Ok guys… I question on this Vignette… since I had left M&A I just selected all answers to be B How many of the 6 answers do you feel the correct answer was ‘B’ Make me feel good…!!
105*35/78 (share of aquirer)=78
105*35/47 (share of aquirer)=78
Wait a minute - I thought they said that these calculations would be based on pre-merger market values! Doesn’t that mean you don’t factor in dilution?? Was that just smoke and mirrors?
Kwekoolio Wrote: ------------------------------------------------------- > Wait a minute - I thought they said that these > calculations would be based on pre-merger market > values! Doesn’t that mean you don’t factor in > dilution?? Was that just smoke and mirrors? my thoughts, too.
it was a no brainer for me, i just looked for the too anwers that combined to 105. other then the 0 - 105 combo, the 78 - 27 was the other, hence picked (pure guess) 78 - 27
Kwekoolio Wrote: ------------------------------------------------------- > Wait a minute - I thought they said that these > calculations would be based on pre-merger market > values! Doesn’t that mean you don’t factor in > dilution?? Was that just smoke and mirrors? that is you assume that prices don’t change
so that would be 105, 0? such effing ambiguos wording
It did say pre-merger a few times in the questions. That is why I felt a little surprise coz I was ready to calculate the price for the new firm.
is there an answer like this: Acquirer’s stock is overvalued compared to the target?
lxwqh Wrote: ------------------------------------------------------- > is there an answer like this: > > Acquirer’s stock is overvalued compared to the > target? That’s what I put
105, 0 too.
Right - so if you are getting 0.8 of 1 share of the acquiring company’s stock, based on the pre-merger market value of the stock, wouldn’t you just multiply 0.8 x price per share of the acquiring company stock x acquired company’s number of shares = $105MM??
^^ Didn’t that question specifically refer to the fact that the acqurier thought that the synergies would be greater than expected. Didn’t it say that right in the vignette, and the answer was something like they would prefer to pay cash?
It was 78 and 27, 100% positive.
That’s the reason why it cannot be the answer for the question In order for it to be the answer, that should be like this: A’s stock is overvalued compared to its market value, not to the target company
man i dont get the 27 at all. that’s insinuating in example one that the mkt value adjusts down to the stock price req’d. but then the second question is assuming the gain from that stock price. the stock price in the second assumption is still 50 bucks. who cares that the tp when there was no synergies was 78??? not important in the context of the second question. the second question was given 105 m$ in synergies what is the gain to the target. that means 600,000M$ total gain divided by 12m new shares = 50$. so the share price of the firm didnt change… how did the shareholders then benefit?? doesn’t make any sense to me (notsaying its wrong)
if it’s not 105, 0 then i just went -2… ouch. i think you guys are right- i didn’t even think about dilution. i should’ve studied corp fi more. one FSA q- they asked about CFO being the best something or other or if CFF were better for something. was it CFO was the best thing? anyone remember this one?
was takeover price around 51, based on historical transactions?
The whole thing with dillution, can somebody tell me why you include those effects when the question directly asks to base it on pre-merger market values? There is an exact example of this question in Schweser. If you do it exactly like they do in schweser, with the exact same wording, you will get 105, 0.