Yesterday, AstroText announced its friendly acquisition of TextTools Inc. AstroText intends to pay \($20\) per share for all of the outstanding common stock of TextTools. At this price, TextTools stockholders will be receiving a per share premium of \($7\) over the company’s closing stock price just two days ago. There are 3 million shares outstanding, so the \($7\) per share premium represents \($21\) million in total. :
AstroText and TextTools are both relatively young software development companies with similar product lines. Both companies have developed leading edge document creation software for the Internet. AstroText has focused its product line on individuals, small businesses, and academic markets. TextTools has targeted the corporate market where security and encryption are extremely important. To maintain their technological edge, both companies must continue to invest heavily in software research and development. Frequent product updates are the norm for companies such as AstroText and TextTools. In addition, both companies have historically spent considerable resources on product marketing and advertising.
AstroText is hosting a stockholders’ meeting later today to discuss details of the acquisition.
So far, the company has said very little about why it’s willing to pay a \($7\) per share premium for Text Tools, how the all-cash deal will be financed, or why the two companies will be worth more together than they are separately.

Required:
1. Suppose you are an AstroText employee who owns 100 shares of the company’s stock. You have also received a substantial number of long-term stock options as part of your compensation package. What questions do you want answered at the stockholders’ meeting?
What information (if any) in the company’s financial reports might help answer those questions?
2. Assume that you are the lead banker for AstroText. You were quite surprised to learn of the TextTools acquisition, in part because your loan to AstroText contains a provision that prohibits the company from making cash acquisitions without your approval. What questions do you want answered at the stockholders’ meeting? What information (if any) in the company’s financial reports might help answer those questions?