1. Company A wants to acquire Company B and estimates that Company B is worth $75 million. Company B has preferred stock of $5 million, debt of $10 million, and outstanding shares of 10 million. Based on this information, what is the maximum amount Company A should offer per common share?
6.00
$6.50
$7.00
$7.50
None of the above
2. Marcus Brothers and Reuth Confections are in the same industry, but offer different product lines. If they merge, what type of merger is involved?
Congeneric merger
Conglomerate merger
Horizontal merger
Vertical merger
None of the above
3. Which of the following statements is most correct?
A defensive merger is one where the firm's managers decide to merge with another firm to increase the possibility of being acquired through a friendly takeover.
Acquiring firms send a signal that their stock is undervalued if they choose to use stock to pay for the acquisition.
Cash payments are used in takeovers but never in mergers
Managers often are fired in takeovers, but never in mergers.
None of the above