a. How many new shares will be issued and at what price? The number of new shares issued is The new shares will be issued at $ b. What will happen to your percentage ownership of BAD? Your percentage ownership of BAD Company will be%. (Round to two decimal places.) c. What will happen to the price of your shares of BAD? The new stock price of your shares of BAD Company will be $ (Round to the nearest cent.) d. Do you lose or gain from triggering the poison pill? If you lose, where does the loss go (who benefits)? If you gain, from where does the gain come (who loses)? The amount that you gain or lose if the poison pill is triggered will be $ (Round to the nearest dollar.) This loss goes to: (Select the best choice below.) (Round to the nearest integer.) per share. (Round to the nearest cent.) OA. you, the attempting acquirer of BAD Company. OB. the other shareholders of BAD Company OC. BAD management. OD. no one. Who benefits? (Select the best choice below.) OA. the other shareholders of BAD Company. OB. you, the attempting acquirer of BAD Company. OC. BAD management

a. How many new shares will be issued and at what price? The number of new shares issued is The new shares will be issued at $ b. What will happen to your percentage ownership of BAD? Your percentage ownership of BAD Company will be%. (Round to two decimal places.) c. What will happen to the price of your shares of BAD? The new stock price of your shares of BAD Company will be $ (Round to the nearest cent.) d. Do you lose or gain from triggering the poison pill? If you lose, where does the loss go (who benefits)? If you gain, from where does the gain come (who loses)? The amount that you gain or lose if the poison pill is triggered will be $ (Round to the nearest dollar.) This loss goes to: (Select the best choice below.) (Round to the nearest integer.) per share. (Round to the nearest cent.) OA. you, the attempting acquirer of BAD Company. OB. the other shareholders of BAD Company OC. BAD management. OD. no one. Who benefits? (Select the best choice below.) OA. the other shareholders of BAD Company. OB. you, the attempting acquirer of BAD Company. OC. BAD management

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose you own stock in a company. The current price per share is P25.00. Another company has just announced that it wants to buy your company and will pay P35.00 per share to acquire all the outstanding stock. Your company’s management immediately begins fighting off this hostile bid. Is management acting in the shareholders’ best interests? Why or why not?
Alpha Inc.'s stock price is $40, and the firm has 4 million shares outstanding. You are confident that, if youtake it over and replace the managers. vou can improve its pertormance and increase its value. However.Alpha Inc. has a poison pill with a 20% trigger. As a consequence, in the event that someone buys more than 20% of the capital without management approval, it would be triggered, and all Alpha Inc.'s shareholders - other than the acquirer would be offered to buy one new share in Alpha for each share they already own, at a 50% discount. If the price remains at $40 while you are acquiring shares in your takeover attempt, and the management of the company decides to resist your buyout attempt when you pass the 20% threshold of ownership: How many new shares will be issued and at what price?What will happen to your percentage ownership of Alpha inc.?What will happen to the price of your shares of Alpha Inc.?Do you lose or gain from triggering the poison pill? If you lose, where…
You work for a leveraged buyout firm and are evaluating a potential buyout of Associated Steel. Associated Steel's stock price is $20 and it has 10 million shares outstanding. You believe that if you buy the company and replace its management, its value will increase by 100%. You are planning on doing a leveraged buyout of Associated Steel, and will offer $20 per share for control of the company. Assuming that you use equity (your own money) to pay for this deal, what will be your gain from the deal? What about other shareholders? Now assume you use debt to finance the deal. How does this change your gains vs. other shareholders when compared to part (B)?
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