Merger and acquisition

Anonymous
timer Asked: Jun 15th, 2013
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Question Description

Based on what the acquiring company set the price for the target company ?

Tutor Answer

intel15
School: Cornell University

The acquiring company makes a public offer at a fixed price above the current market price. Offers in the United States are regulated by the Williams Act. An acquiring company can also engage in a proxy fight, whereby it tries to persuade enough shareholders, usually a simple majority, to replace the management with a new one which will approve the takeover. Another method involves quietly purchasing enough stock on the open market, known as a "creeping tender offer", to effect a change in management. In all of these ways, management resists the acquisition, but it is carried out anyway.

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