Chapter 10 - Mergers and Acquisitions

A firm engages in a(n) ________ when it purchases a second firm.

When one firm acquires a(n) ________ of another firm, it has acquired enough of that firm's assets so that the acquiring firm is able to make all the management and strategic decisions in the target firm.

A(n) ________ acquisition occurs when the management of a target firm wants to be acquired.

When a firm has not sold shares on the public stock market, it is known as

The difference between the current market price of a target firm's shares and the price a potential acquirer offers to pay for those shares is known as an

When Sears and Kmart, two retail firms of relatively equal size in the United States, agreed to combine their assets, this was an example of a(n)

The price of each of a firm's shares multiplied by the number of shares outstanding represents the firm's

In an unrelated acquisition, if 5 firms are interested in acquiring a firm and each of the bidding firms had a current market value of $30,000 while the current market value of the target firm is $20,000, this acquisition is likely to generate economic profits of ________ for the acquiring firm.

If an electronics manufacturer were to acquire a chain of retail electronic stores to sell its products, this would be an example of a ________ merger.

If eBay were to acquire a smaller online auction company, this would be an example of a ________ merger.

In a ________ merger, firms acquire complementary products through their merger and acquisition activities.

When eBay acquired Baaze.com, an Indian auction firm, in order to enter the Indian online auction market, this was an example of a ________ merger.

If there are no vertical, horizontal, product extension, or market extension links between firms, the FTC defines the merger or acquisition activity between firms as a ________ merger.

________ economies are scale economies that occur when the physical processes inside a firm are altered so that the same amounts of input produce a higher quantity of outputs.

Which of the following is a source of diversification economies?

________ economies are achieved by the ability of firms to dictate prices by exerting market power.

________ economies are achieved by improving a firm's performance relative to its risk attributes or lowering its risk attributes relative to its performance.

Which of the following is a financial motivation for why bidding firms might want to engage in merger and acquisition strategies?

Which one of the following is not one of the reasons that Jensen and Ruback listed as to why bidding firms might want to engage in merger and acquisition strategies?

In a related acquisition, if there is one target firm and ten bidding firms, and the value of each of the bidding firms as a stand-alone entity is $50,000 and the value of the target firm as a stand-alone entity is $30,000, the market value of the combined entity will be

Wealthy individuals who provide capital to entrepreneurs to help them grow their businesses are known as

________ firms typically raise money from numerous smaller investors, which they then invest in a portfolio of entrepreneurial firms.

In a(n) ________, a firm, typically working with an investment banker, sells its equity to the public at large.

Entrepreneurs must rely on capital generated from their ongoing operations or ________ and debt capital provided by banks.

Managers of bidding firms continue to engage in merger or acquisition strategies even though they usually do not generate profits for bidding firms in order to

Which of the following actions should bidding firm managers take to help earn superior performance in an acquisition strategy?

A thinly traded market is a market where

To ensure that the owners of target firms appropriate whatever value is created by a merger or acquisition, managers in these target firms should

________ is (are) a maneuver in which a target firm's management purchases any of the target firm's stock owned by a bidder and does so for a price that is greater than the current market value of that stock.

Firms using ________ fend off an acquisition by taking over the firm or firms bidding for them.

A ________ is a compensation arrangement between a firm and its senior management team that promises these individuals substantial cash payment if their firm is acquired and they lose their jobs in the process.

Mergers and acquisitions used to create diversification strategies should be managed through the

The most significant challenge in integrating bidding and target firms has to do with

A ________ is another bidding firm that agrees to acquire a particular target in the place of the original bidding firm.

________ include a variety of relatively minor corporate governance changes that, in principle, are supposed to make it more difficult to acquire a target firm.

Supermajority voting rules are an example of a

________ does not affect the wealth of target firm equity holders.

________ is an example of an ineffective and inconsequential response with the idea that sometimes a bidding firm is interested in just a few of the businesses currently being operated by the target firm.

If P&G's bid for Gillette was invited by Gillette's management, this would be an example of a

If Gillette's total market value on the day the deal was announced was $48.30 billion, P&G's $57 billion offer would represent a(n)

Since both P&G and Gillette are consumer products firms, this acquisition is best described as a

P&G's acquisition of Wella in 2003 is an example of a

P&G's purchase of AG-Hutchison Ltd in 2004 is an example of a

If one of the reasons P&G acquired Gillette was to gain greater market power in key industries, this would be an example of ________ economies.

If P&G wanted to increase the probability that it would be able to earn superior economic performance from its acquisition of Gillette, P&G should

If Gillette's managers wanted to maximize the value that Gillette received from its acquisition by P&G, they should

If P&G's acquisition of Wella had been delayed because it had to overcome a stipulation in Wella's corporate bylaws requiring that more than 50% of Wella's board of directors had to approve the takeover, this would be an example of

The most significant challenge P&G is likely to face in integrating each of the acquired companies into P&G's operations is likely to be ________ differences between P&G and each of the companies.