Question

Conglomerate takeover can be best defined as a takeover of:

Select one:

a. a target company operating in the same line of business as the acquiring company.

b. a target company operating in a different line of business.

c. a company which is a supplier of goods to the acquiring company

d. a target company in an unrelated type of business

e. None of the above

Answer 1

Conglomerate takeover can be best defined as a takeover of-

D. A target company in an unrelated type of business

In a conglomerate takeover, both the companies operate in very different types of business that are unrelated to each other. The takeover is not undertaken to achieve economies of scale because of the unrelated nature of business. A conglomerate takeover results in diversification for the acquirer.

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