Tandem Corporation Is the Target of a Hostile Takeover by Alpha

question 1

Multiple Choice

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:

• 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.

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