M&A ch3

Which of the following is true? A white knight is a Third party that is willing to acquire only a large block of shares of the target of a hostile bid by another firm Group of the target firm's current shareholders who sides with management Third party that is willing to acquire the target of a hostile bid by another firm under terms agreeable to the target's management Group of dissident shareholders who sides with the bidding firm Third party that is willing to acquire the target of a hostile bid by another firm at the same price as the bidder but usually removes the target's management

Third party that is willing to acquire the target of a hostile bid by another firm under terms agreeable to the target's management

A successful proxy fight is a far less expensive means of gaining control over a target than a tender offer. True False

True

In elections involving classified boards, only one group of board members is up for election each year. True False

True

Purchasing the target firm's stock in the open market is a commonly used tactic to achieve all of the following except Strengthening the effectiveness of proxy contests Acquiring a controlling interest in the target firm without making such actions public knowledge. Lowering the average cost of acquiring the target firm's shares Recovering the cost of an unsuccessful takeover attempt Obtaining additional voting rights in the target firm

Acquiring a controlling interest in the target firm without making such actions public knowledge.

All of the following are true of a proxy contest except that they Are often costly Are sometimes designed to replace members of the board Are sometimes designed to have certain takeover defenses removed Are usually successful May enable effective control of a firm without owning 51% of the voting stock

Are usually successful

A leveraged recapitalization involves which of the following actions. Select all that apply. Establishing an employee stock ownership plan Borrowing money Issuing new shares Reducing debt Repurchasing or buying back shares

Borrowing money Repurchasing or buying back shares

All of the following are true of tender offers except that they Must be filed with the SEC Are sometimes over subscribed Are generally considered an expensive takeover tactic Consist only of offers of cash for target stock Are extended for a specific period of time

Consist only of offers of cash for target stock

In a two-tiered offer, the acquirer announces an offer to all shareholders at the same time but offers to pay a higher price to shareholders who tender early. True False

False

A tender offer is a proposal made directly to the target firm's board as the first step leading to a takeover. True False

False

Which of the following is true? A hostile takeover attempt Is supported by the target firm's board and its management Results in lower returns to the target firm's shareholders than a friendly attempt Is almost always successful Is usually preceded by a friendly approach to the target Is generally found to be illegal

Is usually preceded by a friendly approach to the target

Marshall Enterprises is attempting to take over Rayon Group. Rayon's shareholders have the right to buy additional shares at below market price if Marshall (considered by Rayon's board to be a hostile bidder) buys more than 15 percent of Rayon's outstanding shares. What term applies to this antitakeover measure? Greenmail provision Golden parachute plan Share repellent plan Pac Man defense Poison pill

Poison pill

All of the following are commonly used hostile takeover tactics, except: Tender offer Proxy contest Bear hug Litigation Poison pills

Poison pills

Which of the following takeover defenses is generally put in place by a firm before it receives a takeover bid? Pac-man defense Standstill agreements Poison pills Greenmail White knight

Poison pills

Studies have shown that which of the following combinations of corporate defenses is most effective in discouraging hostile takeovers? Poison pills and golden parachutes Standstill agreements and White Knights Poison Pills and tender offers Golden parachutes and staggered boards Poison pills and staggered boards

Poison pills and staggered boards

Some of Acme Inc.'s shareholders are very dissatisfied with the performance of the firm's current management team and want to gain control of the board. To do so, these shareholders offer their own slate of candidates for open spaces on the firm's board of directors. Lacking the necessary votes to elect these candidates, they are contacting other shareholders and asking them to vote for their slate of candidates. The firm's existing management is asking shareholders to vote for the candidates it has proposed to fill vacant seats on the board. Which of the following terms best describes this scenario? Proxy contest Leveraged buyout Divestiture Merger

Proxy contest

Which of the following primarily regulates the conduct of a proxy contest? Hart-Scott-Rodino Act of 1976 Clayton Act of 1914 Securities Act of 1934 Williams Act of 1968 Securities Exchange Act of 1934

Securities Exchange Act of 1934

According to the management entrenchment theory, Management attempts to maximize shareholder value Management resistance to takeover attempts is an attempt to extend their longevity with the target firm Management resistance to takeover attempts is an attempt to increase the proposed purchase price premium Shareholders tend to benefit when management resists takeover attempts

Shareholders tend to benefit when management resists takeover attempts

All of the following are examples of antitakeover provisions commonly found in state statutes except Control share acquisition provisions Business combination provisions Cash-out provisions Fair price provisions Short-form merger provisions

Short-form merger provisions

All of the following are examples of takeover defenses except Litigation Staggered boards Golden parachutes Tender offers Poison pills

Tender offers

Which of the following is likely to affect the desirability to a bidder of launching a hostile takeover bid for a target? Select all that apply The bidder's state of incorporation The target's bylaws The composition of the board of the target firm The bidder's bylaws The composition of the ownership of the target's stock

The bidder's state of incorporation The target's bylaws The composition of the ownership of the target's stock