1. [S1] A merger may result to a new legal en5ty dis5nct from the two original corpora5ons agreeing 6.

6. Both en55es, despite being in different industries are buyers of Raw Material X, a special chemical.
to the merger. (S2] An acquisi5on may result from the purchase of the assets and not the shares of If their aim for a merger is to increase bargaining power over this material, they had considered
the target firm. which factor in their decision?
[A] Only S1 is true [A] Customer segmenta5on
[B] Only S2 is true [B] Industry posi5on
[Cl Both are true [Cl Market share
[P] Both are false [P] Geography and region

2. [S1] When the current board of directors do not agree with the merger or acquisi5on, the 7. The goal of this type of merger or acquisi5on is to combine market segments
shareholders may subsequently replace them and have the new set of directors vote for the merger [A] Congeneric
or acquisi5on. [S2] When the current shareholders do not agree with the merger or acquisi5on, the [B] Market extension
board of directors may subsequently replace them and have the new set of shareholders vote for the [C] Product extension
merger or acquisi5on. [D] Ver5cal
[A] Only S1 is true
[B] Only S2 is true 8. The following an5-hos5le takeover strategies can result to the bankruptcy of the firm EXCEPT
[Cl Both are true [A] Bank-end Plans
[P] Both are false [B] Pacman Defense
[C] Scorched Earth
3. [S1] A conglomerate type of merger oIen aims to decrease unsystema5c or opera5ng risk but [D] Shareholder Rights Plan
may also allow the benefits of economies of scale. [S2] A product extension type of acquisi5on helps
establish the firm's ability to cater to the needs to a wide range of market by leveraging on its 9. ABC Corpora5on currently has 100,000 ordinary shares outstanding and P10,000,000-face value
produc5on. conver5ble bonds. The bonds are equivalent to 200,000 ordinary shares. To prevent an acquisi5on
[A] Only S1 is true through conversion, ABC prohibits any conver5ble bondholder to exercise their rights if this will result
[B] Only S2 is true to a 20% or more ownership in the firm.
[Cl Both are true [A] Lobster Traps
[P] Both are false [B] People Pill
[C] Supermajority Provisions
4. [S1] A congeneric type of acquisi5on oIen aims to diversify the investment porNolio of the parent [D] Yellow Night
corpora5on while at the same 5me, makes use of the parent corpora5on's knowledge of the general
industry where it belongs. [S2] A market extension type of merger will generally benefit from the 10. ABC Corpora5on has issued 10,000 shares which now represents 10% ownership of the en5ty to
en5ty's opera5ng leverage. Ms. LMN. The board knows that she is a neutral party who would like to keep the status quo. The
[A] Only S1 is true price agreed upon is P100, significantly lower than the market value of a share which is currently at
[B] Only S2 is true P625. If ABC would like to use Ms. LMN's ownership as a means to prevent a takeover, Ms. LMN
[Cl Both are true would be ac5ng as
[P] Both are false [A] Black Knight
[B] Greenmail
5 [S1] A synergy from increased debt capacity is considered a financial effect to the firms involved in [C] White knight
the merger or acquisi5on. [S2] A synergy from the market extension type of merger is that the [D] Whitemail
combined firm would be able to create products that would be a result from a well-developed
produc5on capability emerging from the two firms opera5ng together. 11. ABC Corpora5on purchases its own shares from the market at a fair value of P500 each which it
[A] Only S1 is true subsequently sold to a former director for a price of P30. This sale as an an5-hos5le takeover strategy
[B] Only S2 is true may be referred to as a
[Cl Both are true [A] Blackmail
[P] Both are false [B] Greenmail
[C] Whitemail
[D] Yellowmail 17. The target firm also agempts to take over the acquiring firm.
[A] Macaroni Defense
12. An example of this is when 80,000 out of the 90,000 votes from ordinary shares should be [B] Nancy Reagan Defense
obtained before a merger or acquisi5on can push through. [C] Pacman Defense
[A] Back-end Plans [D] Suicide Pill
[B] Staggered Board of Directors
[C] Supermajority Provisions 18. The LEAST effec5ve an5-hos5le takeover strategy for a company with valuable and loyal
[D] Pacman Defense employees would be
[A] Golden Parachute
13. ABC Innova5ons Inc. has several patents rela5ng to groundbreaking technology. Instead of [B] Pension Parachute
adver5sing these to the public, it depends on word-of-mouth marke5ng for its growth. This lessens [C] People Pill
the interest of poten5al acquirers to target ABC in an acquisi5on agempt. It also appears to have a [D] Transfer of crown jewel
high debt ra5o, high non-profit genera5ng asset ra5o and low turnover compared to its industry
peers. ABC's ac5ons can be likened to what strategy? 19. Which of the following would LEAST likely be a synergy between a company that manufacturers
[A] Pacman Defense steel and an unprofitable company that provides welding services?
[B| Scorched Earth [A] Cost Savings
[C] Stands5ll Agreement [B] Diversifica5on
[D] Supermajority Provision [C] Economies of Sale
[D] Taxes Benefits
14. Any offer to be taken over requires shareholder approval through a number of votes which is
more than what is legally for all transac5ons involving change of control, mergers and takeovers. 20. This type of merger or acquisi5on will LEAST likely be inves5gated by the Philippine Compe55on
[A] Macaroni Defense Commission
[B] Staggered Board of Directors [A] Congeneric
IC] Scorched Earth [B] Horizontal
[D]Supermajority Provisions [C] Market Extension
[D] Ver5cal
15. If a poten5al acquirer has cumula5vely acquired at least 20% ownership in the firm, then the
en5ty will issue more ordinary shares to the other shareholders resul5ng to a dilu5on of ownership by 21. Which an5-hos5le takeover strategy allows for a more acceptable acquisi5on agreement between
the poten5al acquirer. This is an example of the par5es?
[A] Lobster Traps [A] Back-end Plan
[B] Nancy Reagan Defense [B] Nancy Reagan Defense
[C] Shareholder Rights Plan [C] Stands5ll Agreement
[D] White Knight [D] Transfer of Crown Jewel

