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A company adopted a shareholder rights plan, where (i) each shareholder owns special warrants, the number of which equals the number of shares they own,
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A company adopted a shareholder rights plan, where (i) each shareholder owns special warrants, the number of which equals the number of shares they own, (ii) these warrants can be exercised when a raider acquires 30 percent or more of company shares, and (iii) each warrant grants the right to purchase five newly issued shares at the strike price of $0. Compute the dollar loss to the raider if it acquires 30 percent of company shares. This firm has a market capitalization of $1 billion.
A. $200 million
B. $233 million
C. $150 million
D. $100 million
A company adopted a shareholder rights plan, where (i) each shareholder owns special warrants, the number of which equals the number of shares they own, (ii) these warrants can be exercised when a raider acquires 30 percent or more of company shares, and (iii) each warrant grants the right to purchase five newly issued shares at the strike price of $0. Compute the dollar loss to the raider if it acquires 30 percent of company shares. This firm has a market capitalization of $1 billion.
| A. | $200 million | |
| B. | $233 million | |
| C. | $150 million | |
| D. | $100 million |
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