An Unrelated Diversification Strategy Can Create Value Through Two Types

question 6

True/False

An unrelated diversification strategy can create value through two types of financial economies: efficient internal capital allocations and purchasing other corporations and restructuring their assets.

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Definitions:

Hostile Takeover

An acquisition attempt by a company or individual without the consent or cooperation of the target company's board of directors.

Investment Banking Firm

An establishment engaged in finance that helps people, businesses, and government bodies acquire funds by underwriting or serving as the representative of the client in the release of securities.

Defensive Strategy

A business approach aimed at protecting the existing market share, products, and profitability against competitors' actions.

Congeneric Merger

Involves firms that are interrelated but that do not have identical lines of business. One example is Advanced Micro Devices' acquisition of ATI Technologies.