Question

A statutory merger is a(n):

A) business combination in which only one of the two companies continues to exist as a legal corporation.
B) business combination in which both companies continue to exist.
C) acquisition of a competitor.
D) acquisition of a supplier or a customer.
E) legal proposal to acquire outstanding shares of the target's stock.

Answer 1

A statutory merger is a business combination where two firms combine and only one continues to exist as a legal entity, with the other being absorbed.

Step-by-step explanation:

A statutory merger refers to a business combination where two companies join together, resulting in only one of the companies continuing its existence as a legal corporation. Generally, the company being merged loses its former legal identity and is absorbed by the surviving corporation. This is different from an acquisition, where the purchased company may still operate under its former name, and both mergers and acquisitions can result in two formerly independent firms operating under common ownership. Antitrust laws play a crucial role in this process to ensure that active competition in the market is maintained.