Section 3 Flashcards
To whom is a fairness opinion rendered to?
The board of directors of the target corporation
What is a Qualified Stock Purchase (QSP)?
The purchase of at least 80% of the total voting power and value of the stock of a corporation by another corporation during a 12-month acquisition period.
What is a reverse triangular merger?
A reverse triangular merger is a merger where a subsidiary merges into the target prior to the target being acquired by the buyer.
Who files an IRS form 8023 when a 338(h)(10) election is made?
The sellers of the target and the acquirer will file IRS form 8023 jointly.
After secured creditors are paid, what is the order of priority claims paid in a Chapter 7 bankruptcy?
(1) Administrative expenses (including legal fees)
(2) Wages due to employees (up to a limited amount)
(3) Contributions to employee benefit plans
(4) Unsecured claims are paid next, which include debentures, and then preferred stockholders, and finally common stockholders
What is the exchange ratio?
Offer price for target shares / buyer’s share price.
What does the “subject company” refer to under Regulation M-A?
The company that is sought to be acquired in a transaction
Why is a shareholders’ rights plan unattractive in a merger?
The plan causes the target company’s debt to rise, making it unattractive to takeover
What happens in a two-step merger?
1) Acquirer offers to buy the target shareholders’ shares typically at a premium price and the target shareholders decide whether to tender their shares.
2) If at least 90% of all shares are tendered, the acquirer squeezes out the remaining shareholders and completes the transaction.
In order for a forward triangular merger to qualify as a Section 368 tax-free reorganization, how much of the consideration to target shareholders can be paid in cash?
50%
