yeah cfo best - lt debt analysis
Crap, now I’m confused - I don’t even remember what the question was really asking now. Were they asking for the gain to the shareholders or what the value to the shareholders was? If they were looking for the value to the shareholders, specifying that we use pre-merger value means no synergies, no dilution, right?
Didn’t the 2nd question ask you to recalculate everything based on expected synergies of 105 instead of 0. I got 78 for the first one and the zero for the 2nd
78 and 0
It was a whole different scenario in question #2 from what I remember. So I don’t think you can just add 78 and 27 because that sums to 105
dinesh.sundrani Wrote: ------------------------------------------------------- > 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…!! Oh please answer this - I had alot of B’s too… in Corp Fin
78 and 0 for me too…
105, 0 - assume pre-merger price is fixed, no dilution w.r.t premium to target Is it how we should interpret? Acquirer relatively more overvalued than target - a proper response?
What is the answer, who is right?
100% sure its 0 for 2nd, first comes down to dilution
I am 100% sure someone else will say they are 100% sure that it is either 78 or 105. I am 105% sure that the net gain to me of that assurance, pre OR post assertion of supreme “rightness”, will be $0.00. I am 75% sure that we will have to agree to disagree on this one and will probably never know who is right unless someone remembers the question verbatim…
yes. why would acquirer want to give stock instead of paying cash. and that was the answer. at least the one i put.
Honestly if you want to see the question verbatim, pull out your schweser book. I’m pretty sure there is an exact example of this problem
I went 105, 0, have no idea where you guys are getting the other digits, but I’m definately worried, I forgot to discount the payoff on the swaption too, careless mistake on a question I shoulda nailed. I’m thinking I have to take a quick break from AF so I don’t rattle my confidence any more.
I realized that I got it wrong. I don’t know what I was thinking at the moment. A gives stocks because it was not confident of feasibility of synergy.
I’m 100% sure that it is 78 - 0. There is a “very similar” example in Schweser’s study notes - with different examples - showing the differences between cash and share exchange. Please refer to book 3, p 166 to 168. That is exactly it !
But if 78 was the takeover premium (profit to T), then the profit to A would have to be 27 (synergies were 105).
Anyone remember lots of B’s around this section?
My answers to this section was A1. B A2. B A3. B A4. B A5. B A6. B Can you tell me what’s my ladyLuck’s score?
both questions definitely said “based on pre merger values”, I remember thinking that was weird. as for why stock, just checked my stalla text, and it says: acquisitions using stock may, in fact, indicate to the market that the acquiring company’s management considers their shares to be overvalued"