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Exam 40: Corporations: Mergers, Consolidations, Terminations

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Question 21

True/False

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Federal securities law does not require that target corporations assist aggressors in any way.

A) True
B) False

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Question 22

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"Green Trees." Wally, the president of Green Corporation, a company that provides landscaping services, wanted his corporation to purchase Tree Corporation, another corporation providing landscaping services. The board of Tree Corporation, however, did not wish to sell. The board of Green Corporation decided to buy any or all of Tree Corporation's stock in order to gain control of Tree Corporation. The management of Tree Corporation and its board strongly objected to the attempt by Green Corporation to take over the company. Green Corporation offered to purchase stock held by shareholders of Tree Corporation at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Green Corporation offered to give shareholders of Tree Corporation stock in Green Corporation in return for their stock in Tree Corporation. -Which of the following is a term for the attempt of Green Corporation to take over Tree Corporation over the objection of management and the board of Tree Corporation?

A) Under the table takeover
B) Surprise takeover
C) Strategic takeover
D) Hostile takeover
E) Planned takeover

F) A) and E)
G) B) and E)

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Question 23

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Set forth the three circumstances listed in the text under which a corporation acquiring assets assumes the liabilities of the selling corporation.

Which of the following was the result on appeal in the Case Opener involving an appeal of a decision of the Federal Trade Commission blocking a proposed merger between Polypore and Microporous Products on the basis that it would substantially lessen competition?

"Death." Barbara is president and a large shareholder in Reuse It, a corporation that sells used cellular telephones. Although the company was not insolvent, sales had been significantly down, and Barbara decided that it would be a good idea to discontinue the business. The board of directors agreed with her. The board members presented the proposal to discontinue the corporation to shareholders. Initially, Willy, a disgruntled shareholder, opposed ending the corporation. He claimed that the problem was that Barbara had done a poor job in management. Barbara planned to go forward with the termination of the company because a majority of the shareholders agreed. Willy, however, came around; and upon a second vote to discontinue the corporation, the vote was unanimous. Quill, a vice president of the corporation, was aware of a few outstanding debts owed by Reuse It. He suggested hurrying along quietly with ending the corporation because any claims not made before the corporation was dissolved could be avoided. Barbara told him that she was not sure that was a good idea. Therefore, the company proceeded with all appropriate notifications. When the time came to liquidate the corporation, the members of the board did not want to participate. Barbara was concerned about what action to take at that point because she really wanted to be finished with Reuse It. -Which of the following is the proper term for the plan to discontinue Reuse It?

"Green Trees." Wally, the president of Green Corporation, a company that provides landscaping services, wanted his corporation to purchase Tree Corporation, another corporation providing landscaping services. The board of Tree Corporation, however, did not wish to sell. The board of Green Corporation decided to buy any or all of Tree Corporation's stock in order to gain control of Tree Corporation. The management of Tree Corporation and its board strongly objected to the attempt by Green Corporation to take over the company. Green Corporation offered to purchase stock held by shareholders of Tree Corporation at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Green Corporation offered to give shareholders of Tree Corporation stock in Green Corporation in return for their stock in Tree Corporation. -By offering to purchase the stock of Tree Corporation at a price above its current market value, Green Corporation made a[n] ____.

Two security services, ABC Security and R. Knight Security, propose to merge. Each corporation has fewer than 10 shareholders. The proposed merger receives majority shareholder approval. Richard, a minority shareholder who owns 10% of the stock in Knight Security, however, is very much opposed to the merger. He tells the other shareholders in Knight Security that unless they convince him otherwise, he will block the merger. What are Richard's rights as a dissenting shareholder, and does he have the power to block the merger?

Which of the following was a finding of the court in Shiftan v. Morgan Joseph Holdings Inc., the case in the text involving stock appraisal rights following a merger?

Which of the following is true regarding situations in which a court may order an involuntary dissolution of a corporation?

What key piece of information does an aggressor generally need in order to gain control of a target corporation through proxies?

Hostile takeovers are takeovers to which the management of the target corporation objects.

In a merger, what happens to the property of the absorbed corporation?

Set forth the universal requirements for a merger or acquisition including what most states require in regard to shareholder approval.

"Green Trees." Wally, the president of Green Corporation, a company that provides landscaping services, wanted his corporation to purchase Tree Corporation, another corporation providing landscaping services. The board of Tree Corporation, however, did not wish to sell. The board of Green Corporation decided to buy any or all of Tree Corporation's stock in order to gain control of Tree Corporation. The management of Tree Corporation and its board strongly objected to the attempt by Green Corporation to take over the company. Green Corporation offered to purchase stock held by shareholders of Tree Corporation at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Green Corporation offered to give shareholders of Tree Corporation stock in Green Corporation in return for their stock in Tree Corporation. -By offering to give shareholders in Tree Corporation stock in Green Corporation in return for shares of stock in Tree Corporation, Green Corporation made a[n] ____.

The boards of directors of all involved corporations must approve a merger or consolidation plan.

"Green Trees." Wally, the president of Green Corporation, a company that provides landscaping services, wanted his corporation to purchase Tree Corporation, another corporation providing landscaping services. The board of Tree Corporation, however, did not wish to sell. The board of Green Corporation decided to buy any or all of Tree Corporation's stock in order to gain control of Tree Corporation. The management of Tree Corporation and its board strongly objected to the attempt by Green Corporation to take over the company. Green Corporation offered to purchase stock held by shareholders of Tree Corporation at a price substantially above the current market value of the stock. When that strategy was not wholly successful, Green Corporation offered to give shareholders of Tree Corporation stock in Green Corporation in return for their stock in Tree Corporation. -Which of the following is a term used to describe Green Corporation in its attempt to buy any or all of Tree Corporation's voting shares?

Which of the following is true regarding state approval of mergers?

Today, consolidations are very rare.

Which of the following is false regarding involuntary liquidation?

When voluntary dissolution procedures are initiated, which of the following must occur first?