answer quickly Buy 50% of the shares for $150 million and buy 10,000 convertible securities for $300 million. Eachsecurity is convertible into 10,000 shares of XYZ at the option of ABC at a redemption value of 102%.Presently, XYZ has 5,000 shares outstanding and the net assets of XYZ have a book value of $350million. The 5,000 shares are owned by one shareholder.Requirement: The CFO would like to know what the impact would be for the acquisition option. TheCFO would like a memo analyzing your opinion on the possible reporting implications.

Acqusition of Business According to IFRS3 its specifically state the rules and regulation which are…

Answered: Buy 50% of the shares for S150 million…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 12P

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Toady Inc. has 2 million shares outstanding selling at $70 a share. The Company intends to undertake a rights issue that allows 1 share to be purchased for every 5 shares currently held by shareholders for $40 each. If all shareholders take up their entitlement, which one of the following is true? The stock price will fall to $65. The number of shares outstanding will fall to 1.6 million. The firm will raise $13.33 million. The total value of the firm will equal $124 million.
An underwriter agrees to purchase the shares directly from the issuing firm for $60 million. The underwriter ends up selling all 3 million shares for $23.00 each. What is the implied underwriting spread? The underwriter's spread was 14.89%. The underwriter's spread was 10.53%. The underwriter's spread was 13.04%. The underwriter's spread was 12.35%.
Suppose you own 71,000 shares of common stock in a firm with 2 million total shares outstanding. The firm announces a plan to sell an additional 1.1 million shares through a rights offering. The market value of the stock is $50.74 before the rights offering and the new shares are being offered to existing shareholders at a $8 discount. If you exercise your preemptive rights, how many of the new shares can you purchase? (Round answer to a whole number. e.g., 123,456)
Firm A has 196,000 shares of stock outstanding, each with a market price of $10 per share. Firm B has 150,000 shares of stock outstanding, each with a market value of $25 per share. Firm B have agreed to take over Firm A using an exchange ratio will be 3:2 meaning that firm A stockholders will receive 3 share of firm B for every 2 shares they currently hold in firm A. What are the shares outstanding of the combined firm?
Jefferson Refining is issuing a rights offering wherein every shareholder will receive one right for each share of equity they own. The new shares in this offering are priced at £21 plus 3 rights. The current market value of the equity is £75 million with 3 milion shares outstanding. What is the value of one right? Show your steps. can u please upload the excel file
The Windsor Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise an additional $36,000 to finance new expenditures, and has decided on a rights issue. The issue will allow current stockholders to purchase one additional share for 20 rights at a subscription price of $6 per share. a) How many new shares must be issued? b) What will be the ex-rights stock price? c) If the ex-rights price were set at $7.90, would you as a potential new stockholder choose to buy shares ex-rights or buy shares at the old price and exercise your rights? d) Suppose that the company was also considering structuring the rights issue to allow for an additional share to be purchased for 10 rights at a subscription price of $3. Prove that a stockholder with 100 shares would be indifferent between purchasing a new share for 10 rights at $3 or purchasing a new share for 20 rights at $6. e) Why do you think the company chose a rights issue rather than a…
Rally inc, is an all equity firm with assets worth $25B and 10B shares outstanding. Rally plans to borrow $10B and use funds to repurchase shares. Rally’s corporate tax rate is 35% and Rally plans to keep its outstanding debt equal to $10B permanently. Suppose Rally offers $3 per share and shareholders tender their shares at this price. How many shares will Rally repurchase?
The Windsor Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise an additional $36,000 to finance new expenditures and has decided on a rights issue. The issue will allow current stockholders to purchase one additional share for 20 rights at a subscription price of $6 per share. How many new shares must be issued? What will be the ex-rights stock price? If the ex-rights price were set at $7.90, would you as a potential new stockholder choose to buy shares ex-rights or buy shares at the old price and exercise your rights?
You are the cfo of a company that has a market cap of 20B. The firm has 50 M shares outstanding, so the shares are trading at 400 per share. You need to raise 1B and have announced a rights issue. Each existing shareholder is sent one issuance right for every share they own. You need to decide how many rights you will require to purchase one share of new stock. You require 16 rights to purchase one share at a price of 320 per share, or 30 rights to purchase two shares at a price of 300 per share. How many shares will be issued with the first approach? How much money will be raised with the first approach? How many shares will be issued with the second approach? How much money will be raised with the second approach? What is the new stock price after issuing money with the second approach? What is the new stock price after issuing money with the first approach?
You are given the following information about Target Inc.: Identifiable assets: Carrying amount: $ 540,000 Fair value: $ 485,000 Identifiable Liabilities: Carrying amount: $ 150,000 Fair value: $ 190,000 The total number of shares issued by Target is 20,000, at an average market price of $23 per share. Consider two scenarios: 1) Shell Inc. is set up to acquire Target, and buys for cash 100% of the issued share capital of Target for $ 510,000. 2) Shell buys an 82% stake in Target, thus acquiring a majority interest. The price paid is now $425,000. Assume that the tax rate is 0, so that you can ignore any deferred tax considerations. REQUIRED: A) Calculate the value of goodwill at acquisition date for the two scenarios, using both the full and partial method of goodwill in scenario 2). B) Provide all of the consolidation entries at the date of acquisition (not only those related to the elimination…
Solve and show the complete solution of the following.
JF Corporation issued 2M shares through an IPO reflecting 30% ownership of the firm. The other 70% are owned by original investors. The offer price was $5 and each share jumped to $10 by the end of the trading day reflecting JF Corporation’s true intrinsic value. What is the original shareholders’ wealth if the IPO is fairly valued? (Your answer should be in millions. Round to the nearest hundredth. e.g., 55.16666 must be expressed as 55.17).

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