Which of the following statements best describes a merger concept?
A) A conglomerate merger is one where a firm combines with another firm in the same industry.
B) Regulations in Canada prohibit acquiring firms from using common share to purchase another firm.
C) Defensive mergers are designed to make a company less vulnerable to a takeover.
D) The corporate valuation method and the equity residual method, even properly applied, produce different results.

Question

Quizplus · Accepted Answer

Defensive mergers are a type of merger where the acquiring company merges with another company to make itself less vulnerable to a takeover. Option A is incorrect as it defines a conglomerate merger. Option B is incorrect as it mentions a specific regulation in Canada, which is not applicable in all countries. Option D is incorrect as it talks about different methods of valuation and does not relate to the concept of a merger.

Which of the Following Statements Best Describes a Merger Concept