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Acquisition and Shareholder Value

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An acquisition creates shareholder value:

1. by acquiring a business whose fundamental value is lower than the purchase price
2. as long as the fundamental value of the target plus the future value of the synergies is greater than the purchase price
3. as long as the fundamental value of the target plus the present value of the synergies is less than the purchase price
4. by acquiring a business whose fundamental value is higher than the purchase price

Please select / choose only 1 option out of 4 options listed.

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This solution explains how an acquisition creates shareholder value.

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1. by acquiring a business whose fundamental value is lower than the purchase price

The main intention of an ...

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