When Gulf was placed on the auction block, a minimum bid level was established at $70 per share. Yet only a few months before, Gulf was trading in the $40 range. How could Gulf become so much more valuable in such a short period of time?

2. Even if the Pickens group were totally successful in their tender offer, they would only control 21% of Gulf's stock. Why did the Gulf Investors Group limit their offer to 21% of equity? Did the reincorporation influence the raiders' strategy? How?

3. If you were one of the prospective Gulf buyers, how much would you bid to acquire Gulf Oil Corporation? You may use the following additional information in your calculation. market premium 8.8% tax rate 50% AA corporate bond rate 13.5%

4. Would the way in which you finance the takeover of Gulf influence the way you would run Gulf after the takeover?