RSM333H1 Chapter Notes - Chapter 15: Grater, Financial Statement, Leveraged Buyout
Document Summary
Takeovers the transfer of control from one ownership group to another. Acquisition the purchase of one firm by another: the acquiring firm retains its identity, while the acquired firm ceases to exist. Merger the combination of 2 firms into a new legal entity. Issues arise because after companies have announced their intention to merge as equals, events occur that take them down a different path. Must look at the means by which the deal is financed. Most acquisitions are made through a cash transaction with the shareholders in the target company receiving cash for their shares. When one company acquires another, the approval of the target company"s shareholders is required since they have to agree to sell their shares. Alternative to a cash transaction is a share transaction where the acquiring company offers shares or some combination of cash and shares to the target company"s shareholders.
