Definition of synergy; merger

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 22, Problem 1Q

a.

Summary Introduction

To determine:

Definition of synergy; merger

a.

Expert Solution

Explanation of Solution

Synergy is the motivation to merger. It means that after merger companies are able to reduce cost and gain from merger. It results in economies of scale in management, marketing and production and increases efficiency. Merger is bring business of two companies under one business and increasing the value of shares.

b.

Summary Introduction

To determine:

Definition of horizontal merger, vertical merger, Congeneric merger, conglomerate merger

b.

Expert Solution

Explanation of Solution

Horizontal merger means joining business of having same line of business. Vertical merger means joining business with its supplier or customer. Congeneric merger happens between related industries. Conglomerate merger happens when one business decides to enter into another industry and join with company in another industry.

c.

Summary Introduction

To determine:

Definition of friendly merger, hostile merger, defensive merger, tender offer, Target Company, breakup value, acquiring company

c.

Expert Solution

Explanation of Solution

A merger in which merger is approved by both the companies is called friendly merger. A situation where merger offer is resisted by the target company, it is called hostile merger. When one company is acquired by another company but Target Company tries to avoid acquisition by initial acquisition company is defensive merger. A tender offer is a friendly merger where merger takes place with the approval of management of both companies and shareholders tender the shares. Target Company is the firm which is acquired by another company under merger. Breakup value is the value of company which is acquired by another company. Acquiring company is the company which purchase the another company under merger.

d.

Summary Introduction

To determine:

Definition of operating merger, financial merger

d.

Expert Solution

Explanation of Solution

Operating merger is merger in which operations in the firm involved are integrated and generate operating synergy. Financial merger is where operations of two companies are not integrated and does not generate operating synergy.

e.

Summary Introduction

To determine:

Definition of purchase accounting

e.

Expert Solution

Explanation of Solution

Purchase accounting is a method of accounting in which assets and liabilities of the firm are valued at fair price when merger is taking place to record in the books of acquiring company.

f.

Summary Introduction

To determine:

Definition of white knight, proxy fight

f.

Expert Solution

Explanation of Solution

White knight is the situation under merger where friendly investor invests in the company and acquires it with the support of management. The merger takes place at the fair value or fair consideration of assets and liabilities. Proxy fight is situation that arises when shareholders send their representatives as proxy and they form a group and try to win corporate vote.

g.

Summary Introduction

To determine:

Definition of joint venture, corporate alliance

g.

Expert Solution

Explanation of Solution

Joint venture is a creation of new entity by two or more parties to acquire new market, to gain from enhanced operations by acquiring skills and capabilities and sharing the risk of investment. Corporate alliance is a relationship build with the motive to reduce cost and improve efficiency.

h.

Summary Introduction

To determine:

Definition of divestiture, spin-off

h.

Expert Solution

Explanation of Solution

Divestiture means divestment. It means withdrawing or cutting-off the investments done by company into another company. Spin-off of corporate means that company splits its one part business as a separate business.

i.

Summary Introduction

To determine:

Definition of holding company, operating company, parent company

i.

Expert Solution

Explanation of Solution

Holding company is the company which has ownership interest in another company and runs the business of these companies. An operating company is the company which runs operations and provides with goods and services to customers. Parent company is the company which holds sufficient power in another company to influence the operations of the company. Sometimes holding company is also known as parent company.

j.

Summary Introduction

To determine:

Definition of arbitrage, risk arbitrage

j.

Expert Solution

Explanation of Solution

Arbitrage is the advantage of difference in price in the two or more different markets and has no negative cash-flows as commodities are simultaneously bought and sold in two different markets at different prices striking the imbalance. Risk arbitrage means that stocks are purchased of the companies which may become takeover targets in some near future.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

An annuity provides payments at the end of each two-year period for twenty years. It pays $1,000 at the end of the first period and increases the payment by $1,000 in each subsequent period, so that at the end of the tenth period it pays $10,000. Given a 2% nominal annual interest rate compounded semiannually, determine in which of the following ranges is the present value of this annuity. please use tvm if neededI

A. What is the amount of the annuity purchase required if you wish to receive a fixed payment of $200,000 for 20 years? Assume that the annuity will earn 10 percent per year.B. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of the current year.C. Calculate the annual cash flows (annuity payments) from a fixed-payment annuity if the present value of the 20-year annuity is $1 million and the annuity earns a guaranteed annual return of 10 percent. The payments are to begin at the end of five years. I need help solving question C on a financial calculator.

