P14-5 Dutch Auction Weeks ago, the consumer products giant, Unilever, annou: to buy back 700,000 shares using a Dutch auction. Since then the compan licited interest from shareholders by asking how many shares they would t different prices. The information they collected appears below. Total shares Price $54.00 54.10 54.20 tendered 200,000 350,000 500.000 Price $54.30 54.40 54.50 Total shares tendered 650,000 800,000 025.000
P14-5 Dutch Auction Weeks ago, the consumer products giant, Unilever, annou: to buy back 700,000 shares using a Dutch auction. Since then the compan licited interest from shareholders by asking how many shares they would t different prices. The information they collected appears below. Total shares Price $54.00 54.10 54.20 tendered 200,000 350,000 500.000 Price $54.30 54.40 54.50 Total shares tendered 650,000 800,000 025.000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:P14-5 Dutch Auction Weeks ago, the consumer products giant, Unilever, announced plans
to buy back 700,000 shares using a Dutch auction. Since then the company has so-
licited interest from shareholders by asking how many shares they would tender at
different prices. The information they collected appears below.
Total shares
Price
¹ $54.00
54.10
54.20
tendered
200,000
350,000
500,000
Total shares
Price
$54.30
54.40
54.50
tendered
650,000
800,000
925,000
a. What is the average price that the company will pay to buy back shares?
b. Is the offering oversubscribed or undersubscribed?
c. What percentage of the shares offered by stockholders will be repurchased?
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