In the case of Conrail, the poison pill provision gave each shareholder the right to purchase one additional share of stock at approximately a 50% discount. Conrail has 90.5 million acquisition shares outstanding and a market price of $71.00 per share, for a market capitalization of $6,426. Assume that Friendly Shareholder and Hostile Bidder buy 90% and 10% of the shares,
respectively. Please use numerical analysis (you can use tables) to explain the mechanism of poison pill.

(a) What is the total equity market value and the number of share outstanding after the pill is triggered?

(b) What will the share price be?

(c) How will the ownership of Conrail be shared between Friendly Shareholder and Hostile Bidder?

(d) And finally, what is the value that is transferred from hostile to friendly shareholders because of the poison pill?