Which of the following statements is true of a hostile takeover?
A) A hostile takeover results when a management wants the firm to be taken over.
B) A hostile takeover occurs when a firm's stock is undervalued relative to its potential.
C) A hostile takeover retains the managers of the acquired firm at their previous positions.
D) A hostile takeover refrains managers to take actions that maximize stock prices.
E) A hostile takeover results in poor management and inefficient operations.

Question

Quizplus · Accepted Answer

A hostile takeover occurs when a different company (often called the "acquirer") tries to acquire another company (sometimes called the "target") without the approval or cooperation of the target company's management. The target company's management may oppose the takeover, but the acquirer sees potential value or opportunity in the target company that is not fully reflected in the target company's stock price. This can happen if the target company is undervalued relative to its potential, making it an attractive target for acquirers who want to gain control and improve its performance.

Which of the Following Statements Is True of a Hostile