Question

Which of the following statements is correct in the case of a merger?question 10 options:

1) the target firm and the acquiring firm both legal status is canceled
2) target firm continues to exist but will be a wholly owned subsidiary of the acquiring firm
3) the target firm shareholders have no say on whether the merger may occur or not
4) the acquiring company retains its pre-merger legal status

Answer 1

The correct statement regarding a corporate merger is that the acquiring company retains its pre-merger legal status. The target company may become a subsidiary or be absorbed entirely, and its shareholders usually have a vote on the merger.

Step-by-step explanation:

Among the options provided about what is correct in the case of a corporate merger, the statement that the acquiring company retains its pre-merger legal status is the correct one. In a merger, the target firm does not always continue to exist; it may be absorbed into the acquiring firm and cease to exist as a separate legal entity, depending on the terms of the merger.

However, in many cases, particularly in an acquisition, the target firm may continue to operate as a wholly owned subsidiary of the acquiring firm. The shareholders of the target firm generally do have a say in whether the merger may occur, as they typically vote on the merger proposal.