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Supplementary objective test questions

37 Goose Co, a large manufacturing company has just combined with Duck Co, a
smaller manufacturing company in the same business sector.

Most of the directors of Duck Co have been made redundant, and the new
Board of Directors is made up of the directors of Goose Co along with two of the
former directors of Duck Co. The new company will continue to trade under the
Goose Co brand name.

Which of the following is the most appropriate term to describe this
business combination?

A Vertical acquisition

B Horizontal acquisition

C Merger

D Conglomerate acquisition

38 AA and BB, two listed UK based companies, are considering a merger. The two
companies have similar levels of profitability and employ similar numbers of
staff. Both are viewed positively by the stock market and have similarly high
price-earnings ratios.

Both companies operate in the banking sector, and have branches in most
towns and cities across the country.

Which THREE of the following synergistic gains are most likely to be
achieved from the merger of AA and BB?

A Bootstrapping

B Economies of scale

C Economies of vertical integration

D Disposal of surplus assets

E Market power

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