Question

Question 7 - Studies of the effects of hostile takeovers have reached which of the following conclusions?

	Executives and managers are more likely to lose their jobs than line workers..
	Shareholders of he target company are better off, but bondholders are big losers.
	The usually involve the winning bidder paying far more than the takeover company is worth..
	All of the above
	None of the above

Answer 1

Hostile takeovers occur when a investor or acquirer instead of buying the company directly through legal means, approaches the shareholders and offers them to pay for their shares more than the market price in order to acquire the company.

This makes shareholders better off as they are getting more than the market price for their shares. However, bond holders are at a loss as the company is now sold and the board of directors and the management would not be heard off and thus bondholders would not be paid duly.

Thus, correct option is (b) Shareholders of the target company... But bondholders are big losers