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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
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 of Company
Ms profits since it was purchased for $ million in
Company Ms board is considering selling the North American subsidiary. It has held
confidential discussions with a North American insurance company that is prepared to
offer $ million for the subsidiary.
a Evaluate Company Ms proposal for divestment from its North American
subsidiary.
b Discuss the agency concerns that may be raised by Company Ms shareholders
if the board accepts the buyers offer of $ million.
c Outline the arguments for and against using the $ million raised from the
divestment of the North American subsidiary to repay some of Company Ms
borrowings.
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