John wants to buy a property for $105,000 and wants an 80 percent loan for $84,000. A lenderindicates that a fully amortizing loan can be obtained for 30 years (360 months) at 6 percentinterest; however, a loan fee of $3,500 will also be necessary for John to obtain the loan.a. How much will the lender actually disburse?b. What is the APR for the borrower, assuming that the mortgage is paid off after 30 years (fullterm)?c. If John pays off the loan after five years, what is the effective interest rate? Why is it differ-ent from the effective interest rate in (b)?d. Assume the lender also imposes a prepayment penalty of 2 percent of the outstanding loanbalance if the loan is repaid within eight years of closing. If John repays the loan after fiveyears with the prepayment penalty, what is the effective interest rate?

Answer 2

Question

Chapter 22, Problem 1Q

a.

Summary Introduction

To determine:

Definition of synergy; merger

a.

Expert Solution

Explanation of Solution

Synergy is the motivation to merger. It means that after merger companies are able to reduce cost and gain from merger. It results in economies of scale in management, marketing and production and increases efficiency. Merger is bring business of two companies under one business and increasing the value of shares.

b.

Summary Introduction

To determine:

Definition of horizontal merger, vertical merger, Congeneric merger, conglomerate merger

b.

Expert Solution

Explanation of Solution

Horizontal merger means joining business of having same line of business. Vertical merger means joining business with its supplier or customer. Congeneric merger happens between related industries. Conglomerate merger happens when one business decides to enter into another industry and join with company in another industry.

c.

Summary Introduction

To determine:

Definition of friendly merger, hostile merger, defensive merger, tender offer, Target Company, breakup value, acquiring company

c.

Expert Solution

Explanation of Solution

A merger in which merger is approved by both the companies is called friendly merger. A situation where merger offer is resisted by the target company, it is called hostile merger. When one company is acquired by another company but Target Company tries to avoid acquisition by initial acquisition company is defensive merger. A tender offer is a friendly merger where merger takes place with the approval of management of both companies and shareholders tender the shares. Target Company is the firm which is acquired by another company under merger. Breakup value is the value of company which is acquired by another company. Acquiring company is the company which purchase the another company under merger.

d.

Summary Introduction

To determine:

Definition of operating merger, financial merger

d.

Expert Solution

Explanation of Solution

Operating merger is merger in which operations in the firm involved are integrated and generate operating synergy. Financial merger is where operations of two companies are not integrated and does not generate operating synergy.

e.

Summary Introduction

To determine:

Definition of purchase accounting

e.

Expert Solution

Explanation of Solution

Purchase accounting is a method of accounting in which assets and liabilities of the firm are valued at fair price when merger is taking place to record in the books of acquiring company.

f.

Summary Introduction

To determine:

Definition of white knight, proxy fight

f.

Expert Solution

Explanation of Solution

White knight is the situation under merger where friendly investor invests in the company and acquires it with the support of management. The merger takes place at the fair value or fair consideration of assets and liabilities. Proxy fight is situation that arises when shareholders send their representatives as proxy and they form a group and try to win corporate vote.

g.

Summary Introduction

To determine:

Definition of joint venture, corporate alliance

g.

Expert Solution

Explanation of Solution

Joint venture is a creation of new entity by two or more parties to acquire new market, to gain from enhanced operations by acquiring skills and capabilities and sharing the risk of investment. Corporate alliance is a relationship build with the motive to reduce cost and improve efficiency.

h.

Summary Introduction

To determine:

Definition of divestiture, spin-off

h.

Expert Solution

Explanation of Solution

Divestiture means divestment. It means withdrawing or cutting-off the investments done by company into another company. Spin-off of corporate means that company splits its one part business as a separate business.

i.

