Ch. 6: Mergers amd Takeovers – No. 1
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
corporation (the surviving corporation) acquires all of the
which both corporations continue to exist and do business.
MERGER, CONSOLIDATION &
(1) payment for their shares in the merged corporation,
Ch. 6: Mergers amd Takeovers – No. 2
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MERGER, CONSOLIDATION &
SHARE EXCHANGE: PROCEDURE
One or more states’ laws will govern the procedures for any
merger, consolidation, or share exchange. In general:
(1) each corporation’s board of directors must approve the
plan’s terms and conditions;
(2) the plan must state the value of each corporation’s
(5) the state will issue, as appropriate, a certificate of
merger to the surviving corporation or a certificate of
consolidation to the successor corporation.
Short-Form Merger: A merger between a parent and a
Ch. 6: Mergers amd Takeovers – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MERGER, CONSOLIDATION & SHARE
EXCHANGE: SHAREHOLDERS’ RIGHTS
While the day-to-day operations of a corporation, and even
the policies governing its ongoing operations, are generally
in the surviving, successor, or other corporation. Instead, he
may
(1) have his shares of the pre-merger or pre-consolidation
corporation appraised, and
(2) be paid the fair market value of his shares by the pre-
Ch. 6: Mergers amd Takeovers – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
ASSET PURCHASE
When a corporation acquires all or substantially all of the
assets of another corporation, by direct purchase, the
purchasing (or acquiring) corporation simply extends its
ownership and control over the additional assets.
Generally, the acquiring corporation only purchases the
assets, not the liabilities, of the other corporation.
However, there are exceptions when:
(1) the acquiring corporation impliedly or expressly
Ch. 6: Mergers amd Takeovers – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
STOCK PURCHASE
offer to the target corporation’s shareholders. The
tender offer is publicly advertised, available to all
shareholders, and offers to pay a higher-than-market
price for shares of the target corporation.
A tender offer may be conditioned on receiving a
specified number of outstanding shares in the target
corporation by a specified date.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TAKEOVER DEFENSES
Takeover Defenses include various measures included in a
knights”).
See Exhibit 41-3 for a listing and discussion of takeover
defenses.
Ch. 6: Mergers amd Takeovers – No. 7
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TERMINATION
Dissolution may occur if
(1) the shareholders unanimously vote to dissolve;
(2) the board of directors votes to dissolve and the
shareholders approve the board’s action; or
(3) a court orders the corporation dissolved in response to
(a) a petition by an authorized state officer for failure
Winding Up: When a corporation dissolves voluntarily, the
directors, as trustees of the corporation’s assets, are
responsible for winding up the corporation’s affairs for the
benefit of its creditors and shareholders and are personally
liable for any breach of their fiduciary duties.
Ch. 6: Mergers amd Takeovers – No. 2
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MERGER, CONSOLIDATION &
SHARE EXCHANGE: PROCEDURE
One or more states’ laws will govern the procedures for any
merger, consolidation, or share exchange. In general:
(1) each corporation’s board of directors must approve the
plan’s terms and conditions;
(2) the plan must state the value of each corporation’s
(5) the state will issue, as appropriate, a certificate of
merger to the surviving corporation or a certificate of
consolidation to the successor corporation.
Short-Form Merger: A merger between a parent and a
Ch. 6: Mergers amd Takeovers – No. 3
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
MERGER, CONSOLIDATION & SHARE
EXCHANGE: SHAREHOLDERS’ RIGHTS
While the day-to-day operations of a corporation, and even
the policies governing its ongoing operations, are generally
in the surviving, successor, or other corporation. Instead, he
may
(1) have his shares of the pre-merger or pre-consolidation
corporation appraised, and
(2) be paid the fair market value of his shares by the pre-
Ch. 6: Mergers amd Takeovers – No. 4
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
ASSET PURCHASE
When a corporation acquires all or substantially all of the
assets of another corporation, by direct purchase, the
purchasing (or acquiring) corporation simply extends its
ownership and control over the additional assets.
Generally, the acquiring corporation only purchases the
assets, not the liabilities, of the other corporation.
However, there are exceptions when:
(1) the acquiring corporation impliedly or expressly
Ch. 6: Mergers amd Takeovers – No. 5
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
STOCK PURCHASE
offer to the target corporation’s shareholders. The
tender offer is publicly advertised, available to all
shareholders, and offers to pay a higher-than-market
price for shares of the target corporation.
A tender offer may be conditioned on receiving a
specified number of outstanding shares in the target
corporation by a specified date.
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TAKEOVER DEFENSES
Takeover Defenses include various measures included in a
knights”).
See Exhibit 41-3 for a listing and discussion of takeover
defenses.
Ch. 6: Mergers amd Takeovers – No. 7
Clarkson et al.’s Business Law: Commercial Law for Accountants (1E)
TERMINATION
Dissolution may occur if
(1) the shareholders unanimously vote to dissolve;
(2) the board of directors votes to dissolve and the
shareholders approve the board’s action; or
(3) a court orders the corporation dissolved in response to
(a) a petition by an authorized state officer for failure
Winding Up: When a corporation dissolves voluntarily, the
directors, as trustees of the corporation’s assets, are
responsible for winding up the corporation’s affairs for the
benefit of its creditors and shareholders and are personally
liable for any breach of their fiduciary duties.