Company M is a multinational insurance company that specialises in car insurance. It

has extensive operations in several European and Asian countries. Company M also

has a subsidiary in North America that has consistently generated $3\%$ of Company

M$$s profits since it was purchased for $$300$ million in $2015.$

Company M$$s board is considering selling the North American subsidiary. It has held

confidential discussions with a North American insurance company that is prepared to

offer $$260$ million for the subsidiary.

a$)$ Evaluate Company M$$s proposal for divestment from its North American

subsidiary.

b$)$ Discuss the agency concerns that may be raised by Company M$$s shareholders

if the board accepts the buyer$$s offer of $$260$ million.

c$)$ Outline the arguments for and against using the $$260$ million raised from the

divestment of the North American subsidiary to repay some of Company M$$s

borrowings.