One CEO justified the merger of his soft-drink company with a machine tool company in the following
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One CEO justified the merger of his soft-drink company with a machine tool company in the following manner: “This is a great merger. First the products are unrelated. Thus our company’s earnings volatility is likely to decrease. Second, our management team has proved that we are better managers than the former management team of the tool company, and thus we are likely to discover new ways to create and capture value within the tool company.” Evaluate this rationale.
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It is true that the merger might reduce earnings volatili...View the full answer
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Related Book For
Managerial Economics and Organizational Architecture
ISBN: 978-0073375823
5th edition
Authors: James Brickley, Jerold Zimmerman, Clifford W. Smith Jr
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