In a deal valued at $7.4 billion including equity ($2.4 billion) and assumed debt ($5.5 billion) minus cash on hand ($500 million), TAR plans to sell itself to the acquirers, with TAR shareholders receiving $36 per share, cash, in return. Shareholder derivative lawsuit firms are already swarming with lawsuits claiming the price is too low, but TAR management notes that the buyout price "represents a 34% premium over TAR's closing stock price on October 23, 2019, the last trading day prior to TAR's public announcement that TAR was evaluating strategic alternatives" -- which seems to me a fair price for a stock selling for about 12 times earnings and with no growth expected on average over the next five years. What is The number of shares of TAR is million? What's The annual earnings of TAR? What's The closing stock price of TAR on October 23, 2019 ?

In a deal valued at $7.4 billion including equity ($2.4 billion) and assumed debt ($5.5 billion) minus cash on hand ($500 million), TAR plans to sell itself to the acquirers, with TAR shareholders receiving $36 per share, cash, in return. Shareholder derivative lawsuit firms are already swarming with lawsuits claiming the price is too low, but TAR management notes that the buyout price "represents a 34% premium over TAR's closing stock price on October 23, 2019, the last trading day prior to TAR's public announcement that TAR was evaluating strategic alternatives" -- which seems to me a fair price for a stock selling for about 12 times earnings and with no growth expected on average over the next five years. What is The number of shares of TAR is million? What's The annual earnings of TAR? What's The closing stock price of TAR on October 23, 2019 ?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 2P

