Humming Inc. is interested in acquiring BirdCo, a supplier of materials for Humming’s products, and feels that it could improve the management of BirdCo. Current management has been lax in monitoring product quality, which could lead to recalls or lawsuits. Management of BirdCo is not supportive of a merger because they could lose their positions, whereas most of the shareholders support the acquisition as a method of obtaining new management. There is a very small minority of shareholders who don’t want to be shareholders of Humming. BirdCo has assets of $5 million with a basis of $6 million. Its liabilities are $2 million. What would be the best solution for Humming in its acquisition of BirdCo?

A) Type A Reorganization

B) Type B Reorganization

C) Type C Reorganization

D) Humming buy Birdco's assets for cash and Birdco distribute the cash to its shareholders and liquidate

E) Humming buy Birdco's stock for cash directly from the shareholders

Answer rating: 100% (QA)

Recommended solution would be A Type A Reorganization Type A reorgan... View the full answer