Which of the Following Is NOT a Motive for Stockholders

question 7

Multiple Choice

Which of the following is NOT a motive for stockholders of the acquired company to sell?

• A) The opportunity to diversify
• B) Gaining a tax advantage
• C) An attractive price
• D) Avoiding bias against smaller businesses

---

Definitions:

Tender Offers

A public proposal by a person or company inviting shareholders to sell their shares at a specified price.

Greenmail

To avoid an unfriendly acquisition, a firm may buy shares owned by a potential acquirer at a price above the market price of the stock. The above-market payment is greenmail.

Horizontal Merger

A business consolidation that occurs between firms operating in the same industry, often aiming to increase market share.

Conglomerate Merger

A union between firms that are involved in totally unrelated business activities.