Asset purchase-subsidiary merger-butler chemical company

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Butler Chemical Company (manufacturer of industrial chemicals) has been struggling over the past few years with the stagnation of agricultural and commercial construction. The company has substantial debt outstanding and last week it disclosed that it may not be able to meet all of its debt obligations if business does not improve. While there is hope that the improving economy will generate sufficient increases in revenues and operating cash flow to avoid bankruptcy, the company has hired an investment banker to explore the possibility of sale either through liquidation or merger. Suppose the banker approached Dow Chemical Company about this opportunity.

Describe the factor that would make Dow favor either an asset purchase or forward subsidiary merger rather than a conventional merger (T merged into P)?

 

Reference no: EM1344273

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