Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
54. An increase in earnings per share after a merger may not indicate increased value if the:
55. The cost of a merger may outweigh the potential gain if the:
56. Firm B's 1 million shares of stock currently sell for $12 each, but firm A is preparing a
tender offer of $18 per share. Firm A estimates the gain of the merger to be $5 million. What
percentage of the merger gains will be captured by firm B's stockholders?
57. The cost of a merger equals the:
58. ABC Corp. has offered 1 million shares having a total market value of $8 million for XYZ.
After the merger is announced, shares in ABC trade for $7 each. If ABC is confident about XYZ's
value, then the cost of the merger:
59. In the case of a merger that is stock financed, the assumed merger cost may be incorrect
if the:
60. The shareholders of firm A have offered 1 million shares valued at $10 each to acquire
firm B. After the merger is announced, stock A trades for $9 per share. Which of the following
statements is
false?
61. Large-scale efforts to make a firm less appealing in the midst of a potential merger are
known as:
62. Other things equal, which one of the following groups of stakeholders should expect to
lose value as a result of an LBO?
63. The free-cash-flow theory of takeovers predicts that firms:
64. Which percentage of shareholder approval would be most associated with a shark-
repellent strategy?
65. In which one of the following ways can the management teams of many corporations
influence the board of directors?
66. Proxy fights generally occur when a group is trying to:
67. One of the reasons why proxy fights are rarely successful is that:
68. Which one of the following is
false
concerning a proposed merger of firms?
69. A public offer to purchase the shares of existing stockholders in order to take the firm
over is called a:
70. When a management team buys the firm from current shareholders while continuing to
manage and often incurring large segments of debt, it is known as a:
71. If Georgia Pacific (lumber products) were to acquire a national homebuilding firm, the
combination would be termed a:
72. Which one of the following is
least
likely to provide a motivation for vertical integration?
73. The observation that cash-rich firms often make questionable acquisitions in diverse
industries, rather than increase dividends, indicates that:
74. Firms with substantial amounts of free cash flow often discover that:
75. The "Bootstrap Game" is played somewhat in defiance of traditional merger logic in that
it:
76. Mergers that attempt to bootstrap earnings may obtain increased current earnings per
share at the expense of:
77. Firms that are acquired to take advantage of bootstrapping often have:
78. If two merged firms are shown to have a higher combined market value than the sum of
their individual market values, then:
79. If the shareholders of an acquired firm capture all of the merger's gain, then the:
80. Why is it not sufficient to state that a merger should occur simply because the economic
gains are positive?
81. Firms A and B are each currently worth $50 million but generate a $20 million gain when
merged. If the cost of the merger was $5 million, how much did firm A pay for firm B?
82. When two firms merge, the value of the acquiring firm will change by the:
83. CBA Corp. is worth $15 million as a stand-alone firm. ABC Corp. has offered 350,000
shares valued at $50 each to merge with CBA. After the merger, however, ABC's shares are worth
only $45 per share. What was the cost of the merger?
84. Which one of the following statements is correct concerning the cost of two firms
merging? The cost:
85. Why might shareholders of an acquiring firm prefer to finance mergers with stock rather
than with cash?
86. Realizing the benefits of a merger is easier when the merging companies have differing:
87. The most likely interpretation of headlines that read "ABC Corp. adopts shark repellent"
is that ABC:
88. Shares of a corporation can, under certain circumstances, be priced at different amounts
to different investors under the terms of a:
89. What does empirical evidence suggest about the distribution of gains from mergers?
90. What type of financing is typically instrumental in bringing about leveraged buyouts?
91. According to the free-cash-flow theory of takeovers, postmerger gains in market value
represent:
