What is a tender offer? X An acquiring corporation asks shareholders of the target corporation to offer their stock for sale. The shareholders of the acquiring corporation offer their shares for sale to shareholders of the target corporation. The shareholders of the acquiring corporation purchase all of the assets of the target corporation. The shareholders of a target corporation form alliances and via shareholder voting eliminate the board of directors so that they may offer the positions to members of the acquiring corporation.

What is a tender offer? X An acquiring corporation asks shareholders of the target corporation to offer their stock for sale. The shareholders of the acquiring corporation offer their shares for sale to shareholders of the target corporation. The shareholders of the acquiring corporation purchase all of the assets of the target corporation. The shareholders of a target corporation form alliances and via shareholder voting eliminate the board of directors so that they may offer the positions to members of the acquiring corporation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Some advantages of obtaining control by acquiring a controlling interest in stock include all but: O The cost may be lower since only a controlling interest in the assets, not the total assets, is acquired. O The legal liability of each corporation is limited to its own assets. O Negotiations are made directly with the acquiree's management. O Tax advantages may result from preservation of the legal entities.
If the articles of incorporation do not include a pre-emptive right, the firm has a choice of offering the issue of common stock directly to existing shareholders or to the public. True or False
Hippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the sale
For what reason might a company purchase treasury stock? To increase shareholder liquidity To execute an acquisition through a share exchange To increase the number of outstanding shares of stock To reduce future income taxes
Before a corporation can issue common shares, it must first issue preferred shares. O True O False
A takeover is the acquisition of control over a corporation through a purchase of substantially all of its assets. O True O False
Match each of the following stockholders' equity concepts to the appropriate term (a-h). Question 5 options: Document which formally creates a corporation Corporate income distributed to stockholders The rules and procedures for conducting a corporation's affairs Group which meets periodically to establish corporate policies A legal entity, separate from the people who create and operate it A company whose shares can be bought and sold in public markets A company whose shares are not bought or sold in public markets Creditors cannot pursue stockholders' personal assets to satisfy claims 1. articles of incorporation 2. limited liability 3. bylaws 4. corporation 5. public corporation 6. board of directors 7. private corporation 8. dividends
Type of corporation Companies that are owned by a group of investors, who could also be associated with the company's management, make initial public offerings. Such companies are referred to as Initial public offering perfo publicly owned corporations closely held corporations When the demand for an initiar puvne uneny uru ur securlties exceeds the number of securities issued, the offering is deemed to be: O Oversubscribed O Undersubscribed Indigo Inc. is going public and issuing 150,000 shares of common stock. The capital raised in the IPO will fund the company's proposed expansion. A Dutch auction is used to allocate shares in the Indigo IPO. The following table shows the number of shares requested by potential investors in each row. Bids Number of Shares Requested Price per Share Bidder # 1 50,000 $56 Bidder # 2 100,000 54 Bidder # 3 150,000 52 Bidder # 4 200,000 50 Bidder # 5 250,000 48 Bidder # 6 300,000 46 What should be the firm's IPO offer price? O $48 O $54 O $55 O $52 O $57…
Terminology varies in the way companies differentiate among share types. But many corporations designate shares as common or preferred. What are the two special rights usually given to preferred shareholders?
What options does a company have if its board or management is opposed to an acquisition, a merger, or a takeover?
Which of the following represents one of the basic rights of stockholders? a. Stockholders may sell their stock back to the company if they wish. b. Stockholders may authorize a business contract on behalf of the corporation. c. Stockholders may determine at what price the company issues stock. d. Stockholders may participate in management by voting on corporate matters.
Will an acquiring corporation recognize gain or loss when it issues its stock to acquire the assets or stock of target corporation in a reorganization? Explain how it will work. How do exchanging shareholders and security holders determine their basis for the stock and securities received in a corporate reorganization? Give an example