CHAPTER 7.docx - CHAPTER 7 o Popularity of merger and...

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CHAPTER 7 o Popularity of merger and acquisition strategies: o Firms use merger and acquisition strategies to improve their ability to create more value for all stakeholders, including shareholders. o In approximately two-thirds of all acquisitions, the acquiring firm’s stock price falls immediately after the intended transaction is announced. o Mergers, acquisition and takeovers: Mergers: Two firms agree to integrate their operations on a relatively co- equal basis. (Friendly) Few true mergers actually take place. The main reason for this is that one party to the transaction is usually dominant in regard to various characteristics such as market share, size, or value of assets Acquisitions: One firm buys a controlling, or 100% interest in another firm with the intent of making the acquired firm a subsidiary business within its portfolio. (Most common) Takeovers: An acquisition in which the target firm did not solicit the acquiring firm’s bid for outright ownership. (Unfriendly) o
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  • Fall '11
  • MichelleZorn
  • Market Power, Regulatory Review

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