Question

Cole and Porter are wealthy businessmen. They borrow money from Regent Trust Bank to acquire Conco Corp. They promise to repay the bank using the assets of Conco Corp. as collateral. In this scenario, Cole and Porter are involved in a

Multiple Choice

• leveraged buyout.

• horizontal merger.

• vertical merger.

• poison pill.

• conglomerate merger.

Answer 1

In this case, Cole and Porter are wealthy businessmen and there is no mention about whether are they the managers / employees of the company; Hence, this is not a Leveraged Buyout;

In this case, there is no mention about any industry in which both Cole and Porer are there to assess whether there could be some Sectoral or Synergised relationship with Conco Corp. Hence, this cannot be considered under either Horizontal Merger or Vertical Merger;

In this case, there is no mention about any involvement of Promoters / Directors / (of Conco Corp) involvement with Cole and Porter to make them purchase Conco Corp, to avoid or make defence any other tactical / foreceful acquisition by some other party; Hence, this cannot be counted under Poison pIll Merger;

In this case, Cole and Porter are indiviual wealthy businessmen. Pooling their interests, they planned to acquire Conco Corp using Financing from the Company. Hence, this can be considered as a Conglomerate merger;