FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Corporate Restructuring

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

True/False

Review LaterAdd Note

Review Later

There is virtually no distinction between economic and commercial business failures.

A) True
B) False

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

A combination of companies that have a buyer-seller relationship is a:

A) conglomerate merger.
B) vertical merger.
C) horizontal merger.
D) takeover.

E) A) and B)
F) B) and C)

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

TNT, Inc. is considering making a tender offer for Blasting Caps Corp. (BCC) , one of their primary suppliers. The equity section of BCC's balance sheet totals $4.95 million, and BCC stock is currently selling 20% above book value. TNT is planning to offer a 15% premium to make the offer attractive. If BCC has 200,000 shares outstanding, calculate the per share price of the tender offer.

When unhappy, shareholders solicit other shareholders to join them in removing certain board members, the action is called a:

The purpose of antitrust laws is to ____.

In an acquisition the acquiring firm can become the parent and the target a subsidiary.

Target managements that resist mergers usually claim the offer is not in the best interest of stockholders because the price offered is too low. However, they may be:

Synergies are very good reasons for mergers. They're always easy to identify and implement and just about always turn out to be worth more than expected.

Which of the following is not a factor that makes valuing a target's stock difficult and imprecise?

Kappa International is thinking about acquiring New Life Inc. New Life generated net cash flows of $13 million last year. This cash flow has been growing at a four percent rate, which is expected to continue into the foreseeable future. Kappa has 10 million shares of common stock outstanding on which stockholders earn a return of about 14%, while New Life has 15 million shares outstanding on which stockholders earn a return of 13%. What is the maximum price per share that Kappa International should offer for New Life?

When an acquiring firm pays too much for an acquisition the real losers are the acquirer's stockholders.

Which of the following terms is not associated with mergers and acquisitions?

The maximum purchase price acceptable to an acquiring firm in a merger is equal to the target's pre-merger value.

Technical insolvency is a firm's inability to meet its current obligations. Legal insolvency means the firm's liabilities exceed its assets.

Commercial failure (as opposed to economic failure) is an issue between a business and its owners rather than its creditors.

Which of the following defensive tactics is not appropriate before a takeover attempt is underway?

Which is generally not a defensive measure for a target firm?

Control of a target can be achieved through:

Although the long-term economic and political implications of the megamergers are as yet unclear, the massive accumulation of economic power currently taking place has no potential to change the open and competitive nature of the economy.

Horizontal mergers can create economies of scale.