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Company ABC has dispersed ownership with a large number of small shareholders and has become the target of a hostile takeover. Its shares are currently
Company ABC has dispersed ownership with a large number of small shareholders and has become the target of a hostile takeover. Its shares are currently trading at a price q>0 per share. It is estimated that, by refocusing on its core business, the company's shares may be worth v>q. Assume that the tender offer is only binding if a majority of shareholders choose to tender their shares and that the acquirers have to bear a transaction cost of xv per share, with 0 v(1-y), would shareholders tender their shares (Y/N)? C) Assume y>x. If the acquirers offer a price equal to or slightly below the price at which they break even, will the takeover succeed (Y/N)? d) Assume y
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