See similar textbooks

Similar questions

McNabb Enterprises is considering going private through a leveraged buyout by management. Management currently owns 21 percent of the 5 million shares outstanding. Market price per share is $20, and it is felt that a 40 percent premium over the present price will be necessary to entice public shareholders to tender their shares in a cash offer. Management intends to keep its shares and to obtain senior debt equal to 80 percent of the funds necessary to consummate the buyout. The remaining 20 percent will come from junior subordinated debentures. Terms on the senior debt are 2 percent above the prime rate with principal reductions of 20 percent of the initial loan at the end of each of the next five years. The junior subordinated debentures bear a 13 percent interest rate and must be retired at the end of six years with a single balloon payment. The debentures have warrants attached that enable the holders to purchase 30 percent of the stock at the end of the sixth year. Management…
Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the offering. The agreement stated that Security Brokers would sell 3 million shares to the public and provide $14 million in net proceeds to Beedles. The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $490,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price? Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answers to the nearest dollar. Loss should be indicated by a minus sign. $5 per share? $ $7 per share? $ $4 per share? $
Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the offering. The agreement stated that Security Brokers would sell 3 million shares to the public and provide $14 million in net proceeds to Beedles. The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $300,000. What profit or loss would Security Brokers incur if the issue were sold to the public at the following average price? Write out your answer completely. A. $6.5 per share? B.$3.5 per share?
NewCo is trying to fully acquire OldCo in an all cash offer. NewCo will assume all the debt of OldCo as part of the acquisition. The expected synergies from the acquisition are $700 million. Before the transaction OldCo has 25 million shares outstanding, a share price of $65, and outstanding debt of $500 million (no excess cash). Is the following statement true or false? If NewCo offers $65 per share of OldCo and the acquisition is successful, the shareholders of NewCo will have captured the full value of the synergies of this transaction. Pick One: True False
Beedles Inc. needed to raise $14 million in an IPO and chose Security Brokers Inc. to underwrite the offering. The agreement stated that Security Brokers would sell 3 million shares to the public and provide $14 million in net proceeds to Beedles. The out-of-pocket expenses incurred by Security Brokers in the design and distribution of the issue were $300,000. What profit or loss did Security Brokers incur if the issue were sold to the public at the following average price? a. $5 per share b. $6 per share c. $4 per share
Financial Corporation wants to acquire Great Western Inc. Financial has estimated the enterprise value of Great Western at $104 million. The market value of Great Western’s long-term debt is $15 million, and cash balances in excess of the firm’s normal working capital requirements are $3 million. Financial estimates the present value of certain licenses that Great Western is not currently using to be $4 million. Great Western is the defendant in several outstanding lawsuits. Financial Corporation’s legal department estimates the potential future cost of this litigation to be $3 million, with an estimated present value of $2.5 million. Great Western has 2 million common shares outstanding. What is the value of Great Western per common share?
Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Because the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed to buy the business. The current owners have no debt financing but Templeton plans to borrow $300 million and invest only $100 million in equity ($40 million in Preferred Shared and $60 million in Common Shares) in the acquisition. Templeton is issuing new common stock at a market price of $27. Dividends last year were $1.45 and are expected to grow at an annual rate of 6% forever. Templeton is issuing a $1000 par value bond that pays 8% annual interest and matures in 15 years. Investors are willing to pay $950 for the bond and Temple faces a tax rate of 35%. The preferred stock of Templeton currently sells for $36 a share and pays $2.50 in dividends annually What is the Weighted Average Cost of…
Templeton Extended Care Facilities, Inc. is considering the acquisition of a chain of cemeteries for $400 million. Because the primary asset of this business is real estate, Templeton’s management has determined that they will be able to borrow the majority of the money needed to buy the business. The current owners have no debt financing but Templeton plans to borrow $300 million and invest only $100 million in equity ($40 million in Preferred Shared and $60 million in Common Shares) in the acquisition. Templeton is issuing new common stock at a market price of $27. Dividends last year were $1.45 and are expected to grow at an annual rate of 6% forever. Templeton is issuing a $1000 par value bond that pays 8% annual interest and matures in 15 years. Investors are willing to pay $950 for the bond and Temple faces a tax rate of 35%. The preferred stock of Templeton currently sells for $36 a share and pays $2.50 in dividends annually What is the Weighted Average…
A large manufacturing company has offered to purchase Composites, Inc. for$32 per share. Before the merger proposal announcement, Composites wastrading at $20/share and, after the announcement, its share price jumped up to$28/share. It is estimated that, if the merger fails to go through, the price ofComposites will drop to $15/share. a) Assuming that the risk-free interest rate is 0%, how would you describea long position in Composites as a combination of positions in a risk-freebond and a binary put option? Please show your workings in detial.b) Assuming that the risk-free interest rate is 0%, how would you describea long position in Composites as a combination of positions in a risk-freebond and a binary call option? Please show your workings in detial.c) Please explain the event-driven strategies through the selling insuranceview.
The Woods Co. and the Mickelson Co. have both announced IPOs at $53 per share. One of these is undervalued by $11, and the other is overvalued by $2, but you have no way of knowing which is which. You plan to buy 800 shares of each issue. If an issue is underpriced, it will be rationed, and only half your order will be filled. If you could get 800 shares in Woods and 800 shares in Mickelson, what would your profit be? (Do not round intermediate calculations.) I found the price of an ideal situaiton but am not sure how to distribute numbers in the expected profit situation
Velcro Saddles is contemplating the acquisition of Skiers’ Airbags Inc. The values of the two companies as separate entities are $42 million and $21 million, respectively. Velcro Saddles estimates that by combining the two companies, it will reduce marketing and administrative costs by $610,000 per year in perpetuity. Velcro Saddles considers offering Skiers’ shareholders a 50% holding in Velcro Saddles. The opportunity cost of capital is 10%. a. What is the value of the stock in the merged company held by the original Skiers’ shareholders? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What is the cost of the stock alternative? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) c. What is the merger’s NPV under the stock offer? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions…
Lobby Ltd is the target of an LBO. It has EBITDA of $150 million. A private equity group buys Lobby at 4 times EBITDA. The purchase is financed by $320 million debt and the remaining is equity investment by the private equity group. Five years later, EBITDA has grow to $175 million. The private equity group sells Lobby at 5 times EBITDA to a competitor. At the time of the sale, the firm still has $320 debt outstanding. Assume cash balance is negligible. 1) What is the value of equity at exit? A) 175M B) 555M C 280M 2. What is the IRR experienced by the private equity group? A) 7.84% B) 98.2% C) 14.7% 3) The positive IRR was due to A) Debt amortization and multiple expansion B) Improvement in operating performance and multiple expansion C) Improvement in operating performance, multiple epxansion, and debt amortization