Asked by
Jahiem Freeman
on Oct 07, 2024
Verified
Which statement best describes mergers?
A) If a company that produces military equipment merges with a company that manages a chain of motels, this is an example of a horizontal merger.
B) A defensive merger is one where the firm's managers decide to merge with another firm to avoid or lessen the possibility of being acquired through a hostile takeover.
C) Acquiring firms send a signal that their stock is undervalued if they choose to use stock to pay for the acquisition.
D) Acquiring firms send a signal that their stock is overvalued if they choose to use cash and bonds to pay for the acquisition.
Defensive Merger
A strategy where a company merges with or acquires another company to protect itself against potential competitors or hostile takeovers.
Hostile Takeover
An acquisition attempt by a company or individual against the target company's wishes.
- Get an insight into the strategic purposes and economic impacts of mergers and acquisitions.
- Differentiate among various categories of mergers and acquisition tactics as well as their economic consequences.
Verified Answer
JL
Learning Objectives
- Get an insight into the strategic purposes and economic impacts of mergers and acquisitions.
- Differentiate among various categories of mergers and acquisition tactics as well as their economic consequences.