16. The poten5al acquirers of ABC Corpora5on have bought 45% ownership for a total price Use the following case for items 22 to 26: ABC Corpora5on is a manufacturer of furniture sets for
P4,000,000. In an agempt of the other shareholders owning the other 47% to discourage the large families. It uses a market niche business strategy to build customer loyalty from the iden5fied
con5nuance of the acquisi5on, they offered to buy the remaining 8% and convert these to treasury. market. In terms of its opera5ons, it uses highly automated manufacturing process which allows ABC
This agempt is called to lower its produc5on cost per set.
[A] Backend Plans It is currently owned by Mr. A (12%), Mr. B (12%), Mr. C (12%), Mr. B (12%) and the public (52%).
[B] Share Buyback In a plan to expand its opera5ons, it would like to acquire Target Corpora5on, a manufacturer of
[C] Shareholder Rights Plan ligh5ng fixtures that are known to be able to brighten the largest of rooms. It approached several
[D] Target Repurchase Target Corpora5on shareholders to buy their shares at fair value. They agreed and exchanged P20
million for the 20 million shares which represent 40% of shares outstanding.
In the more recent stockholders' mee5ng, the original and remaining shareholders represen5ng 60%
ownership no5ced the acquisi5on of shares by ABC. They raised this concern and voted to disallow
any sale or disposal of shares for the 5me being. Subsequently, they were able to nego5ate and the universally accessible and useful... Our companies share similar values; we both always put our users
original shareholders will be given 1 million shares of ABC Corpora5on valued at P35 million for the first and are commiged to innova5ng to improve their experience. Together, we are natural partners
remaining Target Corpora5on shares. to offer a compelling media entertainment service to users,
content owners and adver5sers."
22. What type of acquisi5on according to purpose has ABC executed? (Source: hgps://www.sec.gov/Archives/edgar/data/1288776/000119312506206884/dex991.htm
[A] Congeneric
[B] Conglomerate , 27. Based on the narra5ve above, the following were considered in the acquisi5on decision EXCEPT:
[C] Horizontal [A] Geography and region
[D] Product Extension [B] Products and services
[C] Profitability
23Which an5-hos5le takeover strategy would be least effec5ve for ABC Corpora5on? [D]Synergies
[A] Killer Bees
[B] People Pill 28. What type of acquisi5on according to purpose has ABC executed?
[C] Supermajority Provision [A] Congeneric
[D] White Knight B] Conglomerate
[C] Market extension
24. What type of acquisi5on according to financing mode has ABC executed? [D] Product extension
[A] Cash acquisi5on
[B] Equity swap 29. What type of acquisi5on according to financing mode has ABC executed?
[C] Combina5on of cash acquisi5on and equity swap [A] Cash acquisi5on
[D] Cannot be determined [B] Equity swap
[C] Combina5on of cash acquisi5on and equity swap
25. What type of takeover strategy did ABC implement? [D] Cannot be determined
[A] Creeping Tender Offer
[B] Dawn Raid 30. What type of merger or acquisi5on strategy was implemented?
[C] One-5me Tender Offer [A] Friendly
[D] Premium Raid [B] Hos5le - Creeping Tender
[C] Offer Hos5le - Dawn Raid
26. What type of an5-hos5le takeover strategy has the target firm implemented? [D] Hos5le - One-5me Tender Offer
[A] Nancy Reagan Defense
[B] Proxy Fight
[C] Stands5ll Agreement
[D] Supermajority Provision

Use the following case for items 27 to 30: Google Limited Liability Company is a mul5na5onal
technology company. It focuses on online adver5sing, search engine technology, e-commerce,
ar5ficial intelligence and other related informa5on technologies. It caters to a wide array of users in
its many online plaNorms and services.
Back in October of 2006, it has announced to acquire YouTube, the consumer media company that
had exponen5al growth in videos,viewers and adver5sement revenues for $1. 65 billion in a stock-for-
stock transac5on. The acquisi5on combines one of the largest and fastest growing onbline video
entertainment communi5es with Google’es exper5se. The combined companies can provide a beger,
more comprehensive experience for users interested in uploading, watching and sharing videos.
According to Eric Schmidt, CEO of Google, "The YouTube team has built an exci5ng and powerful
media plaNorm that complements Google's mission to organize the world's informa5on and make it