Corp Fin. Takeover Premium

CFA Level II
#1

Was the 1st answer 105 Million for the TP, and question 2 the answer was 0- which was A i believe???

#2

yes.

#3

78 and 27, you forgot the dilution

#4

that’s what I got, too.

#5

105 and zero

#6

mcleod, what about the dilution?

#7

I remember I got 0 too.

#8

105 and zero for me as well

#9

105 and zero.

#10

Can’t remember the details of the numbers for this question. I remember that 105 and zero made absolute sense on Saturday though.

#11

78 and 0… reason is that you have to add in synergies of 0 in the first case and 105 in the second case: so for 1) 495+1750/47 m shares outstanding = like 47.28 or something(lower than 50!), so hit to acquirer, gain to target of equivalent amounts (78 in this case) for 2) 495+1750+105/47 = 50, so no hit to acquirer, all gains to target

#12

dirty - that might be right, i’m pretty sure 105 and 0 is wrong

#13

yeah man i went 105 0, regretting it, but 1/2 aitn bad i suppose

#14

Actually dirty, I think I did get something like 78 for the first part.

#15

it is talking about total gain, where is the no of shares come into play?! The 105 and 0 are total, not per share based.

#16

I thought the second bit said they pay in cash and then the synergies are 105?

#17

well same answer right? if they paid .8*15m*50$ then they paid 600 for the firm was worth 495+105 to them

#18

I put 78 and 27 For the first question, you had to assume no synergies. Gain to target is 47(find combined value of both companies per combined shares and multipy by 12 m, the shares owned by target). Take that amount and minus MV of target you get 78. For second question, you had to take account the synergies ,so synergies(the gain to acquirer 105) minus the gain to the target (78) gives 27

#19

105, zero

#20

dirtydirty Wrote: ------------------------------------------------------- > 78 and 0… reason is that you have to add in > synergies of 0 in the first case and 105 in the > second case: > > so for 1) 495+1750/47 m shares outstanding = like > 47.28 or something(lower than 50!), so hit to > acquirer, gain to target of equivalent amounts (78 > in this case) > > for 2) 495+1750+105/47 = 50, so no hit to > acquirer, all gains to target To put this to rest, you’re correct with the first bit, Dirty. For the second bit, gains to acquirer = Synergies - TP Here you won’t divide the synergies by the shares, the loss to acquirer from giving shares has already been accounted for in the TP. So it would be 105 - 78 = 27