Ice-cream manufacturer is proposing to acquire a soup manufacturer on the basis that, first, its sales and profits will be more seasonally balanced and, second, from year to year, sales and profits will be less affected by variations in weather. Will this risk spreading create value for shareholders? Under what circumstances could this acquisition create value for shareholders?

Answer rating: 100% (QA)

This is a classic case of UnRelated Diversification for Risk minimisation From a shareholders perspe... View the full answer