan.
E)   the target corporation making a tender offer on the tender offeror.

Question 20

One corporation can acquire all the shares of another corporation through a share ________.In this arrangement,both corporations retain their separate legal existence,with the parent corporation owning all the shares of the subsidiary corporation.

Accepted Answer

A)   collaboration
B)   partnership
C)   compendium
D)   exchange
E)   amalgamation

Exam 29: Corporate Acquisitions and Multinational Corporations

The Williams Act does not regulate the length of time that a tender offer must remain open.

One corporation can acquire all the shares of another corporation through a share default.

In a merger,the corporation which ceases to exist is called the dissolved corporation.

If a dissenting shareholder who has exercised his or her appraisal right is dissatisfied with the corporation's determination of the fair market value of the shares,then:

A shareholder exercising his or her appraisal right can have the corporation petition the court to determine the value of shares,if the shareholder believes that the corporation has set the value too low.

In a merger,the corporation that continues to exist is called the merged corporation.

Solicitation of proxies is regulated under the:

A corporate sale or lease of its assets requires the recommendation of the board of directors and an affirmative vote of the majority of the shares of the selling or leasing corporation that are entitled to vote (unless greater vote is required).

According to the Williams Act,the tender offer must be extended for ten (10)business days if the tender offeror increases the number of shares it will take or the price it will pay for the shares.

Even if management is not in favor of a shareholder resolution,a shareholder has a right to have the resolution included in the corporation's proxy materials if it:

The Delaware antitakeover statute provides that an acquirer of a Delaware corporation cannot complete a merger with the acquired corporation for one (1)year after purchasing fifteen (15)percent or more of the Delaware corporation's shares.

The board of directors has a fiduciary duty to shareholders in taking action relative to a hostile takeover.

A corporation must notify shareholders of the existence of their appraisal rights before a transaction can be voted on.

A short-form merger is a simplified form of merger that can be used so long as the number of voting shares outstanding of the surviving corporation increases by less than twenty percent.

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:

Explain what a "poison pill" is,and how it affects business dealings.

In fighting a hostile takeover,a "Pac-Man" tender offer refers to:

One corporation can acquire all the shares of another corporation through a share ________.In this arrangement,both corporations retain their separate legal existence,with the parent corporation owning all the shares of the subsidiary corporation.