Abc has 100 million shares outstanding each of which has a, Ask an Expert

Finance

ABC has 1.00 million shares outstanding, each of which has a price of $ 17. It has made a takeover offer of XYZ Corporation, which has 1.00 million shares outstanding, and a price per share of $ 2.27. Assume that the takeover will occur with certainty and all market participants know this. Furthermore, there are no synergies to merging the two firms.

A. Assume ABC made a cash offer to purchase XYZ for $ 3.67$3.67 million. What happens to the price of ABC and XYZ on the announcement? What premium over the current market price does this offer represent?

b. Assume ABC makes a stock offer with an exchange ratio of 0.14. What happens to the price of ABC and XYZ this time? What premium over the current market price does this offer represent?

c. At current market prices, both offers are offers to purchase XYZ for $3.67 million. Does that mean that your answers to parts (a ) and (b ) must be identical? Explain.

View complete question

Financial Management, Finance

Category:- Financial Management
Reference No.:- M92847432

Have any Question?Write your Review or question?

Related Questions in Financial Management

Discuss one or a few of the basic concepts of capital

Discuss one (or a few) of the basic concepts of capital budgeting such as independent vs. mutually exclusive, capital rationing, sunk costs, opportunity costs, cash flow patterns, etc. Why are they important for the inve ...

Answer the following questions 1evaluate the criteria fel

Answer the following Questions : 1. Evaluate the criteria FEL uses to assign managers to project teams. What effi-ciencies do these criteria create? What are the resulting problems? 2. Why is it even more important that ...

Discuss the following questions professional or trade

Discuss the following Questions : Professional or trade organizations can provide ethical guidelines for business or professionals within their selected organization. Research a professional or trade organization. Provid ...

Consider the following statistics from a recent survey

Consider the following statistics from a recent survey highlighting the importance of a solid UX strategy : • 95 percent of users said they agree with the following statement: "Good user experience just makes sense." • 8 ...

The following examination is due no later than 9 am monday

The following examination is due no later than 9 AM Monday, October 22nd. You are to email me the exam in an XLSX file named after yourself and containing your section. For example, if your name is Leslie King, the file ...

Module 2 - slpstock and bond valuationfor your second slp

Module 2 - SLP STOCK AND BOND VALUATION For your second SLP assignment, continue to do research on the company you chose to write about for your Module 1 SLP. This time you will be doing research about the valuation of t ...

Capital structure and tax shields go to yahoo finances

"Capital Structure and Tax Shields" Go to Yahoo! Finance's Website, and select a publicly traded company which interests you. Determine the company's symbol (i.e., Apple = APPL) and navigate to the "SEC Filings" link on ...

Assignmentselect a general industry that interests you and

Assignment Select a general industry that interests you and choose a particular market domain within that industry to expand your research and use as a model throughout the course. A market domain may be defined as a seg ...

Discuss the following select a company that has been in the

Discuss the following : Select a company that has been in the news for ethical violations (for example, Enron). Assess the following in 525 to 700 words: Identify the alleged ethical violations. Determine why the violati ...

Questions 1 when can there arise a conflict between

Questions 1. When can there arise a conflict between shareholders and managers goals? How does wealth maximization goal take care of this conflict? 2. A company has just tested the market for a new product. The test indi ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Financial Management Expert