a.
To discuss: The significance of the four economic classifications of mergers on the likelihood of governmental intervention.
Introduction:
A process or an agreement where two or more firms combines together to form one new company is termed as Mergers.
a.
Explanation of Solution
The significance of the four economic classifications of mergers on the likelihood of governmental intervention is as follows:
The mergers that result in the government intervention from the four economic classifications of mergers are as follows:
- Vertical mergers
- Horizontal mergers
These types of mergers would result in the operating synergy.
b.
To discuss: The significance of the four economic classifications of mergers on the possibilities for operating synergy.
b.
Explanation of Solution
The significance of the four economic classifications of mergers on the possibilities for operating synergy is as follows:
The Conglomerate merger takes place when a dissimilar company combines together to form a new company. However, the congeneric merger occurs with same general industry. Both these mergers are not attacked by the government and even they provide less synergistic benefits.
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Chapter 21 Solutions
Bundle: Fundamentals of Financial Management, Loose-leaf Version, 15th + MindTap Finance, 1 term (6 months) Printed Access Card
- What are horizontal, vertical, congeneric, andconglomerate mergers? Are the different typesof mergers equally likely to pass muster with theJustice Department?arrow_forwardExamine what the empirical evidence say about who actually gains in a merger combinations.arrow_forwardExplain what is involved in valuing a merger using the ‘comparative firms’ approach.arrow_forward
- Define each of the following terms:b. Horizontal merger; vertical merger; congeneric merger; conglomeratemergerarrow_forwardDiscuss the underlying theories and empirical evidence on the value creation from horizontal mergers. How do other firm- and deal- characteristics interact with the valuation effects of such mergers?arrow_forwardDefine each of the following terms:c. Friendly merger; hostile merger; defensive merger; tender offer; targetcompany; breakup value; acquiring companyarrow_forward
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- Create a table to compare and contrast the three types of corporate mergers: horizontal, vertical, or conglomerate. Describe the characteristics of the corporations that are involved (products, consumers, etc.) and the benefits of this type of merger for each corporation.arrow_forwardWhat is a merger? Discuss if it is an effective strategy or not.arrow_forwardCritically discuss whether, in general, mergers and acquisitions are successful in practice.arrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT