A limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh. The relevant financial information for B Ltd. is as follows: Number of shares outstanding 1,80,000 Earnings per share Rs.12 Market price per share Rs.76 A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares. a. If the shareholders of B Ltd act together as a Group, will they benefit in terms of price being offered? If so & if not, give reasons.
A limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh. The relevant financial information for B Ltd. is as follows: Number of shares outstanding 1,80,000 Earnings per share Rs.12 Market price per share Rs.76 A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares. a. If the shareholders of B Ltd act together as a Group, will they benefit in terms of price being offered? If so & if not, give reasons.
Chapter23: Corporate Restructuring
Section: Chapter Questions
Problem 7P
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A limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh.
The relevant financial information for B Ltd. is as follows:
Number of shares outstanding 1,80,000
Earnings per share Rs.12 Market price per share Rs.76
A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares.
a. If the shareholders of B Ltd act together as a Group, will they benefit in terms of price being offered? If so & if not, give reasons.
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