Summary Introduction

To determine:

Definition of holding company, operating company, parent company

i.

Expert Solution

Explanation of Solution

Holding company is the company which has ownership interest in another company and runs the business of these companies. An operating company is the company which runs operations and provides with goods and services to customers. Parent company is the company which holds sufficient power in another company to influence the operations of the company. Sometimes holding company is also known as parent company.

j.

Summary Introduction

To determine:

Definition of arbitrage, risk arbitrage

j.

Expert Solution

Explanation of Solution

Arbitrage is the advantage of difference in price in the two or more different markets and has no negative cash-flows as commodities are simultaneously bought and sold in two different markets at different prices striking the imbalance. Risk arbitrage means that stocks are purchased of the companies which may become takeover targets in some near future.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 22, Problem 1Q

a.

Summary Introduction

To determine:

Definition of synergy; merger

a.

Expert Solution

Explanation of Solution

Synergy is the motivation to merger. It means that after merger companies are able to reduce cost and gain from merger. It results in economies of scale in management, marketing and production and increases efficiency. Merger is bring business of two companies under one business and increasing the value of shares.

b.

Summary Introduction

To determine:

Definition of horizontal merger, vertical merger, Congeneric merger, conglomerate merger

b.

Expert Solution

Explanation of Solution

Horizontal merger means joining business of having same line of business. Vertical merger means joining business with its supplier or customer. Congeneric merger happens between related industries. Conglomerate merger happens when one business decides to enter into another industry and join with company in another industry.

c.

Summary Introduction

To determine:

Definition of friendly merger, hostile merger, defensive merger, tender offer, Target Company, breakup value, acquiring company

c.

Expert Solution

Explanation of Solution

A merger in which merger is approved by both the companies is called friendly merger. A situation where merger offer is resisted by the target company, it is called hostile merger. When one company is acquired by another company but Target Company tries to avoid acquisition by initial acquisition company is defensive merger. A tender offer is a friendly merger where merger takes place with the approval of management of both companies and shareholders tender the shares. Target Company is the firm which is acquired by another company under merger. Breakup value is the value of company which is acquired by another company. Acquiring company is the company which purchase the another company under merger.

d.

Summary Introduction

To determine:

Definition of operating merger, financial merger

d.

Expert Solution

Explanation of Solution

Operating merger is merger in which operations in the firm involved are integrated and generate operating synergy. Financial merger is where operations of two companies are not integrated and does not generate operating synergy.

e.

Summary Introduction

To determine:

Definition of purchase accounting

e.

Expert Solution

Explanation of Solution

Purchase accounting is a method of accounting in which assets and liabilities of the firm are valued at fair price when merger is taking place to record in the books of acquiring company.

f.

Summary Introduction

To determine:

Definition of white knight, proxy fight

f.

Expert Solution

Explanation of Solution

White knight is the situation under merger where friendly investor invests in the company and acquires it with the support of management. The merger takes place at the fair value or fair consideration of assets and liabilities. Proxy fight is situation that arises when shareholders send their representatives as proxy and they form a group and try to win corporate vote.

g.

Summary Introduction

To determine:

Definition of joint venture, corporate alliance

g.

Expert Solution

Explanation of Solution

Joint venture is a creation of new entity by two or more parties to acquire new market, to gain from enhanced operations by acquiring skills and capabilities and sharing the risk of investment. Corporate alliance is a relationship build with the motive to reduce cost and improve efficiency.

h.

Summary Introduction

To determine:

Definition of divestiture, spin-off

h.

Expert Solution

Explanation of Solution

Divestiture means divestment. It means withdrawing or cutting-off the investments done by company into another company. Spin-off of corporate means that company splits its one part business as a separate business.

i.

Summary Introduction

To determine:

Definition of holding company, operating company, parent company

i.

Expert Solution

Explanation of Solution

Holding company is the company which has ownership interest in another company and runs the business of these companies. An operating company is the company which runs operations and provides with goods and services to customers. Parent company is the company which holds sufficient power in another company to influence the operations of the company. Sometimes holding company is also known as parent company.

j.

Summary Introduction

To determine:

Definition of arbitrage, risk arbitrage

j.

