The Cat Box acquired The Dog House.As part of this transaction,both firms ceased to exist in their prior form and combined to create an all-new entity,Animal World.Which one of the following terms best describes this transaction?
A)divestiture
B)consolidation
C)tender offer
D)spinoff
E)conglomeration

Question

Quizplus · Accepted Answer

The transaction described in the given scenario is consolidation, which involves the combination of two or more firms to create a new entity. In this case, The Cat Box and The Dog House ceased to exist and merged to form Animal World. The other options do not accurately describe the nature of this transaction. Divestiture, for instance, refers to the sale or disposal of a subsidiary or division, but no such activity is mentioned here. A tender offer involves a bid to acquire a majority stake in a publicly-traded company, which is not applicable in this case. A spinoff, on the other hand, involves the creation of a separate company out of a subsidiary or division of an existing firm, which is not the case here either. Finally, conglomeration refers to the process by which a company expands into unrelated areas through merging or acquiring other firms, which may not be an accurate description of the Animal World transaction either.

The Cat Box Acquired the Dog House