Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Chapter 20, Problem 12DQ
Summary Introduction
To explain: The purpose(s) of the two-step buyout process from the viewpoint of the acquiring company.
Introduction:
Two-step buyout process:
In a two-step buyout, the subsidiary of the acquirer is subject to commencing a tender offer for all its shareholders within a few days of signing the agreement of merger. On acquiring the control over the company, the two corporations are merged.
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What is a typical merger premium paid in a merger or acquisition? What effect does this premium have on the market value of the merger candidate, and when is most of this movement likely to take place?
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Chapter 20 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
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- A6) Finance What are different Anti Merger strategies available to management of firm?arrow_forwardDefine the term “net present value (NPV).” What is each franchise’s NPV? What is the rationale behind the NPV method? According to NPV, which franchise or franchises should be accepted if they are independent? Mutually exclusive? Would the NPVs change if the cost of capital changed?arrow_forwardThe minority stakeholders may exchange their P100 par value shares for P400 cash in case they do not agree with the acquisition what type of anti-hostile takeover strategy ???arrow_forward
- q10. The hubris motive for M&As refers to which of the following? Explains why mergers may happen even if the current market value of the target firm reflects its true economic value The ratio of the market value of the acquiring firm’s stock exceeds the replacement cost of its assets Agency problems Market power The Q ratioarrow_forwardSuppose your firm could purchase another firm for only half its replacement value.Would that be a sufficient justification for the acquisition? Explain.arrow_forward[S1] A proxy fight involves having shareholders looking for board members that will allow an acquisition. [S2] A tender offer can be made with or without plans for an acquisitiona. Only S2 is true.b. Both are true.c. Only S1 is true.d. Neither is true.arrow_forward
- c. (1) Define the term net present value (NPV). What is each franchises NPV? (2) What is the rationale behind the NPV method? According to NPV, which franchise or franchises should be accepted if they are independent? Mutually exclusive? (3) Would the NPVs change if the cost of capital changed?arrow_forwardWhich one of the following is probably the most effective means of increasing investors' interest in an IPO? Multiple Choice Extending the lockup period Issuing the IPO through a rights offering Underpricing the IPO Eliminating the quiet period Eliminating the Green Shoe optionarrow_forward3. Refer to the problem below. What amount is credited to Retained Earnings upon settlement if the shareholders have chosen the cash alternative? * On January 1, 2020, Nun Company had ordinary and preference shares outstanding. The incorporators or original shareholders own ten ordinary shares but no preference shares. On December 31, 2020, the entity declared dividends on the ordinary shares payable on July 1, 2021. The entity decided to give the ordinary shareholders a choice between receiving a cash dividend of P500,000 per share or a property dividend in the form of a noncash asset. The noncash asset is a standard model from the car fleet. Each car has a fair value of P600,000 and carrying amount of P400,000. The entity estimated that 80% of the ordinary shareholders will take the option of the cash dividend and 20% will elect for the noncash asset. Your answerarrow_forward
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