Which of the following statements is incorrect?
A) When using cash, the acquirer bears all the risk.
B) It always pays for the shareholders of the target company to be taken over.
C) Managers have less interest in the financing of the deal than in getting the deal done.
D) When using share swaps in acquisitions, the risk is borne by the shareholders in both companies.
E) The stock price of acquiring companies usually goes up on announcement of a merger indicating it is getting a good value for the company being acquired.

Question

Quizplus · Accepted Answer

The stock price of acquiring companies usually goes down or remains stable on the announcement of a merger, as the market often perceives the acquisition as a risk or a cost, rather than an immediate value gain.

Which of the Following Statements Is Incorrect