Expert Solution

Explanation of Solution

Arbitrage is the advantage of difference in price in the two or more different markets and has no negative cash-flows as commodities are simultaneously bought and sold in two different markets at different prices striking the imbalance. Risk arbitrage means that stocks are purchased of the companies which may become takeover targets in some near future.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 22, Problem 1Q

a.

Summary Introduction

To determine:

Definition of synergy; merger

a.

Expert Solution

Explanation of Solution

Synergy is the motivation to merger. It means that after merger companies are able to reduce cost and gain from merger. It results in economies of scale in management, marketing and production and increases efficiency. Merger is bring business of two companies under one business and increasing the value of shares.

b.

Summary Introduction

To determine:

Definition of horizontal merger, vertical merger, Congeneric merger, conglomerate merger

b.

Expert Solution

Explanation of Solution

Horizontal merger means joining business of having same line of business. Vertical merger means joining business with its supplier or customer. Congeneric merger happens between related industries. Conglomerate merger happens when one business decides to enter into another industry and join with company in another industry.

c.

Summary Introduction

To determine:

Definition of friendly merger, hostile merger, defensive merger, tender offer, Target Company, breakup value, acquiring company

c.

Expert Solution

Explanation of Solution

A merger in which merger is approved by both the companies is called friendly merger. A situation where merger offer is resisted by the target company, it is called hostile merger. When one company is acquired by another company but Target Company tries to avoid acquisition by initial acquisition company is defensive merger. A tender offer is a friendly merger where merger takes place with the approval of management of both companies and shareholders tender the shares. Target Company is the firm which is acquired by another company under merger. Breakup value is the value of company which is acquired by another company. Acquiring company is the company which purchase the another company under merger.

d.

Summary Introduction

To determine:

Definition of operating merger, financial merger

d.

Expert Solution

Explanation of Solution

Operating merger is merger in which operations in the firm involved are integrated and generate operating synergy. Financial merger is where operations of two companies are not integrated and does not generate operating synergy.

e.

Summary Introduction

To determine:

Definition of purchase accounting

e.

Expert Solution

Explanation of Solution

Purchase accounting is a method of accounting in which assets and liabilities of the firm are valued at fair price when merger is taking place to record in the books of acquiring company.

f.

Summary Introduction

To determine:

Definition of white knight, proxy fight

f.

Expert Solution

Explanation of Solution

White knight is the situation under merger where friendly investor invests in the company and acquires it with the support of management. The merger takes place at the fair value or fair consideration of assets and liabilities. Proxy fight is situation that arises when shareholders send their representatives as proxy and they form a group and try to win corporate vote.

g.

Summary Introduction

To determine:

Definition of joint venture, corporate alliance

g.

Expert Solution

Explanation of Solution

Joint venture is a creation of new entity by two or more parties to acquire new market, to gain from enhanced operations by acquiring skills and capabilities and sharing the risk of investment. Corporate alliance is a relationship build with the motive to reduce cost and improve efficiency.

h.

Summary Introduction

To determine:

Definition of divestiture, spin-off

h.

Expert Solution

Explanation of Solution

Divestiture means divestment. It means withdrawing or cutting-off the investments done by company into another company. Spin-off of corporate means that company splits its one part business as a separate business.

i.

Summary Introduction

To determine:

Definition of holding company, operating company, parent company

i.

Expert Solution

Explanation of Solution

Holding company is the company which has ownership interest in another company and runs the business of these companies. An operating company is the company which runs operations and provides with goods and services to customers. Parent company is the company which holds sufficient power in another company to influence the operations of the company. Sometimes holding company is also known as parent company.

j.

Summary Introduction

To determine:

Definition of arbitrage, risk arbitrage

j.

Expert Solution

Explanation of Solution

Arbitrage is the advantage of difference in price in the two or more different markets and has no negative cash-flows as commodities are simultaneously bought and sold in two different markets at different prices striking the imbalance. Risk arbitrage means that stocks are purchased of the companies which may become takeover targets in some near future.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 22, Problem 1Q

a.

Summary Introduction

To determine:

Definition of synergy; merger

a.

