ABC has 1.00 million shares outstanding, each of which has a price of $18. It has...
ABC has 1.00 million shares outstanding, each of which has a price of $16. It has made a takeover offer of XYZ Corporation, which has 1.00 million shares outstanding, and a price per share of $2.43. 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 $3.74 million. What happens to the price of ABC...
Question 5. (12 marks) Bidder Co. has 1 million shares outstanding, each of which has a price of $20. It has made a takeover offer of Target Co. which has 1 million shares outstanding and a price per share of $2.50. 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 Bidder Co. made a cash offer to purchase Target Co. for $3 million....
Your company has earnings per share of $5. It has 1 million shares outstanding, each of which has a price of $44. You are thinking of buying TargetCo, which has earnings per share of $2, 1 million shares outstanding, and a price per share of $29. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offer an exchange ratio such that, at current pre-announcement share prices for both firms, the...
Your company has earnings per share of $8. It has 1 million shares outstanding, each of which has a price of $60. You are thinking of buying TargetCo, which has earnings per share of $4, 1 million shares outstanding, and a price per share of $45. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Complete parts a through d below. a. If you pay no premium to buy TargetCo, what will...
pany has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $38. You are thinking of buying TargetCo, which has earnings of $1 per share, 1 million shares outstanding and a price per share of $21. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offered an exchange ratio such that, at current p share prices for both firms, the offer...
Your company has earnings per share of $5. It has 1 million shares outstanding, each of which has a price of $42. You are thinking of buying TargetCo, which has earnings of $1 per share, 1 million shares outstanding, and a price per share of $26. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. Suppose you offered an exchange ratio such that, at current pre-announcement share prices for both firms, the...
Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $40. You are thinking of buying TargetCo, which has earnings per share of $2,1 million shares outstanding, and a price per share of $25. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. a. If you pay no premium to buy TargetCo, what will be your earnings per share after the...
1) Rearden Metal has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction. Assume Rearden offers an exchange ratio such that, at current pre-announcement share prices...
1) Rearden Metal has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction. Assume Rearden offers an exchange ratio such that, at current pre-announcement share prices...
Hawar International is a shipping firm with a current share price of $4.96 and 10.8 million shares outstanding. Suppose that Hawar announces plans to lower its corporate taxes by borrowing $20.6 million and repurchasing shares, that Hawar pays a corporate tax rate of 30%, and that shareholders expect the change in debt to be permanent. a. If the only imperfection is corporate taxes, what will the share price be after this announcement? b. Suppose the only imperfections are corporate taxes...