In a Type A reorganization in the United States, the following consideration may be used to acquire a target: a. Stock b. Cash c. NOn-equity securities d. All of the above
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In a Type A reorganization in the United States, the following consideration may be used to acquire a target:
| a. |
Stock |
|
| b. |
Cash |
|
| c. |
NOn-equity securities |
|
| d. |
All of the above |
In a Type A reorganization in the United States, at least what percent of the payment to the target must be stock in the acquiring company:
| a. |
20% |
|
| b. |
50% |
|
| c. |
80% |
|
| d. |
100% |
In a Type B reorganization in the United States, at least what percent of the payment to the target must be stock in the acquiring company:
| a. |
20% |
|
| b. |
50% |
|
| c. |
80% |
|
| d. |
100% |
-
In a Type B Reorganization, the stock purchases must be completed over no longer than
a. 6-month period
b. 9-month period
c. 12-month period
d. 3-month period
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- Quasi-reorganization effected thru recapitalization includes, except A. creating enough share premium to absorb the deficit in the corporation B. creating enough revaluation surplus that can absorb the deficit thru revaluation of property, plant and equipment C. results to a zero balance in the retained earnings account after recapitalization. D. decreasing the par value of the shares which results to the increase the balance of the share premium account.Quasi-reorganization effected thru recapitalization includes, except creating enough share premium to absorb the deficit in the corporation results to a zero balance in the retained earnings account after recapitalization. creating enough revaluation surplus that can absorb the deficit thru revaluation of property, plant and equipment decreasing the par value of the shares which results to the increase the balance of the share premium account.Required: i)Determine the gain for World Cruise Bhd. when it acquires Sunrise Cruise Bhd. (ii) World Cruise Bhd. is proposing to finance by cash the deal to purchase all of Sunrise Cruise Bhd.’s issued shares and is offering a premium of 25% over the market price of Sunrise Cruise Bhd.’s shares.Calculate the cost of acquisition of Sunrise Cruise Bhd. (iii) Suggest what should be recommended by Jack Pang to the Board of Directors on the proposed acquisition of Sunrise Cruise Bhd. and why Sunrise’s shareholders should accept the offer.
- Based on Appendix 18) A quasi reorganization is sometimes employed by a firm undergoing financialdifficulties but with favorable future prospects. What are two objectives of this procedure? Briefly describe theprocedural steps.The directors of Ostrow Ltd have appointed you as a merger and acquisition specialist. They are considering theacquisition of Osborn Ltd. You are to advise them whether to proceed with the project.The following data is available: Ostrow LTD Osborn LTD Market price per share R10,00 R8,00 Earnings per share R3,00 R2,40 No.shares issued 2 million 0,5 million Additional information:Cash payment to Ostrow Ltd = R12 million.Synergy benefits of R10 million will accrue through the acquisition.Ostrow Ltd has just had its assets re-valued and the valuation has appreciated quite significantly. a) Calculate the acquisition premium.b) Calculate the post-acquisition market price of the sharec) Calculate the post-acquisition increase/decrease price of the shareThe directors of Ostrow Ltd have appointed you as a merger and acquisition specialist. They are considering theacquisition of Osborn Ltd. You are to advise them whether to proceed with the project.The following data is available: Ostrow LTD Osborn LTD Market price per share R10,00 R8,00 Earnings per share R3,00 R2,40 No.shares issued 2 million 0,5 million Additional information:Cash payment to Ostrow Ltd = R12 million.Synergy benefits of R10 million will accrue through the acquisition.Ostrow Ltd has just had its assets re-valued and the valuation has appreciated quite significantly. a) Discuss the possible tax gains from a merger and acquisition. b) Calculate the combined value of the proposed acquisition c) Calculate the net present value of the proposal. d) Calculate the acquisition premium. e) Calculate the post-acquisition market price of the sharef) Calculate the post-acquisition increase/decrease price of the share
- How would you explain the accounting valuations for the post -control step acquisitions to the Berkshire Hathaway executives? Do you agree or disagree with the GAAP treatment of reporting additional investments in subsidiaries when control has previously been established?The directors of Nico Limited have appointed you as a merger and acquisition specialist. They are considering theacquisition of Maya Limited. You are to advise them whether or not to proceed with the project.The following information is available: Nico Limited Maya LimitedMarket price per share R400.00 R280.00Earnings per share R240.00 R120.00No. of shares issued 2 000 000 800 000 - Cash payment to Maya Limited = R78 million.- Synergy benefits of R30 million will accrue through the acquisition.- Maya Limited have just had their assets re-valued and the valuation has appreciated quite significantly. Calculate the post-acquisition increase/decrease price of the share Assume the acquisition is based on market values with a cash payment Calculate the post-acquisition earnings per share Assume the acquisition is based on earnings per shareLinpro Industries is considering the acquisition of Odetics Inc. in a stock-for-stock exchange. Assume no immediate synergistic benefits are expected. Selected financial data on the two companies are shown below: Linpro Odetics Sales (millions) $480 $90 Net income (millions) $38 $10.4 Common shares outstanding (millions) 10 2.1 Earnings per share $3.80 $4.95 Common stock (price per share) $45.60 $74.25 Calculate Linpro's post-merger EPS if the Odetics shareholders accept an offer of $90 a share in a stock-for-stock exchange. Question 9Answer a. $4.38 b. $3.81 c. $4.29 d. $3.42
- M’s Club is attempting to acquire the V’s Club. Certain financial data on these corporations aresummarized in the following table.Item M’s Club V’s ClubEarnings available for common stock $20,000 $8,000Number of shares of common stock outstanding 20,000 4,000Market price per share $12 $24M’s Club has sufficient authorized but unissued shares to carry out the proposed merger.a. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original sharesof each firm?b. Repeat part a if the ratio of exchange is 2.0.c. Repeat part a if the ratio of exchange is 2.2.d. Discuss the principle illustrated by your answers to parts a through c1. As a result of the merger, what is the goodwill? 560,000 638,500 650,000 11,500 2. what is the Retained Earnings after the merger? 10,465,250 10,269,250 10,350,500 10,280,750 3. what is the net increase or (decrease) in the stockholders' equity of SD Corp. after the merger? P8,904,250 P8,709,250 (P7,604,250) P7,604,250A(n) ________________ occurs when the management of the target company purchases a controlling interest in that company and the company incurs a significant amount of debt as a result. a. greenmail b. statutory merger c. poison pill d. leveraged buyout