Expert Solution

Explanation of Solution

Synergy is the motivation to merger. It means that after merger companies are able to reduce cost and gain from merger. It results in economies of scale in management, marketing and production and increases efficiency. Merger is bring business of two companies under one business and increasing the value of shares.

b.

Summary Introduction

To determine:

Definition of horizontal merger, vertical merger, Congeneric merger, conglomerate merger

b.

Expert Solution

Explanation of Solution

Horizontal merger means joining business of having same line of business. Vertical merger means joining business with its supplier or customer. Congeneric merger happens between related industries. Conglomerate merger happens when one business decides to enter into another industry and join with company in another industry.

c.

Summary Introduction

To determine:

Definition of friendly merger, hostile merger, defensive merger, tender offer, Target Company, breakup value, acquiring company

c.

Expert Solution

Explanation of Solution

A merger in which merger is approved by both the companies is called friendly merger. A situation where merger offer is resisted by the target company, it is called hostile merger. When one company is acquired by another company but Target Company tries to avoid acquisition by initial acquisition company is defensive merger. A tender offer is a friendly merger where merger takes place with the approval of management of both companies and shareholders tender the shares. Target Company is the firm which is acquired by another company under merger. Breakup value is the value of company which is acquired by another company. Acquiring company is the company which purchase the another company under merger.

d.

Summary Introduction

To determine:

Definition of operating merger, financial merger

d.

Expert Solution

Explanation of Solution

Operating merger is merger in which operations in the firm involved are integrated and generate operating synergy. Financial merger is where operations of two companies are not integrated and does not generate operating synergy.

e.

Summary Introduction

To determine:

Definition of purchase accounting

e.

Expert Solution

Explanation of Solution

Purchase accounting is a method of accounting in which assets and liabilities of the firm are valued at fair price when merger is taking place to record in the books of acquiring company.

f.

Summary Introduction

To determine:

Definition of white knight, proxy fight

f.

Expert Solution

Explanation of Solution

White knight is the situation under merger where friendly investor invests in the company and acquires it with the support of management. The merger takes place at the fair value or fair consideration of assets and liabilities. Proxy fight is situation that arises when shareholders send their representatives as proxy and they form a group and try to win corporate vote.

g.

Summary Introduction

To determine:

Definition of joint venture, corporate alliance

g.

Expert Solution

Explanation of Solution

Joint venture is a creation of new entity by two or more parties to acquire new market, to gain from enhanced operations by acquiring skills and capabilities and sharing the risk of investment. Corporate alliance is a relationship build with the motive to reduce cost and improve efficiency.

h.

Summary Introduction

To determine:

Definition of divestiture, spin-off

h.

Expert Solution

Explanation of Solution

Divestiture means divestment. It means withdrawing or cutting-off the investments done by company into another company. Spin-off of corporate means that company splits its one part business as a separate business.

i.

Summary Introduction

To determine:

Definition of holding company, operating company, parent company

i.

Expert Solution

Explanation of Solution

Holding company is the company which has ownership interest in another company and runs the business of these companies. An operating company is the company which runs operations and provides with goods and services to customers. Parent company is the company which holds sufficient power in another company to influence the operations of the company. Sometimes holding company is also known as parent company.

j.

Summary Introduction

To determine:

Definition of arbitrage, risk arbitrage

j.

Expert Solution

Explanation of Solution

Arbitrage is the advantage of difference in price in the two or more different markets and has no negative cash-flows as commodities are simultaneously bought and sold in two different markets at different prices striking the imbalance. Risk arbitrage means that stocks are purchased of the companies which may become takeover targets in some near future.

Answer 6

Chapter 22, Problem 1Q

a.

Summary Introduction

To determine:

Definition of synergy; merger

a.

Expert Solution

Explanation of Solution

Synergy is the motivation to merger. It means that after merger companies are able to reduce cost and gain from merger. It results in economies of scale in management, marketing and production and increases efficiency. Merger is bring business of two companies under one business and increasing the value of shares.

Answer 7

Chapter 22, Problem 1Q

a.

Summary Introduction

To determine:

Definition of synergy; merger

Answer 8

a.

