Reorganizations

Reorganizations - Reorganizations Merger a combination of...

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Reorganizations Merger: a combination of two corporations in which only one corporation survives and the merged corporation goes out of existence. The acquiring company assumes the assets and liabilities of the merged company. Friendly merger —cash financed Friendly merger —stock financed (bidder uses stock to purchase target shares) Hostile—cash tender offer Hostile—stock tender offer Reverse Merger: a merger in which a private company may go public by merging with an already public company that often is inactive or a corporate shell. Leveraged buy outs: A buyer uses debt to finance the acquisition of a company Often results in “going private.” One version: management buy- out. Corporate Restructuring: Often referred to as asset selloffs such as divestitures, spin-offs, split-offs, split-ups. Divestiture: the sale of a unit of a company Spin-off: Parent distributes shares on a pro rata basis to its shareholders. These new shares give shareholders ownership rights in a division or part of the parent company that is sold off. Split-off: shareholders of a parent company exchange their shares in the parent company for shares in the sold off entity. Split-up: parent spins off all of its component parts and ceases to exist. Antitakeover Measures: preventative (reduce likelihood) and active (after takeover initiated) Preventative: Early warning systems: monitoring shareholding and trading patterns Poison pills: securities issued by potential target to make the firm less valuable in the eyes of a hostile bidder. Often right offerings that allows shareholders of target to buy stock in the acquiring firm at a low price Distributed as a dividend and become activated after a
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triggering event like the acquisition of 20% of outstanding stock by any individual, corporation or partnership. Can be deactivated by the board of directors (dead-hand provisions).
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This note was uploaded on 03/26/2011 for the course ACTG 3400 taught by Professor Durkee during the Spring '11 term at Weber.

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Reorganizations - Reorganizations Merger a combination of...

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