Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 26, Problem 2Q
Summary Introduction
To determine: The Significance of merger with regard to likelihood of governmental intervention and possibilities of operating synergy.
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Students have asked these similar questions
Four economic classifications of mergers are (1) horizontal, (2) vertical, (3) conglomerate,and (4) congeneric. Explain the significance of these terms in merger analysis with regard to(a) the likelihood of governmental intervention and (b) possibilities for operating synergy.
What are horizontal, vertical, congeneric, andconglomerate mergers? Are the different typesof mergers equally likely to pass muster with theJustice Department?
Define synergy. Is synergy a valid rationale for mergers? Describe several situationsthat might produce synergistic gains.
Chapter 26 Solutions
Intermediate Financial Management (MindTap Course List)
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Similar questions
- “Reasons for merger that will result in wealth maximization are strategic benefits, market power, economics of scale, economies of vertical integration and taxation benefits”. Describe how any four out of the five factors mentioned may contribute to the success of a merger business exercisearrow_forwardExplain what is involved in valuing a merger using the ‘comparative firms’ approach.arrow_forwardDefine each of the following terms:b. Horizontal merger; vertical merger; congeneric merger; conglomeratemergerarrow_forward
- Define each of the following terms:c. Friendly merger; hostile merger; defensive merger; tender offer; targetcompany; breakup value; acquiring companyarrow_forwardDiscuss the underlying theories and empirical evidence on the value creation from horizontal mergers. How do other firm- and deal- characteristics interact with the valuation effects of such mergers?arrow_forwardSeveral reasons have been proposed to justify mergers. Among the more prominent are (1) tax consideration, (2) risk reduction, (3) control, (4) purchase of assets at below replacement cost, and (5) synergy in general. Which of the reasons are economically justifiable? Which are not? Which fit the situation at hand? Explain.arrow_forward
- What is involved in valuing a merger using the ‘comparative firms’ approach.arrow_forwardDefine each of the following terms:d. Operating merger; financial mergerarrow_forwardCreate a table to compare and contrast the three types of corporate mergers: horizontal, vertical, or conglomerate. Describe the characteristics of the corporations that are involved (products, consumers, etc.) and the benefits of this type of merger for each corporation.arrow_forward
- Critically discuss whether, in general, mergers and acquisitions are successful in practice.arrow_forwardWhat merger-related activities are undertaken byinvestment bankers?arrow_forwardThe following are sensible motives for mergers EXCEPT: a. Economies of scope b. Reducing firm risk through diversification c. Reducing competition d. Eliminating inefficiencies e. All of the abovearrow_forward
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