Winterbourne is considering a takeover of Monkton Incorporated. Winterbourne has 29 million shares outstanding, which sell for $78 each. Monkton has 24 million shares outstanding, which sell for $96 each. If the merger gains are estimated at $120 million, what is the highest price per share that Winterbourne should be willing to pay to Monkton shareholders? Highest price per share
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- 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…e. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction. If Rearden pays no premium to buy Associated Steel, then Rearden's price-earnings ratio after the merger will be closest to: 10.0. 10.42. 12.0. 7.8.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
- LYFT IPO was issued at $72/share. Before the IPO, Lyft had 240 million class A shares outstanding and wanted to issue additional 30 million class A shares. On top of that, Lyft gave its underwriters options to purchase another 5 million shares at $72 each. When Lyft stock price fell below the IPO price of $72, to support the stock price, up to how many shares the underwriters could buy from the open market without losing money? 5 million shares 30 million shares 35 million shares 240 million shares 275 million sharesBeedles 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 net proceeds to Beedles. The out- of- pocket expenses incurred by Security Brokers in the design and distribution of the issue were $460,000 . 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 hearest dollar. Loss should be indicated by a minus sign. $5.25 per share? $ $6 per share? $ $3.5 per share? $Rearden Metal has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Rearden Metal will pay for Associated Steel by issuing new shares. There are no expected synergies from the transaction. If Rearden pays no premium to buy Associated Steel, then Rearden's price/earnings ratio after the merger will be closest to: Answer choices A) 12 B) 10.42 C) 7.80 D) 10
- 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?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? $The managing directors of Track PLC are considering what value to place on Money Plus PLC, a company which they are planning to take over soon. Track PLC’s share price is currently £4.21, and the company’s earnings per share stand at 29p. Track’s weighted average cost of capital is 12%.The board estimates that annual after-tax synergy benefits resulting from the takeover will be £5m, that Money Plus’s distributable earnings will grow at an annual rate of 2% and that duplication will allow the sale of £25m of assets, net of corporate tax (currently standing at 30%), in a year’s time. Information relating to Money Plus PLC:Financial Position Statement of Money plus PLC.£m Non-Current Assets 296 Current Assets 70366 Equity:Ordinary Shares (£1) 156 Reserves 75 2317% Bonds 83 Current Liabilities 52 Total Liabilities 366 Statement of Profit or Loss Extracts£m Profit before interest and tax 76.0 Interest payments 8.3 Profit before tax 67.7 Taxation 20.3 Distributable Earnings 47.4Other…
- Fishwick Enterprises has 201,500 shares outstanding, half of which are owned by Jennifer Fishwick and half by her cousin. The two cousins have decided to sell 101,000 shares in an IPO. Half of these shares would be issued by the company to raise new cash, and half would be shares that are currently held by Jennifer Fishwick. Suppose that the shares are sold at an issue price of $50 but rise to $80 by the end of the first day’s trading. Suppose also that investors would have been prepared to buy the issue at $80. a. Percentage of ownership 20 % b. Stock value $4,020,000 c. Number of shares 63,125 d. Total wealth ?? million e. Cost of underpricing shares ?? millionThe Sullivan Co. needs to raise $78 million to finance its expansion into new markets. The company will sell new shares of equity via a general cash offering to raise the needed funds. If the offer price is $31 per share and the company's underwriters charge a spread of 7 percent, how many shares need to be sold? In the previous problem, if the SEC filing fee and associated administrative expenses of the offering are $1,425,000, how many shares need to be sold now?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.
