Crickey Co, a company quoted on the London Stock Exchange, has cash balances of 23 million which are currently invested in short-term money market deposits. The cash is intended to be used primarily for strategic acquisitions, and the company has formed an acquisition committee with a remit to identify possible acquisition targets. The committee has suggested the purchase of Mallard Co, a company in a different industry that is quoted on the stock exchange. Although Mallard is quoted, approximately 50% of its shares are still owned by three directors. These directors have stated that they might be prepared to recommend the sale of Mallard, but they consider that its shares are worth 22 million in total.

Revenue Pre-tax operating cash flow Taxation (33%) Oakton Co 000 480,000 51,000 16,830 Mallard Co 000 38,000 5,300 1,749 Post tax operating cash flow Dividend 34,170 11,000 3,551 842 Non-current assets (net) Current assets Current liabilities 168,000 135,000 99,680 8,400 4,700 3,900 203,320 9,200 (Mallard 10 pence par) 500 Financed by: Ordinary shares (25 pence par) Reserves 12% Debentures 2006 10% Bank term loan 5,200 10,000 158,320 20,000 15,000 Recent 11% bank loan 3,500 203,320 9,200 Revenue Pre-tax operating cash flow Taxation (33%) Oakton Co 000 480,000 51,000 16,830 Mallard Co 000 38,000 5,300 1,749 Post tax operating cash flow Dividend 34,170 11,000 3,551 842 Non-current assets (net) Current assets Current liabilities 168,000 135,000 99,680 8,400 4,700 3,900 203,320 9,200 (Mallard 10 pence par) 500 Financed by: Ordinary shares (25 pence par) Reserves 12% Debentures 2006 10% Bank term loan 5,200 10,000 158,320 20,000 15,000 Recent 11% bank loan 3,500 203,320 9,200