Expert Solution

Explanation of Solution

Synergy is the motivation to merger. It means that after merger companies are able to reduce cost and gain from merger. It results in economies of scale in management, marketing and production and increases efficiency. Merger is bring business of two companies under one business and increasing the value of shares.

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

Summary Introduction

To determine:

Definition of horizontal merger, vertical merger, Congeneric merger, conglomerate merger

b.

Expert Solution

Explanation of Solution

Horizontal merger means joining business of having same line of business. Vertical merger means joining business with its supplier or customer. Congeneric merger happens between related industries. Conglomerate merger happens when one business decides to enter into another industry and join with company in another industry.

Answer 13

b.

Summary Introduction

To determine:

Definition of horizontal merger, vertical merger, Congeneric merger, conglomerate merger

Answer 14

b.

Expert Solution

Explanation of Solution

Horizontal merger means joining business of having same line of business. Vertical merger means joining business with its supplier or customer. Congeneric merger happens between related industries. Conglomerate merger happens when one business decides to enter into another industry and join with company in another industry.

Answer 15

b.

Expert Solution

Answer 16

b.

Expert Solution

Answer 17

Expert Solution

Answer 18

c.

Summary Introduction

To determine:

Definition of friendly merger, hostile merger, defensive merger, tender offer, Target Company, breakup value, acquiring company

c.

Expert Solution

Explanation of Solution

A merger in which merger is approved by both the companies is called friendly merger. A situation where merger offer is resisted by the target company, it is called hostile merger. When one company is acquired by another company but Target Company tries to avoid acquisition by initial acquisition company is defensive merger. A tender offer is a friendly merger where merger takes place with the approval of management of both companies and shareholders tender the shares. Target Company is the firm which is acquired by another company under merger. Breakup value is the value of company which is acquired by another company. Acquiring company is the company which purchase the another company under merger.

Answer 19

c.

Summary Introduction

To determine:

Definition of friendly merger, hostile merger, defensive merger, tender offer, Target Company, breakup value, acquiring company

Answer 20

c.

Expert Solution

Explanation of Solution

A merger in which merger is approved by both the companies is called friendly merger. A situation where merger offer is resisted by the target company, it is called hostile merger. When one company is acquired by another company but Target Company tries to avoid acquisition by initial acquisition company is defensive merger. A tender offer is a friendly merger where merger takes place with the approval of management of both companies and shareholders tender the shares. Target Company is the firm which is acquired by another company under merger. Breakup value is the value of company which is acquired by another company. Acquiring company is the company which purchase the another company under merger.

Answer 21

c.

Expert Solution

Answer 22

c.

Expert Solution

Answer 23

Expert Solution

Answer 24

d.

Summary Introduction

To determine:

Definition of operating merger, financial merger

d.

Expert Solution

Explanation of Solution

Operating merger is merger in which operations in the firm involved are integrated and generate operating synergy. Financial merger is where operations of two companies are not integrated and does not generate operating synergy.

Answer 25

d.

Summary Introduction

To determine:

Definition of operating merger, financial merger

Answer 26

d.

Expert Solution

Explanation of Solution

Operating merger is merger in which operations in the firm involved are integrated and generate operating synergy. Financial merger is where operations of two companies are not integrated and does not generate operating synergy.

Answer 27

d.

Expert Solution

Answer 28

d.

Expert Solution

Answer 29

Expert Solution

Answer 30

e.

Summary Introduction

To determine:

Definition of purchase accounting

e.

Expert Solution

Explanation of Solution

Purchase accounting is a method of accounting in which assets and liabilities of the firm are valued at fair price when merger is taking place to record in the books of acquiring company.

Answer 31

e.

Summary Introduction

To determine:

Definition of purchase accounting

Answer 32

e.

Expert Solution

Explanation of Solution

Purchase accounting is a method of accounting in which assets and liabilities of the firm are valued at fair price when merger is taking place to record in the books of acquiring company.

Answer 33

e.

Expert Solution

Answer 34

e.

Expert Solution

Answer 35

Expert Solution

Answer 36

f.

Summary Introduction

To determine:

Definition of white knight, proxy fight

f.

