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You work for a leveraged buyout firm and are evaluating a potential buyout of UnderWater Company. UnderWater's stock price is $ 1 7 and it

You work for a leveraged buyout firm and are evaluating a potential buyout of UnderWater Company. UnderWater's stock price is $ 17 and it has 1.75 million shares outstanding.You believe that if you buy the company and replace its management, its value will increase by 36%. You are planning on doing a leveraged buyout of UnderWater and will offer $ 21.25 per share for control of the company.
a. Assuming you get 50%control, what will happen to the price of non-tendered shares?
b. Given the answer in part (a), will shareholders tender their shares, not tender their shares, or be indifferent?
c. What will your gain from the transaction be?

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