Company R is a major food retailer.

CIMA F3 Question Answer

Company R is a major food retailer. It wishes to acquire Company S, a food manufacturer.

Company S currently supplies many stores owned by Company R with food products that it manufactures.

Company S is of similar size to Company R but has a lower credit rating.

Which of the following is most likely to be a synergistic benefit to R on purchasing S?

Savings due to a reduction in purchase costs and more control over the value chain.

Cost savings due to reducing the range of products manufactured by Company S.

Lower cost of borrowing due to the acquistion of a company with a different credit rating.

Reduced competition resulting in the ability to raise retail selling prices for food products.

CIMA F3 Summary

Price: $52.5 ~~$149.99~~