Question
In: Finance
Broadcom wanted to acquire Qualcomm. The management and directors of Qualcomm rejected the offer. Is this...
Broadcom wanted to acquire Qualcomm. The management and directors of Qualcomm rejected the offer. Is this consistent with managerial objectives for the financial firm?
Managerial Objective: maximize the current value per share of the existing stock
Solutions
Expert Solution
yes, it is consistent with the managerial objective of maximization of the current value per share of the existing stock because this can lead to maximization of the overall value of the company, even if the company is not acquired.
Acquisition of Qualcomm can be resulting into mismanagement of resources of Broadcom because these companies are not resulting in producing synergies for each other in the long run, so management can be deciding against going for the merger and acquisition and this decision of management cannot be directly accused of that the management are not working for the maximization of the shareholders wealth because a bad acquisition can also lead into destruction of the shareholders over all value and it can also lead into the decrease of the current share price of the company so it can be said that the directors cannot enter into an acquisition in order to prevent a bad acquisition which can restrict the value of the shareholders.
So, in this case it is not rational and prudent to accused the management of not acting into benefits of the shareholders.
jeff jeffy answered 2 years agoRelated Solutions
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