Topics Covered: Mergers and Acquisitions

1. Which of the following LEAST accurately describes the advantages of specific types of mergers and acquisitions? *

The acquisition of an entity outside the industry and supporting services will result to decrease in cost of production of the acquirer.

The catch-all term for the benefits from M&As is synergy.

Financial advantages of M&A include decreased operating costs, increased financial capacity, and combined sales.

A diversified group of business may further acquire other businesses in a conglomerate type of acquisition.

2. Identify which anti-hostile takeover strategies are being described.

[S1] A merger will only push through if at least 80% of the outstanding capital stock vote for this decision.

[S2] A third entity purchases the remaining 30% shares so that the would-be acquirer cannot increase its ownership of the corporation from 41% to 71%. *

Supermajority provision; Creeping Tender Offer

Lobster Trap; Creeping Tender Offer

Supermajority provision; White Knight

Lobster Trap; White Knight

3. DEF Corporation is an online shopping platform based in Australia. What factor would be least appropriate to consider in a merger and acquisition? *

The size and profitability of the target firm when it plans close the latter and decrease competition.

The synergies obtained from a target firm that provides a somewhat related product or service

The geography and region of the target firm when it plans to expand to a more global market

The service provided by a target firm involved in IT solutions

4. Which is the best anti-hostile takeover strategy that can be made by an entitywhen there is a high chance that current holders of convertible bonds may use their right and increase their holdings in the firm? *

Greenmail

Nancy Reagan defense

Staggered board of directors

Lobster trap