How does a corporation acquire another company through merger, buying assets or stock?

Expert Solution

Mergers can be done with acquiring Assets of the company which is called the Asset acquisition under merger scheme and mergers can also be done through stock purchase which is also called stock acquisition under the merger scheme.

When corporation acquires another corporation through asset acquisition which means that the Assets of another company is acquired to a extent of more than 50%, so that it is merged with another company and it means that the control of its operation is held by another corporation. In Asset acquisition, there is not just acquisition of asset but the merging company also acquires some of the liabilities of other companies also so it helps in overall acquisition of the control of another firm.

In case of a stock acquisition, the share of other company is acquired up to an extent of more than 50% so that the control of the another organisation is acquired and it is done through fixation of a certain price at which the shareholders of the another company are agreed to sale their stake to the another company.

The shareholders need to give their consent in order to have a successful merger so that there should be certain price at which the controlling stake of the company is acquired through various investment bankers or it can either be acquired acquired through the stock market.

These are the two major merger schemes, through which control in the another organisation is acquired.

jeff jeffy answered 1 year ago

A. Camilia Inc. has two options to acquire intangible assets either through buying the intangible asset,...

A. Camilia Inc. has two options to acquire intangible assets either through buying the intangible asset, or through doing some research and develop the intangible asset internally. From what you learnt from this course explain with details the differences between these two ways of acquiring intangible assets. B. Camilia, Inc, a biotechnology company, developed and patented a diagnostic product called Trouvadol. Camilia purchased some research equipment to be used for Trouvadol and subsequent research projects. Camilia defeated a legal challenge...

Company A is going to acquire Company B through a stock-for-stock transaction in which Company A...

Company A is going to acquire Company B through a stock-for-stock transaction in which Company A will offer 0.5 share for each share of Company B. You are given the following information: Company A Company B Share Price $60.00 $20.00 Earnings Per Share 5.00 1.00 Number of Common Shares 20 million 10 million Calculate each stock’s price/earnings multiple. Calculate the percentage control premium Company A is offering. Will the transaction be dilutive or accretive to Company A? Explain. Calculate the...

Merger and Stock Investment Saxton Corporation purchases all of Taylor Company’s assets and liabilities on January...

Merger and Stock Investment Saxton Corporation purchases all of Taylor Company’s assets and liabilities on January 1, 2016, for $15 million in cash. At the date of acquisition, Taylor’s reported assets consist of current assets of $10 million and plant and equipment of $70 million. It reports current liabilities of $16 million and long-term debt of $58 million. Investigation reveals that Taylor’s plant and equipment is overvalued by $2 million and it has an unreported customer database valued at $700,000....

Company A is preparing a deal to acquire company B. One analyst estimated that the merger...

Company A is preparing a deal to acquire company B. One analyst estimated that the merger would produce 175 million dollars of annual cost savings, from operations, general and administrative expenses and marketing. These annual cost savings are expected to begin two years from now, and grow at 2% a year. In addition the analyst is assuming an after-tax integration cost of 0.3 billion, and taxes of 20%. Assume that the integration cost of 0.3 billion happens right when the...

Company A is preparing a deal to acquire company B. One analyst estimated that the merger...

Company A is preparing a deal to acquire company B. One analyst estimated that the merger would produce 175 million dollars of annual cost savings, from operations, general and administrative expenses and marketing. These annual cost savings are expected to begin two years from now, and grow at 2% a year. In addition the analyst is assuming an after-tax integration cost of 0.3 billion, and taxes of 20%. Assume that the integration cost of 0.3 billion happens right when the...

Johnson paid $325,000 to acquire 100% of Willis Corporation in a statutory merger. In addition, Johnson...

Johnson paid $325,000 to acquire 100% of Willis Corporation in a statutory merger. In addition, Johnson also agreed to pay the shareholders of Willis $0.40 in cash for every dollar in income from continuing operations of the combined entity over $75,000 in the first three years following acquisition. Johnson projects that there is a 20% (45%, 35%) probability that the income from continuing operations in the first three years following acquisition is $65,000 ($90,000, $115,000 respectively). Johnson uses a discount...

Why does AT&T wish to acquire Time Warner? What is the benefit to the merger? Who...

Why does AT&T wish to acquire Time Warner? What is the benefit to the merger? Who loses? The U.S. government doesn’t generally get involved with vertical mergers, why is the government contesting the AT&T/Time-Warner deal, but not (at least yet) the Disney/Fox deal (although the U.K. has expressed concerns)? Do you believe AT&T should be allowed to acquire Time-Warner? If so, should they place any restrictions on the merged firm?

A partnership was approached by a corporation that would like to acquire them by a stock...

A partnership was approached by a corporation that would like to acquire them by a stock acquisition. The partnership has no authorized stock, and the corporation does not want to pay cash for the partnership. The partnership is valued at $4,000,000 today. Reading the partnership agreement, you find that the partnership can be terminated at any time with the consent of the partners. They do not want to dissolve the partnership. The corporation very much wants to purchase the partnership....

A partnership was approached by a corporation that would like to acquire them by a stock...

A partnership was approached by a corporation that would like to acquire them by a stock acquisition. The partnership has no authorized stock, and the corporation does not want to pay cash for the partnership. The partnership is valued at $4,000,000 today. Reading the partnership agreement, you find that the partnership can be terminated at any time with the consent of the partners. They do not want to dissolve the partnership. The corporation very much wants to purchase the partnership....

AUS Corporation paid $160,000 to acquire all of Horany Company's net assets. Horany reported assets with...

AUS Corporation paid $160,000 to acquire all of Horany Company's net assets. Horany reported assets with a book value of $120,000 and fair value of $196,000 and liabilities with a book value and fair value of $46,000 on the date of combination. AUS also paid $6,000 to a search firm for finder's fees related to the acquisition. What amount AUS Corporation while recording its investment in Horany Company will record as goodwill?

Question

How does a corporation acquire another company through merger, buying assets or stock?

Solutions

Expert Solution

Related Solutions

A. Camilia Inc. has two options to acquire intangible assets either through buying the intangible asset,...

Company A is going to acquire Company B through a stock-for-stock transaction in which Company A...

Merger and Stock Investment Saxton Corporation purchases all of Taylor Company’s assets and liabilities on January...

Company A is preparing a deal to acquire company B. One analyst estimated that the merger...

Company A is preparing a deal to acquire company B. One analyst estimated that the merger...

Johnson paid $325,000 to acquire 100% of Willis Corporation in a statutory merger. In addition, Johnson...

Why does AT&T wish to acquire Time Warner? What is the benefit to the merger? Who...

A partnership was approached by a corporation that would like to acquire them by a stock...

A partnership was approached by a corporation that would like to acquire them by a stock...

AUS Corporation paid $160,000 to acquire all of Horany Company's net assets. Horany reported assets with...