M7-The Economic Effect of Significant Transactions

Question 1

When two companies operating in the same industry merge, it represents a horizontal merger. (true or false)

Answer 1

true

Question 2

If a company merges with one of its suppliers, this represents a vertical merger. (true or false)

Answer 2

true

Question 3

A diagonal combination occurs when a company that engages in an activity integrates with another company that provides ancillary support for that primary activity. (true or false)

Answer 3

true

Example a fresh fish retailer merges with a transport company

Question 4

A circular combination occurs when different business units with relatively remote connections come together under single management. (true or false)

Answer 4

true

Question 5

A tender offer occurs when a company makes an offer to the shareholders of another company it is attempting to acquire. (true or false)

Answer 5

true

Question 6

Under an Equity Carve Out, a new public company is formed, shares are sold to the public through an IPO, the original company receives cash, and the parent company maintains a controlling interest. (true or false)

Answer 6

true