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Sun Company is contemplating a tender offer to acquire 8 0 % of Moon Corporation's common stock. Moon's shares are currently quoted on the New
Sun Company is contemplating a tender offer to acquire of Moon Corporation's common stock. Moon's shares are currently quoted on the New York Stock Exchange at $ per share. In order to have a reasonable chance of the tender offer attracting of Moon's stock, Sun believes it will have to offer at least $ per share. If the tender offer is made and is successful, the purchase will be consummated on January Michael Jackson, the chairperson of Sun's acquisitions committee, has provided you with the projected financial statements for Sun Company without the proposed acquisition and the Projected Financial Statements of the Moon Company in the table
Sun Company's Projected Financial Statements for Without Acquisition and Moon Company's Projected Financial Statements for
Additional Information
As of January all of Moon Company's assets and liabilities are fairly valued except for machinery with a book value of $ an estimated fair value of $ and a year remaining useful life. Assume that straightline depreciation is used to amortize any revaluation increment.
No transactions between these companies occurred prior to Regardless of whether they combine, Sun Company plans to buy $ of merchandise from Moon Company in and will have $ of these purchases remaining in inventory on December In addition, Moon is expected to buy $ of merchandise from Sun in and to have $ of these purchases in inventory on December Sun and Moon price their products to yield a and markup on cost respectively.
Sun Company intends to use three financial yardsticks to determine the financial attractiveness of the combination. First, Sun wishes to acquire Moon only if consolidated earnings per share will be at least as high as the earnings per share Sun would report if no combination takes place. Second, Sun will consider the proposed combination unattractive if it will cause the consolidated current ratio to fall below two to one. Third, return on average stockholders' equity must remain above for the combined entity. If the financial yardsticks described above and the nonfinancial aspects of the combination are appealing, then the tender offer will be made. On the other hand, if these objectives are not met, the acquisition will either be restructured or abandoned.
Sun Projected Financial Statements Without Acquisition Moon Projected Financial Statements
Sales $ $
Cost of goods sold
Operating expenses
Income before taxes
Income tax expense
Net income
Retained earnings, January
Add: net income
Less: dividends
Retained earnings, December
Cash
Accounts receivable
Inventory
Property, plant, and equipment
Accumulated depreciation
Total assets
Sun Projected Financial Statements Without Acquisition Moon Projected Financial Statements
Accounts payable
Common stock
Paidin capital in excess of par
Retained earnings
Total liabilities and stockholders' equity
Parent: $ par; Subsidiary: $ par
Picture included of excel sheet how it needs to be recorded on three reports as pictured pro forma income statement wacquisition pro forma balnce sheet with acquisition, journal entries requirement. please provide as much detail as possible i am completely lost in this assignment
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