Which One of the Following Statements Is Correct Concerning Acquisitions

question 72

Multiple Choice

Which one of the following statements is correct concerning acquisitions?

• A) If the acquisition is done on an all cash basis the shareholders of the target firm are excluded from any losses resulting from an unsuccessful merger.
• B) Acquisitions done on an all cash basis are generally considered non-taxable events.
• C) Acquisitions done utilizing shares of voting common stock have no effects on the control of the post-merger firm.
• D) If the acquisition is done on an all cash basis the shareholders of both the acquirer and the acquired firm will gain from any realized future benefits of the merger.
• E) The capital structure of the post-merger firm will be the same whether an acquisition is done on a cash basis or on a stock basis.

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Definitions:

Hostile Takeover

An attempt by a company or individual to acquire another company against the wishes of the target company's management and board of directors.

Voting Trust

An arrangement where the shares of a company's stock are placed under the control of a trustee, often to consolidate voting power or to make unified decisions on behalf of the shareholders.

Directors

Individuals elected by shareholders to oversee the management of a corporation and make major decisions.

Election

The formal process of selecting a candidate for office or deciding on a policy issue, typically through the casting of ballots.