Expert Solution

Explanation of Solution

White knight is the situation under merger where friendly investor invests in the company and acquires it with the support of management. The merger takes place at the fair value or fair consideration of assets and liabilities. Proxy fight is situation that arises when shareholders send their representatives as proxy and they form a group and try to win corporate vote.

Answer 37

f.

Summary Introduction

To determine:

Definition of white knight, proxy fight

Answer 38

f.

Expert Solution

Explanation of Solution

White knight is the situation under merger where friendly investor invests in the company and acquires it with the support of management. The merger takes place at the fair value or fair consideration of assets and liabilities. Proxy fight is situation that arises when shareholders send their representatives as proxy and they form a group and try to win corporate vote.

Answer 39

f.

Expert Solution

Answer 40

f.

Expert Solution

Answer 41

Expert Solution

Answer 42

g.

Summary Introduction

To determine:

Definition of joint venture, corporate alliance

g.

Expert Solution

Explanation of Solution

Joint venture is a creation of new entity by two or more parties to acquire new market, to gain from enhanced operations by acquiring skills and capabilities and sharing the risk of investment. Corporate alliance is a relationship build with the motive to reduce cost and improve efficiency.

Answer 43

g.

Summary Introduction

To determine:

Definition of joint venture, corporate alliance

Answer 44

g.

Expert Solution

Explanation of Solution

Joint venture is a creation of new entity by two or more parties to acquire new market, to gain from enhanced operations by acquiring skills and capabilities and sharing the risk of investment. Corporate alliance is a relationship build with the motive to reduce cost and improve efficiency.

Answer 45

g.

Expert Solution

Answer 46

g.

Expert Solution

Answer 47

Expert Solution

Answer 48

h.

Summary Introduction

To determine:

Definition of divestiture, spin-off

h.

Expert Solution

Explanation of Solution

Divestiture means divestment. It means withdrawing or cutting-off the investments done by company into another company. Spin-off of corporate means that company splits its one part business as a separate business.

Answer 49

h.

Summary Introduction

To determine:

Definition of divestiture, spin-off

Answer 50

h.

Expert Solution

Explanation of Solution

Divestiture means divestment. It means withdrawing or cutting-off the investments done by company into another company. Spin-off of corporate means that company splits its one part business as a separate business.

Answer 51

h.

Expert Solution

Answer 52

h.

Expert Solution

Answer 53

Expert Solution

Answer 54

i.

Summary Introduction

To determine:

Definition of holding company, operating company, parent company

i.

Expert Solution

Explanation of Solution

Holding company is the company which has ownership interest in another company and runs the business of these companies. An operating company is the company which runs operations and provides with goods and services to customers. Parent company is the company which holds sufficient power in another company to influence the operations of the company. Sometimes holding company is also known as parent company.

Answer 55

i.

Summary Introduction

To determine:

Definition of holding company, operating company, parent company

Answer 56

i.

Expert Solution

Explanation of Solution

Holding company is the company which has ownership interest in another company and runs the business of these companies. An operating company is the company which runs operations and provides with goods and services to customers. Parent company is the company which holds sufficient power in another company to influence the operations of the company. Sometimes holding company is also known as parent company.

Answer 57

i.

Expert Solution

Answer 58

i.

Expert Solution

Answer 59

Expert Solution

Answer 60

j.

Summary Introduction

To determine:

Definition of arbitrage, risk arbitrage

j.

Expert Solution

Explanation of Solution

Arbitrage is the advantage of difference in price in the two or more different markets and has no negative cash-flows as commodities are simultaneously bought and sold in two different markets at different prices striking the imbalance. Risk arbitrage means that stocks are purchased of the companies which may become takeover targets in some near future.

Answer 61

j.

Summary Introduction

To determine:

Definition of arbitrage, risk arbitrage

Answer 62

j.

Expert Solution

Explanation of Solution

Arbitrage is the advantage of difference in price in the two or more different markets and has no negative cash-flows as commodities are simultaneously bought and sold in two different markets at different prices striking the imbalance. Risk arbitrage means that stocks are purchased of the companies which may become takeover targets in some near future.