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BAD Company's stock price is $20, and the firm has 10 million shares outstanding. You believe you can increase the company's value if you buy
BAD Company's stock price is $20, and the firm has 10 million shares outstanding. You believe you can increase the company's value if you buy it and replace the management. Assume that BAD has a poison pill with a 15% trigger. all BAD's shareholdersother than the acquirerwill be able to buy one new share in BAD for each share they own at a 65% discount. Assume that the price remains at $20 while you are acquiring your shares. If BAD's manageme resist your buyout attempt, and you cross the 15% threshold of ownership: a. How many new shares will be issued and at what price? b. What will happen to your percentage ownership of BAD? c. What will happen to the price of your shares of BAD? d. Do you lose or gain from triggering the poison pill? If you lose, where does the loss go (who benefits)? If you gain, from where does the gain come (who loses)? a. How many new shares will be issued and at what price? The number of new shares issued is (Round to the nearest integer.) The new shares will be issued at $ per share. (Round to the nearest cent.) b. What will happen to your percentage ownership of BAD? Your percentage ownership of BAD Company will be %. (Round to two decimal places.) c. What will happen to the price of your shares of BAD? The new stock price of your shares of BAD Company will be $ (Round to the nearest cent.) d. Do you lose or gain from triggering the poison pill? If you lose, where does the loss go (who benefits)? If you gain, from where does the gain come (who loses)? The amount that you gain or lose if the poison pill is triggered will be $ . (Round to the nearest dollar.) This loss goes to: (Select the best choice below.)
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