Diversification is supposed to reduce risks, but the diversification that can result when a merger occurs can sometimes be unwelcomed by stockholders...

Diversification is supposed to reduce risks, but the diversification that can result when a merger occurs can sometimes be unwelcomed by stockholders in the acquiring firm. Why would stockholders in the acquiring firm not be interested in the diversification that results from a merger?

AnswerA merger means acquiring another firm by taking its all assets and liabilities.The firm which is acquired by another firm losses its identity and the firmwho acquires it retains its...