I'd have to ask one of the DD experts why a merger could not be approved.
It does appear as a way out for companies in KMAG's situation. I could imagine another firm might see potential here and be willing to assist in closing an investigation (pressuring the SEC to give KMAG a clean bill of health).
Not an expert on mergers & how they work but any company willing to take a risk with KMAG might be able to help pull them out of the greys and at least get the stock quoted again...or am I missing something here?