(c) Discuss the factors that might influence whether the initial bid is likely to be accepted by the

参考答案

正确答案：

(c) The type of payment might influence the success of the bid. Paxis is proposing a share for share exchange which offers a continuation in ownership of the entity, albeit as part of the successful bidder. However, relative share prices will change during the period of the bid, and the owner of shares in the potential victim company will not know the precise postacquisition value of the bid. An alternative might be cash payments which provides a known, precise sum, and might be favoured for this reason. However, in some countries payment in cash might lead to an immediate capital gains tax liability for the investor.

The effective price offered would of course be a major influence. Paxis would need to offer a premium over the existing share price, but the size of the premium that would be acceptable is unknown. Informal discussions with major shareholders of Wragger might assist in determining this (subject to such discussions being permitted by the regulatory authorities).

立即搜索

您可能感兴趣的试题

(d) Estimate by how much the bid might be increased without the shareholders of Paxis suffering a fall in their expected wealth, and discuss whether or not the directors of Paxis should proceed with the bid. (5 marks)

答案解析
(b) Assuming that the cost of equity and cost of debt do not alter, estimate the effect of the share repurchase on the company’s cost of capital and value. (5 marks)

答案解析
(c) Acting as an external consultant to Semer, discuss the validity of the proposed strategy to increase gearing, and explain whether or not the estimates produced in (b) above are likely to be accurate. (10 marks)

答案解析
3 The managers of Daylon plc are reviewing the company’s investment portfolio. About 15% of the portfolio is represented by a holding of 5,550,000 ordinary shares of Mondglobe plc. The managers are concerned about the effect on portfolio value if the price of Mondglobe’s shares should fall, and are considering selling the shares. Daylon’s investment bank has suggested that the risk of Mondglobe’s shares falling by more than 5% from their current value could be protected against by buying an over the counter option. The investment bank is prepared to sell an appropriate six month option to Daylon for ￡250,000.

答案解析
Roy Crawford has argued for a reduction in both the product range and customer base to improve company

答案解析