MGT339H5 Lecture Notes - Lecture 6: Shares Outstanding, Systematic Risk, Human Capital
Document Summary
The acquirer eats the target the equity of the target company seizes to exist. Merger one firm acquired by another (acquiring firm retains name and acquired firm ceases to exist) Disadv: must be approved by stockholders of both firms. Consolidation: more democratic form of a merger where both firms cease to exist and new firm is created. Herding cats (biggest problem when it comes to mergers and acquisitions): persuade all shareholders to agree. Acquisition of stock: don"t want to completely acquire that company, but do want to attain a controlling interest in that company. A firm is acquired by purchasing voting shares of the firm"s stock. Advantage no stockholder vote required, and can deal with stockholders if management is unfriendly. Disadvantage can be delayed if stockholders hold out for higher payment (costly), and complete absorption requires a merger later. Tender offer public offer to buy shares (cash or securities), and gain of voting shares.
