Pedernales: Dorado Merger

Pedernales might can structure an acquisition Dorado if the company by purchasing stocks from the company. Tax issue that Pedernales would have to consider not only using cash when the company is structuring an acquisition of the company if Dorado stock value increased fivefold. If Pedernales makes a section 338 election after buying the stock when the stock increase threefold it would result in Pedernales having a large amount of tax liability. Also if Pedernales wants to carry over the tax credit from Dorado the firm will have to structure a reorganization. Other issue that Pedernales should consider is merging Dorado corporation into itself so that the important licenses that Dorado has can be forfeit since it cannot be transfer. Also Pedernales
should consider leaving the Dorado in existence if they do not want to deal with the legal liabilities that can result from Dorado disposing chemical wastes.