Assume that two companies wish to engage in a Business Combination involving a share exchange. Once the share exchange is consummated, each shareholder group will have an equal number of voting shares. Which of the following statements best describes the course of action that must be taken under these circumstances?
A) Other factors must be examined to determine which shareholder group is more dominant.
B) The company with the largest net assets (at fair market value) is deemed to be the acquirer.
C) No acquirer can be identified since no shareholder group has majority voting control, so the share exchange must be annulled.
D) The Boards of Directors of both companies must enter into discussions to agree on which party will be the acquirer.

Question

Quizplus · Accepted Answer

Other factors must be examined to determine which shareholder group is more dominant. In situations where voting power is equally distributed and no clear acquirer can be identified through voting shares alone, other qualitative and quantitative factors are considered to determine which party has obtained control or is more dominant in the combination.

Assume That Two Companies Wish to Engage in a Business