Company B has struck an inprinciple agreement to be acquired by Company A. However, Company B's controlling shareholders demand that the board only accept cash payment. However, paying in cash requires substantial borrowings by Company A and will affect its credit rating.

a. If you are the Chairman of Company A, how would you make changes to the deal design to satisfy both parties' requirements?

b. What do you think may be the reasons behind Company B's controlling shareholders resisting the stock deal. If you have to insist on a stock deal what protection can you offer to address their concerns?

c. You hear rumor that another company (C) is now preparing a bid for Company B. How does this change your approaches in questions a and b above?