Lets reconsider part (b) of Problem 9. The actual premium that your company will pay for TargetCo
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Let’s reconsider part
(b) of Problem 9. The actual premium that your company will pay for TargetCo will not be 20%, because on the announcement the target price will go up and your price will go down to reflect the fact that you are willing to pay a premium for TargetCo.
Assume that the takeover will occur with certainty and all market participants know this on the announcement of the takeover.
a. What is the price per share of the combined corporation immediately after the merger is completed?
b. What is the price of your company immediately after the announcement?
c. What is the price of TargetCo immediately after the announcement?
d. What is the actual premium your company will pay?
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Muhammad Umair
I have done job as Embedded System Engineer for just four months but after it i have decided to open my own lab and to work on projects that i can launch my own product in market. I work on different softwares like Proteus, Mikroc to program Embedded Systems. My basic work is on Embedded Systems. I have skills in Autocad, Proteus, C++, C programming and i love to share these skills to other to enhance my knowledge too.
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