Which of the following statements regarding merger deals is (are) correct? Choose all correct answer(s) On average, the price of the target increases substantially, while the price of the bidder does not increase by much. If the premium paid by the bidder exceeds the expected additional value to be created through the merger, the bidder's share price is likely to drop on the announcement of the bid. A bidder can often acquire a public-listed company for less than its current market value. Synergies are by far the most common justification that bidders give for the premium they pay for a target.
Which of the following statements regarding merger deals is (are) correct? Choose all correct answer(s) On average, the price of the target increases substantially, while the price of the bidder does not increase by much. If the premium paid by the bidder exceeds the expected additional value to be created through the merger, the bidder's share price is likely to drop on the announcement of the bid. A bidder can often acquire a public-listed company for less than its current market value. Synergies are by far the most common justification that bidders give for the premium they pay for a target.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Which of the following statements regarding merger deals is (are) correct?
Choose all correct answer(s)
On average, the price of the target increases substantially, while the price of the bidder
does not increase by much.
If the premium paid by the bidder exceeds the expected additional value to be created
through the merger, the bidder's share price is likely to drop on the announcement of the
bid.
A bidder can often acquire a public-listed company for less than its current market value.
Synergies are by far the most common justification that bidders give for the premium they
pay for a target.
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