Some acquirers prefer to structure deals so as to apply the pooling-of-interest accounting method, not the 'purchase' method, to post-transaction companies
Article Abstract:
The contested takeover bids regarding First Interstate Bancorp illustrate some of the differences between the two accounting methods allowed: pooling of interest, and purchase. Wells Fargo & Co, attempting a hostile takeover, would have to use the purchase method, which yields an increase in both goodwill and asset value. That reduces future reported profits, affecting the market for both the resulting company's stock and its debt. Pooling is different than tax-free reorganization, but the two overlap and can coincide.
Publication Name: The National Law Journal
Subject: Law
ISSN: 0162-7325
Year: 1995
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Outsourcing agreements may hinder takeovers: as merger activity increases, targets and their vendors may ally to thwart hostile suitors
Article Abstract:
Outsourcing companies' information technology to an independent provider has become a huge business and may interact in novel ways with the resurgent trend toward mergers and acquisitions. A changed mgmt or business environment may necessitate renegotiating a contract with an outsourcing vendor, potentially creating a source of conflict. Outsourcing agreements could also be used as poison pills, to deter would-be corporate suitors, either by being hard to break or by terminating automatically.
Publication Name: The National Law Journal
Subject: Law
ISSN: 0162-7325
Year: 1995
User Contributions:
Comment about this article or add new information about this topic:
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