Asked by Katie Creager on May 12, 2024
Verified
An automobile manufacturer,Diamond Securities Inc.offers to purchase 58% shares of a mid-sized start-up that deals with digital accessories for automobiles.However,Diamond Securities Inc.does not specify the price or the form of payment.According to the contract,the price of the purchase will be determined based on the market value of the share on the day of the purchase.This deal is an example of
A) a tender offer.
B) factoring.
C) a spin-off.
D) venture capitalism.
Tender Offer
A public offer to buy shares from shareholders, usually at a premium over market price, as a way to gain control of the company.
Digital Accessories
Electronic ancillary equipment that supports and enhances the use of primary digital devices such as computers, smartphones, and tablets.
Factoring
A financial transaction where a business sells its accounts receivable to a third party at a discount, in exchange for immediate money.
- Grasp the essence and monetary effects of corporate moves including mergers, acquisitions, divestments, and split-offs.
Verified Answer
DD
Deniz DomaniçMay 18, 2024
Final Answer :
A
Explanation :
A tender offer is a public, open offer or invitation (usually announced in a newspaper advertisement) by a prospective acquirer to all stockholders of a publicly traded corporation to tender their stock for sale at a specified price during a specified time, subject to the tendering of a minimum and maximum number of shares. In this scenario, Diamond Securities Inc.'s offer to purchase 58% shares of a company without specifying the price or form of payment, but basing it on market value, aligns with the characteristics of a tender offer.
Learning Objectives
- Grasp the essence and monetary effects of corporate moves including mergers, acquisitions, divestments, and split-offs.