Question 1

Owen is the CEO of ABC company that solely produces technological equipment used in science laboratories around the world. He has recently been approached by ZZ, a company that produces and sells computer games. Owen does not see any organisational synergies between the two firms but is still interested in potentially merging his company with ZZ. As a board member of ABC and a close friend of Owen, you know that he has always been a big fan of playing computer games since his teenage years.

a) In this particular occasion, does the fact that you are a personal friend of Owen help the companys shareholders?

b) If there have been many hostile takeovers in the past year in the industry in which ABC operates, how would this affect your answer to Part(a) above? Explain in detail.